Hardware and Software Internet 3.18. Virtual Private Branch Exchange (PBX)

Chances are, you’ve spent a pretty fair portion of your life talking to people through a Private Branch Exchange . . . and you probably didn’t even know it. But now that you’re in business, you’re probably a bit jazzed about getting some of the fancy phone stuff. Stuff like extensions (“Dial 1 for sales, dial 2 for technical help”), music that plays when a caller is on hold, call forwarding, or even a night line. It doesn’t matter that you’re running your business from a mobile phone; all that extra stuff makes it sound like you’re a real business.

And if you’re outsourcing many of the functions of your business, it doesn’t make sense to have a phone number in Michigan for sales, one in Florida for technical help, and another in San Francisco for orders. And each person who picks up the phone gives your caller a different company name! No, you want one phone number and you want many of the features that other businesses have.

A “private branch exchange,” or PBX, is the juice that delivers all these features, such as extensions, voice mail, call forwarding, and so on, that you normally associate with a business number. In the old days, a PBX was a box of hardware, some pricy phones with lots of buttons, and a bit of software that allowed businesses to string a bunch of phones together into one (or maybe more) incoming/outgoing phone lines. When someone calls in to the PBX, they are directed to “extensions” that are routed by that PBX, which physically divides the one phone line into many lines, each with their own extension and some piece of hardware―phone, fax, or computer―attached to that line.

As you might imagine, a hardware PBX costs quite a pile of dough not only to set up, but to pay for each month. Your phone bills can climb from tens of dollars to hundreds or thousands of dollars, so a physical PBX is probably well out of your reach. Not only that, the hardware version is geographically located; it sits in a building somewhere in the world and the phone extensions are connected directly to it. Stringing together phones from all over the country . . . or all over the world . . . is a very difficult, very expensive proposition. And, of course, your mobile phones are right out.

Ah, the wonders of information technology! If you want your own private branch exchange, you don’t need a physical one. You can always purchase or rent a virtual PBX, one that is run from a computer or server using local or toll-free phone numbers and VoiP to connect to real phones. To the outside world, it looks like you’re running a business with extensions and separate voice mail. Your “extensions” could all run into the same phone (why not?) or they can live all around the globe. They could include land lines, mobile phones, PDA’s, fax machines, PCs, or any of the features you’ve got on your spanking new iPhone.

Also called VoiP PBX, the PBX actually sits on a server somewhere; calls and PBX features are delivered through the Internet. If you rent these server services, you are purchasing a hosted PBX. You own no hardware―like Web site hosting, all you’re purchasing is a service.

You would evaluate the features of virtual PBX’s in the same way you would evaluate the services of a physical PBX. You start with the question, “what do I need?” You then determine what you can afford. Then you ask yourself what you will need and can afford in the future. That’s the key to all technology planning: a.) what do I need now and b.) what do I need in the future. You then make purchasing decisions that get you what you need now and allow you to get what you need in the future when you need it. So, if you want multiple extensions now but know you’ll need dynamic operator extensions in the future, go with a service that will let you add dynamic operator extensions.

While the basic task of a PBX is to make and maintain connections between phones, the world of PBXs and virtual PBXs is a veritable candy store of features. Almost all the features you can get from a physical PBX are available from virtual PBXs at a fraction of the cost (as low as 20% of the cost of an actual PBX in terms of setup and monthly fees). And there are some features that only virtual PBX services offer, such as voice mail email notification. So you should spend a few minutes getting to know all these features. Figure out what you’ll need before shopping around.

Here’s a pretty exhaustive list of PBX features and what they mean:

