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RingCentral UK Private Automatic Branch eXchange (PABX) definition-311

What is PABX?

If you’ve worked with telephone systems before, you might have heard a few acronyms being thrown around: PABX, PBX, IP PBX…the list goes on.

Private Automatic Branch Exchange (PABX) is synonymous with modern-day business telephone systems. It connects external and internal callers to an internal network via a switchboard – without the need for manual operation in the middle, unlike its ancestor PMBX.

PMBX required operators to know exactly which wire should go into which port. Nowadays, of course, you’re more likely to find an operator using buttons and codes to connect calls to the right department.

The term PBX is now used interchangeably with PABX and can include both that and PMBX under its umbrella.

PBAX systems are a necessity for big and small businesses in the modern age. Rather than relying on individual landline connections – with different numbers for each – customers can ring a central number and reach the right person through a specific extension.

This can be crucial in enhancing your customer experience, which can affect everything from your reputation to revenue.


PABX vs. PBX–How The Technology Has Transformed

As our phone systems have advanced, so too has our ability to satisfy customers and cut costs.

When PBX systems were invented in the late 1800s, they had switchboard operators routing incoming calls to the right person by physically unplugging and re-plugging copper wires to complete the telephony circuit.

This was already an improvement on the original analogue Public Switched Telephone Network (PSTN), which involved each phone having a unique phone line and number. This was hugely expensive for a business: they’d have to pay traditional landline prices every time coworkers called one another. They’d also need to have installed multiple phone lines, adding another expense.

Manually switching calls, although time-consuming, did allow businesses to save on the cost of individual telephone lines. It also set up the basics for call transfers, forwarding, and call centres and meant that companies could have a centralised number for customers. 

But we’ve come a long way since then!

By the 1970s, automatic switching had become commonplace, and the original PMBX systems, obsolete.

And now, fifty years later? Businesses rely on IP PBX instead: a form of PBX that functions through an internet connection. That’s often what people mean when they talk about PBX and PABX now – and we’ll talk more about the benefits of IP PBX later.

Woman using a headphones

How a PABX System Works

Despite its modern upgrades, a PABX system operates in quite a similar way to its ancestors. Gone are the copper wires, but the central exchange still exists: the phone calls are just propelled by automation instead of human hands.

Every device within a business – phones, fax machines – is connected to this central exchange within a company’s own internal phone network. Each has its own designated extension number and can often be reached simply by dialling into the central network and tapping in this combination.

Just like on a regular landline handset, you can still leave a voicemail – and you’ll have caller ID.

With calls not having to go beyond this local network, internal communications are simplified.

Many modern PABX systems also incorporate IVR: Interactive Voice Response. You’ve doubtless come across these: automated messages which can both tell you which number to dial and even recognise spoken answers. 

RingCentral allows you to set up your organisation’s IVR and customise this with ease with our user-friendly and accessible drag-and-drop interface.

What Does PABX Have To Do With IP Communications?

Because many PABX systems are now actually IP PBX – Internet Protocol PBX – systems, IP Communications are an integral part of the conversation around PBX.

These internet-based PBX systems can be hosted in the cloud or connect to on-premise equipment using SIP Trunking.


SIP – Session Initiation Protocol – is a communications protocol that sets a standard for developers so that different endpoints can communicate seamlessly. It enables the deployment of VoIP.

SIP can also carry all other forms of digital media: video conferencing, instant messages, voice messages, etc.

SIP Trunking allows service providers to supply a secure way for PBX systems to receive these digital messages.


Voice over Internet Protocol is one way that businesses today can communicate over the internet. As the name suggests, its functionality is around voice calls: they’re translated into data and sent across the ether.

VoIP can be hosted off-site by a separate VoIP provider. This provider can maintain the system and perform all necessary updates. This also makes it a scalable system for SMEs. 

Unlike an Integrated Services Digital Network (ISDN), one of the main advantages of VoIP is that the only thing that needs to be in place to implement it is a decent internet connection (and maybe some headsets for conference calls). No hardware necessary.

Nowadays, VoIP connections transfer your voice in real-time, and there’s no noticeable difference between VoIP and traditional phone lines in terms of message delay.


IP PBX systems employs converged voice and data networks to make calls and relay messages over the internet via audio, video, and instant messaging – all while maintaining the functionality of analogue phones.

You can use an in-house IP PBX to connect to a VoIP provider, thereby receiving all the benefits of a VoIP system alongside being able to transfer other digital media.

Both VoIP and IP PBX can help to enhance your customer experience offering and integrate with CRM platforms you already use.

PBAX systems generally require some on-site hardware – internet routers and a computer that manages the whole system, for starters.

Advantages of Choosing PABX
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Advantages of Choosing PABX

Just like in the 1800s, there are still plenty of advantages to choosing a PABX system that’s up to date with modern business practices.

Reduce costs with automation

Advanced PABX allows you to automate processes like call transfer and call forwarding. Auto attendants connect telephone lines almost instantaneously, whether they’re external or internal calls, which speeds up the entire calling process.

RingCentral’s auto attendant provides you with the full receptionist service, except unlike a live operator, you’ll never miss another call. Our virtual receptionist will greet customers and route their calls wherever they need to go.

Importantly for your business’s bottom line, this sort of automation also means you’re not paying switchboard staff. Though you have to invest in the right PABX technology for your business, you can choose the option which works for you – and your budget.

More flexible technology

Because it can be based in the cloud, PABX systems can connect employees all over the globe using just one system. 

RingCentral’s cloud messaging platform allows you to connect to colleagues from any device anywhere in the world.

Whether you’re using it for team conference calls or liaising with customers, PABX is a flexible solution.

It’s also infinitely scalable, meaning as businesses grow, their communication system grows with them.

Businesswoman Using her Smartphone

Greater efficiency

PABX systems keep you up-to-date on what your business needs to function more efficiently. 

Many modern platforms allow you to monitor calls, so you can keep track of instances like your customer service team becoming overwhelmed every Monday morning.

Perhaps your customer service team is constantly fielding calls and has a long queue of people to get back to? It might be time to consider hiring a couple more representatives, switching around the schedule, or looking into the advantages and disadvantages of automating your customer support?

When you know where time is being spent, you’ll be able to manage all teams and processes more efficiently.

Solutions like RingCentral also integrate with all your existing software to streamline workflows.

PABX is The Modern Business Telephone Solution

Telecommunications have come a long way since the traditional PBX of the 1800s. Whether you need to keep in touch with colleagues or greater oversight on calls, PBAX offers advanced features: it’s the modern business telephone solution.

Check out RingCentral’s plans and pricing for the most advanced PBX solutions for your business.


Originally published Sep 21, 2021, updated Jan 28, 2022

Allyn Jayawon


Allyn is the SEO Specialist for EMEA at RingCentral, the leader in cloud communications solutions.

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