The Evolution of Cloud PBX

Posted on August 2, 2021

Modern telecom is easy to take for granted in our era of fast-paced communication. Today, calling capabilities are more seamless, scalable and flexible than ever before. But that wasn’t always the case. Let’s walk through a brief history of how Private Branch Exchange (PBX) systems evolved and how these systems have influenced the telecom landscape.

The First PBX Systems

PBX systems were first introduced in the 1960s as a way for businesses to communicate in a more cost-effective way. At the time, operators would physically move switches connected to phone lines to facilitate a phone call. The switchboard system was costly and meant that businesses needed to go through their phone company’s switchboard to place calls, even to individuals in their own organization. As phone systems became a more integral part of the business world, companies invested in their own switchboards and operators. The PBX system was born.

While PBX systems were considered a valuable investment and significant upgrade from going through the phone company, the cost to run the system was still high. The switchboard hardware was expensive and required physical space to store it. Owning a PBX system also came with the added costs of maintenance and required the business to have experts on location that could update and maintain the system. At the same time, the birth of PBX created a significant shift in business communication and enabled more organizations to power their own telecommunications.

Gaining Momentum and Complexity

In the 1980s, Primary Rate Interfaces (PRI) were introduced. These systems allowed businesses to manage multiple phone connections and leveraged automated switchboards that had entered the scene. A PRI used PBX equipment to deliver voice communication through T1 lines, which used copper wires to make end-to-end connections. PRI (also called PRI Trunking) soon became the telecom standard for business calling since the technology could support 23 channels at the same time.

Communication demand increased during this era leading to further evolution of telecom technology. PRI connections formed the foundation of future technologies such as Voice over Internet Protocol (VoIP) and Session Initiation Protocol (SIP) trunking.

Growing PBX Capabilities via the Internet

With the dawn of the internet in the 1980s and ‘90s, PBX systems were integrating with computers, enabling new calling capabilities and driving more adoption. Eventually, VoIP (Voice over Internet Protocol) enhanced PBX even further by creating a way for businesses to integrate their various communications services. Eventually, SIP, a protocol used to transmit voice and data between a network and a user, replaced PRI connections. SIP Trunking uses the internet to establish voice circuits in tandem with an IP PBX or traditional PBX with an IP gateway. By harnessing this technology, businesses gained a robust alternative for a traditional PRI with lower costs. As new internet-powered resources like the cloud were introduced, telecom was finally able to shift from on-prem to hosted solutions.


The cloud has become known for enabling flexibility. As a result, many enterprises are opting for cloud-based PBX systems instead of on-prem versions because they’re easier to deploy and manage. By hosting their PBX virtually, businesses receive cost savings and increased flexibility that their on-prem counterparts don’t offer. For example, cloud systems are hosted offsite in a secure location, eliminating the need for businesses to maintain the system on their own. Further, companies get more predictable billing for their system since they aren’t hit with unexpected maintenance costs. Many providers also charge per-user, so companies pay only for the services they need.

Cloud-based PBX systems also allow for easy scalability since companies can add or remove user licenses whenever they need to. In this way, businesses that are growing rapidly or reducing their footprint can quickly and easily adjust their calling services according to their needs. Calling services for contact centers, for instance, can be up and running virtually overnight—something that on-prem PBX solutions simply aren’t equipped to do.

Today’s Cloud-Based PBX Systems

Ultimately, cloud-based PBX systems offer a higher degree of control for companies who want to fine-tune their services to meet their specific needs. Another configuration that IT teams are increasingly turning to for a tailored telecom experience is known as BYOC (Bring Your Own Carrier). This approach is used in tandem with cloud-based PBX systems to unlock a higher level of customization and flexibility.

The BYOC model means that enterprises choose the carrier they want to power their Unified Communications as a Service (UCaaS) or Contact Center as a Service (CCaaS) solutions. With BYOC, users retain control over dialing plans and phone numbers, E911 location advantages and call-routing solutions offered by their provider.

In addition, some providers (such as Flowroute) offer powerful Application Programming Interfaces (APIs) that can enable additional services like SMS/MMS messaging as part of their suite of telecom resources. With these capabilities, companies can better serve their customers and adjust to their changing preferences.

The PBX systems introduced decades ago signified an early preference for control and customization with business telecom, which spurred further innovation in subsequent years. As the future of telecom continues to evolve, customers can rely on carriers like Flowroute to enable modern solutions that allow them to get the most from their communications services.

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