PBX vs. VoIP: 13 Key Differences Explained

For business owners or key decision-makers, choosing between PBX vs. VoIP is a high-impact decision. It’ll become the basis for all future internal and external communication.

Understanding how both communication systems differ will help you make an informed decision before opting for either.

This article breaks down all key differences to help make this decision easier. Let’s start!

PBX vs. VoIP: Core Difference

A Private Branch Exchange (PBX) is a private telephone network that uses on-premises landline telephones to communicate over a Public Switched Telephone Network (PSTN).

Meanwhile, VoIP technology uses the internet to allow communication between users.

They both achieve the same result: allowing users to talk to each other, but they have different strings attached. Both differ in terms of cost, required maintenance, ease of scalability, uptime, downtime, and hardware requirements.

PBX vs. VoIP: 13 Distinguishing Factors

Let’s break down some key distinguishing factors that separate PBX and VoIP.

Initial Investment

Installing a PBX system is a costly endeavor. Many hardware and software requirements are involved, translating into a high initial investment.

Required hardware includes

• Hard phones (such as desk phones)
• Routers
• Cabling
• Backup power supply
• Modems.

With VoIP systems, the initial investment is low. The primary hardware requirement is a device (such as a mobile phone or computer) to make calls.

Maintenance Costs

When compared with VoIP, the cost of maintenance with PBX systems is higher because there’s considerably more hardware involved. Additionally, maintaining the hardware will require an in-house IT team.

For small businesses that might not be able to afford a team, PBX systems will be costly.

Domestic & International Call Rates

With a PBX system, domestic and international call rates are usually higher because they are routed through a PSTN. This is because a PSTN number is an in-country number defined by its geographical location. Even for domestic long-distance calls, you’ll probably get charged a higher per-minute rate.

VoIP services such as Vibes Communications are not bound by PSTN technology. You can make calls through an internet connection, the charges are comparatively lower for domestic and international calls. You can call any number in the world, even if it’s a landline.

Scalability

Scaling a PBX system as the number of users grows requires physically adding new hardware. You’ll need to ensure that the PBX system has enough physical ports for new cards. Not only is this a costly endeavor, but it also translates to added time and resources. If you’re a business in its growth phase, constantly worrying about adding new hardware will be an issue.

VoIP systems are easier to scale than PBX systems because of the low maintenance costs involved. When the number of users grows, you’ll need to update your subscription/license agreement. At best, if you’re using physical VoIP-based phones, you’ll be paying the cost of the phone and no other additional hardware.

Voice Quality

PBX systems are generally more reliable in terms of voice quality. This is because the system has physical telephone lines that usually only face a few interruptions. However, voice quality issues often arise because of physical system issues. And it can be quite costly to fix these issues. For example, if the physical telephone line is damaged, it might be harder to identify where the exact problem is occurring and fix it.

In comparison, VoIP systems face the risk of a faulty internet connection impacting voice quality. But, choosing a reliable VoIP service provider such as Vibes Communications can solve this problem.

Vibes Communications look at your specific needs, such as the number of devices and users or average bandwidth consumption.

Uptime & Downtime

Typically, PBX and VoIP phones have high uptime. But, for both, certain different circumstances can result in downtime. With PBX phones, issues in the physical environment where the hardware equipment is placed can result in downtime.

With VoIP, a low-quality internet connection can cause considerable downtime.

Device Compatibility

You can only use a traditional analog PBX system as a landline phone. In comparison, you can make VoIP-based calls using almost any digital device, such as a desktop, laptop, smartphone, or tablet, in addition to a landline phone.

Contractual Agreements

Because of the long installation process and the amount of hardware that needs to be installed, there’s usually a long lock-in period with PBX service contracts. Additionally, software licenses can also require long-term commitments. While large businesses might be able to commit to such contracts, it’s not viable for small businesses.

VoIP technology does not have a complicated installation process or a lot of hardware requirements. The services are usually offered as monthly subscription packages, and no long lock-in periods are involved. This makes it viable for businesses of all scales, especially small businesses.

