How Does a Hosted PBX System Work? 

Business woman using PBX system

A quick Google search will tell you that hosted PBX systems are exceedingly popular. There are hundreds of providers talking about the benefits of hosted PBX systems – both for your business and your customers. And we agree with all of them: a hosted PBX system is very beneficial.  

But in the discussion about the benefits of a hosted PBX system, many providers forget to talk about how a hosted PBX system works. That’s why we’re here! To give you a step-by-step, plain-English summary of the inner workings of a hosted PBX system. 

But First, What is a PBX System? 

Before we understand hosted PBX, it’s good to understand what a PBX even is. PBX stands for “Private Branch Exchange” and is a system that creates a private telephone network for businesses. This allows internal calls to be kept internal, rather than sent over the Publicly Switched Telephone Network (PSTN). Not only does it help employee-to-employee calls remain secure, but it also bypasses the public call fees charged on the PSTN.  

PBX systems began as a bunch of physical switches and wiring that was stored in a box. Sometimes even a room – in a company’s office space. All internal calls were routed through these switches and any external calls were routed through another switch that was connected to the PSTN. 

Did You Know? The earliest PBX systems were invented in the 1960s to reduce telephony costs for businesses. They were called PABXs (Private Automated Branch Exchanges). 

With us so far? Good!  

Hosted PBX Systems and How They Work 

Unlike its predecessor, a hosted PBX system doesn’t need physical hardware, or its own office space to connect calls. It is “hosted” on a server in your VoIP provider’s data center, connecting calls virtually using an internet connection, SIP devices, and a combination of internet-based protocols like VoIP, SIP, and others. 

Let’s take you through it step by step. Though we’ll do our best to keep it simple. 

  1. Leah picks up the phone and dials Mindy in accounting – she needs to ask her a question about some payroll numbers. 
  1. Immediately, the hosted PBX system uses Session Initiation Protocol (SIP) to initiate a connection between Mindy and Leah’s SIP devices using your existing data network (i.e. your current internet connection!).  
  1. Once the connection is made, the hosted PBX system uses a VoIP server to convert Leah’s voice signals into digital data and compress that data into data packets. 
  1. These packets are then sent across the internet to their destination using a router. 

Quick Tip: Think about data packets like sequential packages. They may vary in size and structure, but each one carries an important piece of information. This information identifies who sent the packages and who is supposed to be receiving them. 

To get more technical insight about data packets, click here

  1. Those data packets are then routed to the right recipient – in this case Mindy. 
  1. Her SIP device decompresses the data packets (like a virtual unboxing) into sound that Mindy can hear through her headset – it’s Leah! 
  1. The two women converse as normal and when Mindy hangs up, the hosted PBX system terminates the connection between the SIP devices and stops sending data.  
Infographic about PBX system

Still Have Questions? Magic Apple is Here to Help! 

We know this is a lot to take in, and that’s okay! We, here at Magic Apple Technology, have spent years becoming hosted PBX experts so you don’t have to be. Our top-tier hosted PBX systems are designed to give you the communications you need and the peace of mind you crave. Ready to find out more? Reach out to us today

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