  • Automated attendant: this feature allows callers to select extensions from a menu rather than having to go through an operator―callers can reach the operator by dialing the extension “0.”
  • Automatic Call Distribution: ACD allows you to assign extensions dynamically to certain functions (such as sales, customer service, etc.). Calls are routed to the correct extension queue.
  • Autodialing: automatically directs fax and voice mail calls to the right device.
  • Call answer security: A feature of follow-me (see below), which can reroute calls to different phones until the line is picked up, call answer security requires a password to be entered for one or more of the extensions in the queue before a follow-me call can be connected.
  • Call blocking: You may not wish to receive any calls from a certain phone number, exchange, or area code. Call blocking prevents these calls from connecting.
  • Call forwarding: Allows calls to be redirected to other devices, such as a mobile phone or another extension, if an extension is busy or unavailable.
  • Call parking: Allows a person at one extension to put a caller on hold in order to free up the extension. Once a call is put on hold or “parked,” any person at any another extension can pick up the call.
  • Call pickup: Allows a person at one extension to pick up a call from another extension.
  • Call return: Dials the incoming number of a voice mail message. You listen to a voice mail message and, either during or after playback, you dial a certain number on the keypad; the system will the automatically dial the number associated with the message (if the call did not originate from a restricted phone). A useful feature if you access voice mail at inconvenient times, such as when you’re driving.
  • Call screening: When activated for any extension, call screening requires incoming callers to verbally identify themselves. That identification is passed to extension user when they pick up the phone (“You have a call from [pause] Fred Thompson”). The extension owner can then connect to the call or transfer it to voice mail or another extension.
  • Call transfer: Allows a user at one extension to redirect a call to another extension or device.
  • Call waiting: If a user at an extension is using the line and another call comes in on the same extension, call waiting alerts that user and allows them to put the one call on hold in order to pick up the incoming call.
  • Clickto-call: A feature only offered by virtual PBX’s, click-to-call allows users to click a link on your Web site to connect via their PC or PDA to your phone exchange.
  • Conference call: Allows more than two callers on a single extension line.
  • Dial-by-name directory (or Automated directory): This features allows you to create a name directory for your telephone exchange by assigning extension numbers to individuals. Callers can find individuals either by inputting some portion of the person’s name using the phone dial keypad or listening to a voice-generated list of individuals and extensions.
  • Dynamic operator extension: Most PBX systems, virtual or physical, allow callers to reach an “operator” by dialing the extension “0.” A dynamic operator extension allows you to allocate the operator extension to any extension on the system. With follow-me (see below), you can create a queue of extension numbers that the system will go through until an “operator” answers on one of the extensions.
  • Direct inward dialing (DID): This feature allows you to have several different phone numbers directed to an extension on the PBX. Callers can reach individual extensions either by dialing the base number and an extension or by dialing the phone number (or phone numbers) assigned to that extension. For instance, your sales department could be reached by dialing your base number, say 1-800-555-5555, and then dialing the extension “3.” With DID, you could also assign another number, say 1-612-333-3455, to your sales department. If you want, you could attach another toll-free number for people who live outside of Minnesota (1-800-334-5555). People can dial any one of these three numbers and the call will land at the exact same phone.
  • Do Not Disturb (DND): Allows users to disable ringing on an extension and, sometimes, to redirect the call to another phone.
  • Follow-me (also called Follow-me Find-me): Associates a string of numbers or extensions to each individual and directs incoming calls to each extension in order until the call is picked up. Since follow-me can connect to any phone, including your home phone (or a pay phone in your favorite bar, if you want), a good follow-me system should also offer call answer security, which allows you to set a password for one or more of the phones in the follow-me phone queue. The user (such as your spouse at home or a fellow tippler in the bar) cannot connect to the call until a password has been entered.
  • Information extensions: a PBX sometimes allows you to have extensions that only offer pre-recorded information, such as store hours, help, or sales pitches. Mail-only extensions are information extensions that also allow users to also leave voice mail messages, which can be retrieved by any assigned member of the organization.
  • Interactive voice response: Incoming calls are greeted by a voice response that allows users to select extensions by dialing keys or speaking into the phone.
  • Music on-hold (information on-hold): Plays music when calls are placed on hold. For virtual PBX’s, it sometimes costs extra to choose your own music. A variation of music on-hold allows you to play information while the caller is on hold and is called information on-hold.
  • Night service (or Day and night mode): redirects incoming calls during particular hours of the day (usually after hours) to either a night service or a voice mail system.
  • Notifications: These are alerts that alert you when voice mail has been left on an extension. These alerts can be delivered to your phone (as a physical PBX does), or email, fax, Web, pager, or instant messaging service.
  • Toll-free virtual calling: Also called “Virtual Calling Card,” this is actually a pretty neat feature that some virtual PBX’s offer. Toll-free virtual calling allows you to dial into your PBX using your business’ toll-free number (if you have one), enter a password, and then use your PBX to place a long-distance call. This is an incredibly useful tool if you find yourself on a phone that you don’t want to use to make long-distance calls, such as a pay phone, hotel phone, or your parents’ home phone.
  • Voice mail: Allows incoming voice messages to be sorted by extension or user.

So, them’s the apples in the basket. What probably matters the most is the drag on your wallet.

Most virtual PBX services, like mobile phone or banking services, have fairly elaborate pricing systems that can ding you coming and going.

Like physical PBX’s, mobile phones, and your own landline, you pay per minute of use. Some virtual PBX’s charge for blocks of minutes, which typically do not roll over from month to month, and a set rate for every extra minute the system is in use each month. Some charge only by the minute, and prices can range from around 4¢ to 7¢ per minute.

Many services offer several “packages” that are combinations of minutes and features, with the most expensive packages having the most minutes and features. This allows you to scale the services to your needs; as your business . . . and extensions . . . grow, you move up the scale to more expensive packages. Others offer set per-minute rates and charge flat fees for additional features. They offer the advantage of decoupling features from usage requirements. You may, for instance, need a huge number of minutes each month but only the bare-bones in terms of features. Alternatively, you may not need a big package of minutes but absolutely require some of the more advanced features.

