The term Private Branch Exchange (PBX) refers to a telephone system independent of the Public Switched Telephone Network (PSTN). PBX systems process inbound and outbound call flows, giving the operator greater flexibility. For example, PBX solves a problem that burdened large organizations for decades.
Via landlines, the service provider performs internal calls like any other outbound request. Consequently, it costs money and occupies lines. Before PBX, large organizations would incur costs just communicating between employees and departments. With PBX, internal calls do not hit the PSTN. This saves money and frees the lines.
Internal calling illustrates one reason businesses adopted PBXs in the early days. More generally, PBX offered a level of customization traditional telephony services could not match. Today this remains the case.
The first PBXs were massive switchboards tended by receptionists. They would connect the circuits manually, plugging and unplugging lines as calls came and went.
By the mid-1970s, automated switches entered the market, making processes more efficient. Gradually, automated switchboards displaced manual ones. The terms Private Automatic Branch Exchange (PABX) and Private Manual Branch Exchange (PMBX) differentiated the two types of switching. No such distinctions exist nowadays.
In the 1990s, PBX systems underwent several changes. In 1995, researchers sought ways to transfer audio and video files over the internet. They succeeded a year later and introduced VoIP to the world.
From this point forward, IP-PBX, otherwise known as hosted PBX, grew in popularity. Businesses could now buy the PBX experience without maintaining, housing or operating the equipment. ISDN PBX systems also appeared, presenting modern features like conference calling and call forwarding. IT technicians experimented with ports, contributing to the scalability of the technology.
Moving through the 2000s, the rise of VoIP and hosted PBX gave way to substantial developments in IP-telephony. As the years passed, the technology became more powerful and affordable. Today, it is one of the most popular communication suites—and for a reason.