Businesses make calls internally using a  PBX (Private Branch Exchange). The PBX also connects to the public switched telephone network (PSTN) via trunk lines. Because they incorporate telephones, fax machines, modems, and more, the general term “extension” is used to refer to any end point on the branch.

PBXs are differentiated from “key systems” in that users of key systems manually select their own outgoing lines, while PBXs select the outgoing line automatically. Hybrid systems combine features of both.

Initially, the primary advantage of PBXs was cost savings on internal phone calls: handling the circuit switching locally reduced charges for local phone service. As PBXs gained popularity, they started offering services that were not available in the operator network, such as hunt groups, call forwarding, and extension dialing. In the 1960s a simulated PBX known as Centrex provided similar features from the central telephone exchange.

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A PBX will often include:

• The PBX’s internal switching network.
• Microcontroller or microcomputer for arbitrary data processing, control and logic.
• Logic cards, switching and control cards, power cards and related devices that facilitate PBX operation.
• Stations or telephone sets, sometimes called lines.
• Outside Telco trunks that deliver signals to (and carry them from) the PBX.
• Console or switchboard allows the operator to control incoming calls.
• Uninterruptible Power Supply (UPS) consisting of sensors, power switches and batteries.
• Interconnecting wiring.
• Cabinets, closets, vaults and other housings.