Since the services bill you by the minute―even if you purchase a block of minutes―you need to really do your homework as to what constitutes a “minute.” Remember that I said you can be dinged coming or going? Well, you should find out where the dings are coming from before you sign up.

For instance, many services bill you in blocks of six minutes or some other fraction of an hour. The per-minute rate may be 5¢, but you’re paying for six minute blocks. So a one-minute call gets counted as a six-minute call and costs 30¢ or eats up six of your monthly minutes; a seven-minute call costs 60¢ or eats up twelve of your minutes. In this case, a “minute” actually means “six minutes” or “three minutes” or “two minutes.”

As another example, many virtual PBX services are actually two phone calls, not one. For instance, if you have call forwarding, there’s an inbound call (the original call to the extension) and there’s an outbound call (the virtual PBX forwarding the original call to another number). Virtual PBX services frequently bill these as two calls. Some PBX services also treat follow-me services as two calls, an inbound and an outbound call similar to call forwarding. In these cases, a “minute” actually means “two minutes.”

Nothing saves money like doing your homework.

All PBX services offer a free toll-free phone number and/or a local phone number. Some will charge extra for an “800” toll-free number (as opposed to 866 or some other toll-free area code) and some offer “vanity” phone numbers for an additional cost.

Because we’re talking virtual here, folks, you can have pretty much any local phone number you want. If you’re a fashion designer in Pocatello, Idaho, you might want to have a New York or Los Angeles local number assigned to your business. Why not? Those cities are the hotbeds of fashion and, no matter how good you are as a designer, consumers aren’t impressed by a Pocatello, Idaho area code. A virtual PBX allows your “phone” to be anywhere in the country, so use that to your advantage.

3.18.1. GotVMail


We consider GotVMail one of the best dollar-for-dollar bargains in the hosted PBX line-up. With monthly fees starting at $10 per month ($9.95, actually), GotVMail is specifically designed for very small, entrepreneurial businesses like yours and offers a fairly simple, scaled-down virtual PBX system consisting of the central, most important features:

  • Call attendant and multiple extensions with unlimited incoming calls (i.e., callers never get a busy signal)
  • Information-only extensions
  • Call forwarding and follow-me
  • Music on-hold (including custom music)
  • Voice mail and email notification/sending of voicemail messages
  • Custom greeting
  • Faxes
  • Dial-by-name directory
  • Call screening and call transfer
  • Conference calling
  • Night service
  • Toll-free virtual calling (virtual calling card)

GotVMail assigns your business a toll-free number. You can also use your local number, but you have to arrange with your phone company to transfer calls on your local number to the toll-free number assigned by GotVMail.

GotVMail has the simplest plans. While other services base plan pricing on both reduced minutes and reduced services, GotVMail breaks up plans based on minute blocks and number of extensions. The cheapest, at $10 per month, offers 5 extensions and 50 minutes per month of usage (additional minutes run 7.4¢ per minute). For $20 per month, you get ten extensions and 250 minutes (with additional minutes for 6.8¢ per minute). For $50, you get 20 extensions and 1,000 minutes (with additional minutes clocking in at 5.8¢ per minute). Finally, for $100 per month, you can activate 50 extensions and receive 2,000 minutes of calls while paying 4.8¢ for each additional minute. Each plan, except for the most expensive, all comes with a $25 activation fee.

3.18.2. Ring Central


Ring Central is one of the most affordable hosted VoiP PBX systems available. Offering four different plans with standard PBX features (extensions, call forwarding, call screening, voice mail, fax, and dial-by-name directory, music on-hold, call transfer, click-to-call) that differ primarily based on the number of minutes and extensions offered in each plan. The lowest plan clocks in at $10 per month, but it’s only right if you plan to spend very, very little time on the phone.

Like many other services, Ring Central offers either a toll-free number for your business or any local number, i.e., you can have a local number anywhere in the U.S. You could be located in Los Angeles and have a Miami number assigned to your business.

You manage your virtual PBX totally online with a Web-based account management site. The site allows you to configure your extensions, set call answering rules, night service rules, and other parameters. You can view your call logs at any time.

The service requires no special telephone or exchange hardware on your end. It can work any phone, PC, PDA, or fax machine. The PBX is instantly activated upon sign-up.

