To provide the cost savings of IP-based phone calls for
small companies, a couple of VoIP lines with a business plan from a low-cost
provider such as Vonage or Lingo will suffice. But as the organization grows, users
will want to look at more sophisticated options, the same as if using a public
switched telephone network (PSTN).

Medium- to large-sized businesses have long used private
branch exchange (PBX) switchboards to route incoming calls from a number of
external lines among a larger number of internal lines. This saves money
because there’s no need to have a separate line for every employee, and makes line
sharing more efficient. Most systems in use today are technically PABX, which
means the call routing is automated, rather than dependent on a human
switchboard operator.

According to an article by Robert Poe in VoIP News, major
research firms reported that a majority of PBX systems sold in the first
quarter of 2006 were IP-based. Slowly but surely, companies are moving away
from traditional PBXs to IP PBX solutions.

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How IP PBX works

To the end user, the IP version of PBX is essentially the
same. Under the hood, though, there’s a big difference. The heart of the system
is the IP PBX server, which works somewhat like a proxy server. With a Session Initiation Protocol (SIP)-based system, the VoIP clients register their SIP addresses with the server, which maintains a database of all the clients and their addresses. (The VoIP clients can be soft phone software installed on a computer or self-contained hard phone devices.)

When a user places a call, the PBX server recognizes whether
it’s an internal or external call. Internal calls route to the SIP address of
the phone or user receiving the call. External calls route to the VoIP gateway.

The company may have its own VoIP gateway incorporated into
the system, or use the gateway of a VoIP service provider. The purpose of the
gateway is to link an IP system with the PSTN. VoIP gateways can connect either
to analog phone lines or to digital lines (ISDN or
standard multiplex T-carrier lines).

The gateway device can take the form of a dedicated appliance, or as an expansion card in the server. Like other
gateway devices, it has two or more ports to allow it to span multiple
networks. In this case, one connection is to the IP network and one is to the
PSTN. A virtual PBX refers to a card and
PBX software installed on an existing PC.

Traditional PSTN PBX lines connect to the VoIP network (or to
the Internet) using an FSX gateway. Or, going in the other direction, PSTN
phone lines may connect to an IP PBX with a foreign exchange office (FXO) gateway.

IP Centrex is a service model whereby the VoIP provider owns
and hosts the PBX equipment. Hosted IP PBX solutions are turnkey solutions that
don’t require organizations to have personnel on staff capable of managing the

Advantages of IP PBX

Along with the cost savings of VoIP, users can get some extra
features with IP PBX that don’t typically come with a
traditional PBX system. PBX systems support caller ID, three-way calling, call
forwarding, voice mail, and similar features that business phone users take for
granted. The nice thing about IP-based systems is that users’ voice mail messages can be forwarded to their e-mail inboxes, so
they not only get instant notification that a call has come in, but can also
play the messages from their computers or handheld devices.

Other sophisticated automated features are available, too. “Smart”
systems can be set up to route calls differently depending on the caller ID
information. Thus, a user could have calls from his or her boss forwarded
directly to a cell phone, while calls from that pesky sales rep automatically
go to voice mail.

Businesses also find the monitoring and reporting
capabilities of IP systems useful in maintaining an audit trail and keeping up
with costs. The system can track usage by phone number/SIP address, monitor
performance information and Quality of Service (QoS),
and detect security breaches.

Why not IP PBX?

What are the disadvantages of transitioning to an IP-based
PBX system? There can be a large upfront cost. In addition to the IP PBX
hardware and/or software, IP phones may need to replace traditional handsets—or
adapters used to allow them on the VoIP network.

Even worse, if the IP network is an outdated one, an upgrade to
the entire network may be necessary to support high quality voice
transmissions, which require more bandwidth than many data transmissions.

Finally, implementing an IP PBX system on-site (as opposed to
using a hosted service) requires personnel with knowledge and experience in
VoIP. It’s an IT specialty area with which many systems administrators are

IP PBX vendors

There are hundreds of vendors who make IP PBX equipment. This
list just provides a sampling and is by no means conclusive:

  • Axon
    Virtual PBX
    software from NCH Swift Sound can be installed on almost any
    Windows computer (server operating system is not required) to provide
    switching between multiple phone lines and extensions. It uses a SIP protocol to
    connect to VoIP hard phones or soft phone clients, and is especially good for
    small- to medium-sized businesses on a budget. Axon is a free product that can
    be downloaded at
  • SwyxWare is a Windows server-based PBX software that comes
    in two flavors: Compact for small businesses (10 or fewer users) and Essential
    for larger businesses. It’s scalable in that users can add features and
    applications such as conferencing by buying a new license key. Learn more at
  • Cisco
    Unified CallManager
    is an enterprise-level VoIP call processing system
    that supports sophisticated features such as multimedia conferencing, and can
    handle up to 30,000 lines per server cluster. Users can implement this system in
    both Windows and Linux environments. See
    for an overview.
  • Sphericall from
    Sphere Communications is a software-based IP PBX for Service Oriented
    Architecture (SOA) and can scale to 30,000 ports. It uses a
    distributed software architecture rather than clustering to increase
    reliability/fault tolerance. Find out more at
  • Summary

    IP PBX technology is growing in sophistication and
    popularity, and can provide businesses with substantial cost savings due to
    ease of installation (resulting in much lower rollout costs), calling features
    that are not standard on traditional PBX equipment, better monitoring and usage
    tracking, and lower overall calling costs.