PABX VS PBX: What’s the difference?

Getting the right telephone system for your business might be one of the most important decisions any business owner will make and the battle of PABX vs PBX is never-ending.

With clear and effective communication that allows employees to operate quickly, effectively, and seamlessly in making sales and serving customers businesses must find a setup that works for them and not against them.

If a company plans to run with a PABX system, it’s essential to secure an affordable service that doesn’t cause too much damage to the existing business process and operations.

But before you can make an informed choice, you need to get under the hood and understand the key differences between available systems, as well as the specific features they offer. 

To help out, we’re turning our telephony expertise to break down:

  • What is PABX?
  • How does it work?
  • The differences between PABX and PBX
  • How PABX can help manage a business phone network
  • Setting up your system either on-premise or with VoIP
  • Key features to look for in a PABX system

Let’s get started.

What is PABX?

Private Automatic Branch Exchange (PABX) essentially gives your business a private telephone exchange solely for your purposes. Rather than connecting a whole bunch of landlines to the public network, PABX allows extensions to be built from the same telephone number while taking care of the switching and connecting internally. On the same subject : Tips on How to Find the Cheapest VoIP Provider. Not only does this make future growth far easier to implement, but it also boasts significant cost and efficiency savings when compared to operating multiple landlines.

Typically, the system is owned and operated by the business itself, with the business owners taking on the responsibility of regular maintenance, repairs, and upgrades. 

PABX allows for a complex web of multiple network connections, facilitating business communications as they grow and adapt. As a result, the system can handle an impressively high volume of incoming and outgoing calls, which can be expanded with additional hardware installations.

How does PABX work?

PABX effectively acts as a private, internal phone network, that includes modems, hubs, adapters, routers, telephone handsets, and even fax machines. To see also : Various Types Of Voip Equipment.

As a result, internal calls occur without accessing an external public network. 

  • The caller dials a specific extension number, taking them to a particular handset or extension line.
  • An Interactive Voice Response (IVR) system plays a series of recorded messages, interprets the caller’s dialed or spoken responses and navigates them to the correct department or extension.

Outgoing calls connect to the public network through trunk lines, which staff members across handsets and extensions share. This can cause problems in times of high call rates.

Today, these systems are increasingly moving to the cloud, meaning they exist virtually rather than physically and are hosted on a server. This internet-accessed setup dispenses the need for extensive copper cabling and junction connections, making upgrades and network management directly from a computer terminal or even a mobile device.

By doing so, the extension lines can operate in a much more advanced manner, connecting to a shared team list rather than one specific handset making it easy for calls to be answered by the next available agent.  

This also proves to be efficient for workers who are off-shift to mark themselves offline without affecting business operations.

 PABX vs PBX — What are the differences?

Back in the early days of business telephony, systems required a dedicated room in which switchboard operators manually plugged in wires to connect calls. Read also : virtual pbx solutions for small business. These rapidly developed into more advanced systems involving handset-based switches but still relied on human operators.

The key difference between the Private Automatic Branch Exchange (PABX) definition and the Private Branch Exchange (PBX) is that the former simply automated those call transfers and connections.

Contrastingly, a PABX system can take care of this entirely independently, based on pre-programmed instructions or even via Interactive Voice Response (IVR). This allows the caller to guide themselves to the desired telephone extension resulting in faster communications and cost savings on switchboard staff.

How can PABX help manage your business phone network?

Enterprise communication is all about efficiency and ease. No business wants their agents to spend time on complex systems or completing complex administration before doing their job.

Here’s how PABX can help you manage your business efficiently:

  • Cost-effectiveness and efficiency savings
    An automated switching system removes the need for switchboard staff to direct calls manually. That saves you money and time and makes sure callers aren’t waiting at a bottleneck when they reach out to your business.
  • Enhanced customer service
    Ensuring calls reach the right agents quickly goes a long way. This has a direct impact on the quality of the service the customers receive, thus reflecting on the business’ CSAT scores. Moreover, a well-routed call system is mandatory if customer happiness is your north star. 

If you choose to upgrade your service to a cloud-based system, this is where your PABX will play a vital role in unlocking additional benefits for your business:

  • Improved reliability

    The risk of downtime lessens, with system redundancy built-in at the server end and the timely system maintenance from the vendor’s end.  This directly ensures there’s a seamless connection between the business and the customers.

  • Scalability

    Cloud-based systems scale at the click of a button. If you need to add extensions within the software, shared contact lists are updated just as quickly.

  • Cost efficiencies

    Built on subscription models, cloud-based services ensure you only pay for the call volume and agent licenses you need. You can bid goodbye to the days of having to absorb additional capacity costs to future-proof your communications. 