The four plans are:


100 minutes (additional minutes: 6.7¢ minute), 5 extensions, toll-free or local number, call forwarding, call screening, voice mail, Internet fax

$10 month (annual payment) or $15 month (monthly payment)

Business Plus

500 minutes (additional minutes: 5.9¢ minute), 10 extensions, toll-free or local number, call forwarding, call screening, voice mail, Internet fax, dedicated fax number, dial-by-name directory

$25 month (annual payment) or $30 month (monthly payment)

Business Power

1,000 minutes (additional minutes: 4.8¢ minute), 20 extensions, toll-free or local number, call forwarding, call screening, voice mail, Internet fax, dedicated fax number, dial-by-name directory

$45 month (annual payment) or $50 month (monthly payment)

Business Premium

2,500 minutes (additional minutes: 3.9¢ minute), 100 extensions, toll-free or local number, call forwarding, call screening, voice mail, Internet fax, dedicated fax number, dial-by-name directory

$80 month (annual payment) or $100 month (monthly payment)

3.18.3. Virtual PBX


Virtual PBX is one of the most popular VoiP hosted PBX solutions, particularly among small start-ups. It is also the oldest, having started VoiP business phone systems way back in 1997 when only the most hardy among us were using VoiP (yes, I was one of the hardy few). For your purposes, Virtual PBX is one of the only services that explicitly targets home-based and one-person businesses. However, it is also one of the priciest services that charges by the minute and per extension. We believe that Virtual PBX is probably out of your price range, but it is the Cadillac of virtual PBX systems so you should at least check it out to see what a full-service, top-of-the-line hosted PBX solution looks like.

Virtual PBX is one of the most full-featured virtual PBX services available (which in part explains its priciness). Features include auto-attendant, follow-me, call transfer, music on-hold, information on-hold, night service, direct inward dialing (for an additional $10 per month), caller ID, call screening, DND, information extensions, call waiting, call blocking, conference calling (for additional per-minute fees), information extensions, dial-by-name directory, ACD, and extra toll-free or local numbers (for an additional $10 per month per number).

While all Virtual PBX plans charge per minute, you can buy blocks of minutes for each of the numbers (toll-free or local) attached to your PBX. 1,000 minutes costs $30 per month while 10,000 minutes can be purchased for $450 per month (the larger the block you buy, the more you pay per minute―go figure).


Designed for one- or two-person businesses, the SOHO plan allows you to have 3 extensions for $10 per month and 6.9¢ per minute.

Small Business

Designed for two- to twenty-person businesses, the Small Business plan allows you to have up to 25 extensions for $12 per month per extension and 5.9¢ per minute.


Designed for large organizations, the Corporate plan allows you to have unlimited extensions for $9 per month per extension and 5.9¢ per minute.

3.18.4. Inteliphone


Inteliphone offers very low-priced, partial PBX features such as voice mail or follow-me. If all you want out of a PBX system is follow-me, you can purchase this from Inteliphone for only $20 a month and not have to bother with toll-free numbers or extensions. If, on the other hand, you want a PBX system, Inteliphone offers a fairly basic system at a competitive price.

Voice Mail

Day and night-service recorded greeting that allows callers to leave voice messages up to two minutes in length for $10 per month.


Full follow-me capability with call screening, caller-ID, music or information on-hold, and email notification for $20 per month.


Up to 90 extensions, 100 voice announcements, and 9 voice menus with group calling, call transfer, call forwarding, call screening, caller ID, music or information on-hold, night service, dial-by-name directory, dynamic operator extension, information extensions, and an extra toll-free number for $30 per month and 5.9¢ per minute (along with a $30 initial setup charge).

3.18.5. Phone Fusion


Phone Fusion offers the best pricing for very basic PBX services. If you are truly strapped for cash, Phone Fusion is probably your best bet for getting PBX services. Its basic service is really more of a virtual operator―you sign up with one phone number (say, your home or mobile phone), and for $10 per month, Phone Fusion will add follow-me, music on-hold, voice mail, call screening, and call transfer.

Their Virtual Attendant, at $25 per month and 4.9¢ per minute (for inbound, 3.5¢ for outbound calls), offers something closer to true PBX features, such as extensions, auto attendant, and follow-me.

3.18.6. Virtual Telecenter


Virtual Telecenter is probably the best deal we’ve found for hosted PBX. For a flat fee of $50 (with a one-time $50 set-up fee), you receive unlimited inbound call minutes and the following features: ten extensions, ten voice mail boxes, information extensions, call forwarding, call screening, call transfer, call return, call blocking, Do Not Disturb, dial-by-name directory, night service, custom on-hold music, email notification, virtual fax, and personalized greetings.

Outbound calls are billed at 6.9¢ per minute billed in six minute increments (so a one minute outbound call costs 41.4¢ (you see what we mean by dinging you whether you’re coming or going?) If you read the fine print, Virtual Telecenter will charge you for incoming calls if you use the system “excessively.” So, like all great deals―kind of like those low, low monthly payments on your mortgage that you receive a dozen times each month―it behooves you to proceed carefully.

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