Portability

Because PBX systems are limited to landline phones physically connected to a wire, portability in carrying the device around is limited. Users are limited to the physical area where the phone is located to communicate.

VoIP technology enables users to communicate through multiple portable devices such as mobile phones, tablets, or laptops. As long as there's a solid internet connection on both ends, users can communicate with each other regardless of location.

Channels of Communication

With PBX phones, users are limited to voice calls as a communication channel. In comparison, VoIP services offer additional channels such as instant messaging and video calling.

Security

A traditional PBX system is highly secure. The infrastructure is installed on-premises, and there’s no internet connection involved. The risk of unwanted parties, such as hackers gaining access to the network is unlikely.

On the other hand, VoIP services are susceptible to certain security concerns if the VoIP service provider is not chosen wisely. A VoIP service provider with weak security arrangements can make the network vulnerable to certain risks. These include phishing, DDoS attacks, call tampering, malware, VOMIT, and SPIT.

Size of Business

Because PBX systems involve a lot of on-premises hardware, businesses will need trained human resources to maintain the system. For large businesses with the resources to do this, installing a PBX system is viable. But, for small businesses, hiring dedicated human resources and training the IT team to maintain the PBX system is not viable.

On the other hand, VoIP systems do not have much hardware involved that needs to be maintained. Because VoIP technology is software-based, the service provider can take care of most maintenance requirements. VoIP service providers provide 24/7 customer support to handle any issues if they arise instantly. Because of this, VoIP is viable for businesses of all scales.

Integrations

PSTN technology, which forms the underlying basis for PBX systems, only allows for voice calling capabilities. PBX does not allow for integrations with other communication channels such as CRM, e-mails, and social media.

VoIP technology allows for integrations with multiple communication channels, including instant messaging, CRM, e-mails, and social media. Such advanced capabilities allow for more collaboration in business environments.

Some common FAQs about PBX vs. VoIP

What is a Hosted PBX?

A hosted PBX, also known as a ‘cloud PBX’ or ‘virtual PBX,’ is a PBX system hosted off-premises and managed by a cloud service provider. Unlike traditional analog PBX systems, a hosted PBX system leverages the internet to enable communication.

Do I need a PBX to use VoIP?

No, you don’t have a PBX system to use VoIP. On the contrary, PBX and VoIP are two different methods of communication. To use VoIP, you primarily need an internet connection and a device that supports VoIP technology, such as a desktop computer, laptop, smartphone, or VoIP desk phone.

Should I Use Hosted PBX or VoIP?

While both hosted PBX and VoIP systems use the internet, they differ in their method of implementation and the features they offer. Hosted PBX has limited features such as call forwarding, routing, auto-attending calls, and voicemail.

On the other hand, VoIP services offer these features and additional features such as instant messaging and video conferencing. Ultimately, the choice should be based on business requirements.

Is VoIP Better Than PBX for Small Businesses?

Yes, VoIP is better than PBX for small businesses. Implementing VoIP services requires a low initial investment, while PBX involves a high initial cost. For businesses in their initial stages, the high cost of PBX systems does not make sense.

VoIP is also better in terms of scalability, hardware requirement, maintenance, and flexibility of use. Additional features included with VoIP services, such as video conferencing and instant messaging, seal the deal in favor of VoIP.

PBX vs. VoIP: What’s the Better Option?

Based on the above comparison, it’s clear that VoIP has more advantages when weighed against PBX. The initial complexity of implementing a PBX system is not worth it for small businesses.

A high initial investment is involved, and you need added resources to maintain the system. It can make sense for large businesses to opt for high security by choosing a PBX system. But, by choosing the right VoIP service provider, you can circumvent this.

Enter Vibes Communications.

We provide a highly cost-effective, reliable, and secure VoIP platform that makes internal and external communication easy. We’re vetted by third-party security and compliance certifications and strive for 99.99% uptime by keeping several points of presence and carrier-grade data facilities.

Reach out to us today to find out how our high-quality VoIP services can make your communication faster and better.