Setting up your system


There are no two ways to install a brand new on-premise PABX system since it’s a tedious and costly process. It demands significant up-front investment and extensive installation of copper cabling; Public Switched Telephone Network (PSTN) connections, Primary Rate Interface (PRI) lines, and the required handsets, extensions, and conference speakers systems that you need.

While this process might leave you with an effective phone system, responsibility for maintenance, upkeep, and upgrades rest solely on your shoulders. And when you want to add extensions, the systems need to be physically installed and then programmed manually into every handset you use.

However, you should also be sure of using the same physical office space for at least the medium term. However, this setup will restrict your staff’s remote working options, as their primary communications network is located in one place. Also, businesses won’t be able to take advantage of advanced functionalities such as video conferencing, call metrics, and virtual phone numbers without installing additional services.

VoIP PABX system

Integrating your telephone system with cloud-based software provides far greater flexibility and functionality than in a more traditional setup.

Voice over Internet Protocol (VoIP) and its associated technologies allow calls to take place through the internet. This takes advantage of the far greater bandwidth available over a data connection, allowing for much larger call volumes and for video conferencing, instant messaging, and advanced integrations.

Additionally, a cloud-based system can be accessed anywhere with a simple internet connection, on any computer or mobile device. Upgrades and scaling up are a breeze, with maintenance also taken care of at the server end by your service provider.

To set up a VoIP-integrated PABX, you can:

  • Purchase a new cloud-based system on a subscription model
  • Upgrade existing systems using Session Initiation Protocol (SIP) trunking, allowing you to make use of legacy hardware and phone numbers

Whichever option you choose to run with, you will be taking full advantage of an internet connection and the enhanced functionality that your business offers. If you feel like digging a bit deeper into virtual telephony, read our in-depth exploration of ‘softphones’.

Key features to look for in a PABX system

So what exactly can you do with a PABX system, and what should you look out for?

  • Call transfer
    This makes it easier for an agent to hand calls over to colleagues or escalate an issue to a manager’s line.
  • Automatic ringback
    This allows callers to hang up and receive a callback once the busy line becomes free.
    • Auto-attendant
      An auto-attendant is a voice menu system that replaces a receptionist, making it straightforward for callers to be guided directly to relevant extension numbers.
    • Interactive Voice Response (IVR)
      This is an advanced version of an auto-attendant that can help direct callers and deal with their queries by itself in many cases. The IVR uses pre-recorded messages that answer common questions to save staff time when the phone lines are busy.
    • Automatic call recording
      Every conversation can be easily recorded and archived to help with training, quality monitoring, or compliance further down the line.
    • Voicemail
      This straightforward function allows a caller to record a message in a particular mailbox. With cloud-based hosted systems you can even take advantage of voicemail to email or automated email transcription functions, accelerating your staff’s ability to respond to voicemail messages.
    • Do Not Disturb
      This turns a specific extension ‘offline’, blocking incoming calls. If you like, they can instead be routed to voicemail.
  • Call conferencing
    This lets you connect to several callers simultaneously, at either one or both ends of the call.
    • Call groups
      This adds several extension numbers into a group so that those handsets ring together when a specific number is called. It makes it easy for whichever member of your sales or service team is available to answer the call.
    • Direct dial-in and speed dialing
      This allows callers to enter a special code that takes them directly to the required extension line, bypassing the auto-attendant or IVR.
  • Call pick-up
    If someone’s away from their desk, this allows another staff member to pick up a call for them using their own handset.
  • Call parking
    This function allows an employee to put a call on hold on one device and continue the conversation on another handset.

Find out more about the different kinds of PBX and what they can offer you.

Is PABX the way to go?

The truth is, very few businesses these days rely on a manual switching network, given the obvious advantages of an automated system.

The transformation is continuing well beyond these relatively simple technologies, with the advent of cloud-based telephony ushering in more and more advances in the functionality and efficiencies made possible by enterprise communication networks. These are no longer restricted purely to calls, but they also boast of highly dependable omnichannel support and advanced integrations with computer software. 

To know more, why not explore some of the latest trends in call center technology?

Illustration by Mahalakshmi Anantharaman

Animation by Vinoth Krishnan

About Freshcaller

Freshcaller is a modern-day cloud phone system that can be used to set up a SaaS call center for customer support and sales. With its cloud-based architecture, Freshcaller brings together the best of legacy features like IVR and advanced call routing capabilities like Smart Escalations, Customizable Performance Reporting to help you set up state-of-the-art call center operations. Freshcaller offers phone numbers in 90+ countries, requires zero phone hardware, and is extremely easy to use.

Visit the Freshcaller website for more information.

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