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Hosted VoIP PBX Systems Replacing Legacy PBX Systems

Comparing hosted VoIP PBX systems to legacy PBX systems shows that the newer VoIP-based systems provide cost, scalability, and management advantages.

The hosted VoIP PBX system is the core of leading edge business communications. These new business VoIP telephone systems have been replacing older telco-provided PBX systems worldwide for several years. Tech savvy companies have opted overwhelmingly to go with VoIP PBX systems, so the pace of replacement has increased.

The Legacy PBX System

PBX is an acronym for “private branch exchange”.

A PBX system for your business in the 60’s and 70’s consisted of touch tone handsets connected by a thick bundle of copper wires to a punch down patch panel in a massive wiring closet. The patch panel looked like a giant centipede, climbing the wall, with hundreds of colorful insulated copper wires stretching out from every crevice.

Cables from the patch panels connected to a large black or gray box in the corner. This is the PBX that your company would have leased from the Phone Company or purchased from a systems house and installed in your wiring closet. This PBX connected to the nearest Phone Company central office (CO) over copper phone lines that provided a circuit-switched trunk to your office. The trunk line contains several trunk circuit-switched pairs (individual telephone lines). This enabled your PBX to provide support inward and outbound calls at the same time.

If you added people to your office, you’d eventually have to add more pairs in your trunk to the CO, and you monthly costs would be increased. Generally, a technician from the Phone Company would have to visit your PBX to provision these additional circuits.

If business contracted, requiring fewer lines, you had to have the Phone Company remove the additional circuits. This was a costly process.

The Phone Company Clings to Life With Hosted PBX Service

The Phone Company realized that on-premise PBX equipment was expensive to operate and maintain. The setup and maintenance cost was too great for small customers who wanted to buy their own PBX hardware on the market. Changing lines and extensions was a huge task for big companies.

So the Phone Company began to offer Centrex service. Basically, with Centrex, the hardware circuit switch is retained at the Phone Company, and only the handsets and patch panel remain on company premises. Centrex service (sold under brand names like ESSX or Multiserv), reduced maintenance cost because most of the maintenance work could be done by the phone company back at its CO.

Where Centrex missed the mark, however, was that it did nothing to make scaling up less expensive, and Centrex administration became an administrative and bureaucratic nightmare. Entire telephone services organizations were set up to administer them, and getting a new phone line and handset assigned to a particular number with just the right features took up to 60 days in large organizations.

Understanding the Hosted VoIP PBX System

The hosted VoIP PBX system evolved as a fusion of Internet technology, modern high-seed computers, PBX software, and Voice over IP technology.

  • Internet technology, including IP, SIP, and other protocols, carries your data (including packetized voice) from point to point by steering each packet of data, not by switching copper wired circuits. Data packets can each carry their own “send to” address, so that the packets can be steered from point to point millions of times faster than circuits can be switched.
  • High speed computers available today run hundreds of millions time faster than those available in 1969.The IBM 360 Model 40 could perform 13,100 floating point multiply operations per second. Your own late-model Macbook Pro can run at up to 40 gigaflops. This means that even your laptop computer is 3 million times faster than a late 60’s era mainframe computer. Modern servers are even faster. This fantastic speed makes it easy for modern servers to be used as lightning fast PBX servers, replacing slow hardware of days gone by. With these servers, all the PBX features that had to be provided with dedicated circuit boards in the past can now be provided by software.
  • Excellent PBX software like Asterisk now make it possible to provide both basic and highly advanced features in software, replacing dedicated circuit boards of the past. This makes it possible for updates and enhancements to be rolled out frequently without the expense of building and installing new circuit boards. Better still, new extensions and new features can be added in seconds, without having to call the phone company or pay for a technician visit.
  • VoIP – voice over IP – technology converts voice and sound to internet packets. This key development makes it possible to transmit voice conversations over packet switched Internet connections. This allows the high-speed computers to route calls and manage features, and allows calls to reach local or international customers at no cost or at a very low-cost per minute. For businesses with lots of long distance calling, this can offer a huge cost reduction.
Asterisk VoIP PBX.

VoIP PBX

Comparing Legacy PBX to a Modern Hosted VoIP PBX System

The legacy PBX was based on analog voice conversations being carried over pairs of copper wires. Conversations were circuit-switched from end to end, and hardware was required to add more features or extensions. A separate pair of copper wires was required for each and every phone, and an open circuit to the Phone Company CO had to provided for each conversation.

The hosted VoIP PBX system carries digital voice signals carried over ethernet cables. Conversations are packet-switched from end to end. Extension and features can be added merely by changing software settings. All the voice traffic is carried over your company’s Internet connection.
Table 1 – Feature Comparison Legacy PBX v Hosted VoIP PBX System

Legacy Analog PBXHosted VoIP PBX System
Connectivitycircuit switched – phone wirespacket switched – network cable
EquipmentEquipment placed in your officeVoIP service provider’s data center
Who managesyour employeesVoIP service provider
Additional EquipmentRequires a Gateway or SIP Trunk for Unified MessagingNone when used with VoIP phones
TelephonesTraditional touch tone phonesVoIP phones or touch tone phones

Hosted VoIP PBX System Advantages

The benefits you gain result from these four key changes in technology:

  • Internet technology – You don’t have to pay the Phone Company a large per minute charge for long distance or international calls over switched circuits.  Calls passing over the Internet as IP traffic do not incur such high toll charges as phone calls do.
  • High speed computers – Make it possible for space age PBX software to deliver advanced features and natural scalability.
  • Excellent PBX software – You can do your own feature and extension changes via a web interface and the software that runs on those high-speed computers.  You don’t have to pay for a phone company technician or wait on a service call.  You can add 10 new staff members in just a few minutes, for example.
  • VoIP technology – the excellent quality of your voice conversations is assured.  High performance software switched conversations suffer very little jitter or dropout because of the performance and call quality features provided.

Hosted VoIP PBX System References

Bruce Brownlee

Bruce Brownlee

Bruce Brownlee is AVOXI's Digital Marketing Director. Bruce's background includes lead generation, SEO, web analytics, and web development for AVOXI. Bruce has an engineering, telecommunications, and software development background, working with Lotus Development, Blackstone & Cullen, EMC, Cox Communications, Travel Channel, Brand Fever, and AVOXI.
Bruce Brownlee
Bruce Brownlee

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