Let’s get some background and terminology out of the way first. What the heck is a PBX? The letters stand for private branch exchange: private because it is located on the customer’s premises, branch because it connects to the public switched network on one side and phones on the other side – it’s the end of the line, and exchange meaning switch. When the acronym gained currency, PBXs were owned and operated by the telephone operating company, so they weren’t private in the sense of possession; they were private in the sense that no other company used that switching facility. The first PBXs had no automation: real people, called operators (later attendants), made the connections. The lines that connected PBXs to the public telephone network were, and are, called trunks. The PBX provided connections to local telephones and similar equipment, called collectively stations or extensions.
Inventing the PBX was a win for the telephone company in several ways. They needed less copper, since there were many more stations than trunks, and trunk lines were much longer than station lines. They needed fewer of their own operators, since the company (wo)manned its own switchboard. They needed less space in the central offices where switching was performed. The PBX also helped the companies that used it: they could deliver personalized service with their own personnel, and internal call quality was usually excellent, because there were hundreds of feet, not miles, of copper between the phones.
Automation arrived in the in the form of switches that made connections in response to dialed digits on the telephone. PBXs were created to take advantage of that capability, and the number of operators declined.
Then a regulatory bombshell exploded. In 1968, the FCC handed down a ruling called the Carterphone Decision. They said that end users could, under certain conditions, connect their own equipment to the public telephone network – they didn’t have to lease telephones and PBXs from their telephone operating company. An orgy of innovation ensued, with whole classes of equipment springing up and being adopted almost overnight. Answering machines. Wireless phones. Fax machines. Modems.
Many companies, attracted by the opportunity to sell products directly to customers instead of stodgy telephone companies, entered the PBX business. The combination of feature-starved customers, hungry manufacturing companies, and a technological revolution driven by the integrated circuit meant the the PBX gained features and capabilities at an amazing rate. Some examples, not all of which are wonderful things from the point of view of the average person:
- Least cost routing: you dial the number; the PBX looks at all the available trunks, tie lines, foreign exchange lines, WATS lines, and makes the connection the cheapest way.
- Automated attendant: you don’t get to talk to a real person. “Press 1 for sales, 2 for customer support, and 3 to order a pizza.”
- Voicemail. ‘Nuf said.
- Automatic call distribution: you call American Airlines, and the PBX routes your call to a free agent, while keeping statistics on each agent’s performance and equalizing the workload across the agents on duty.
- Outbound telemarketing: the PBX places calls to phone numbers supplied by a computer. When a call is answered, it is directed to an agent (or, even worse, played a recording).
- Call Detail Recording. the PBX keeps track of who called whom, and how long they talked.
- Centralized Attendant Services: One group of operators in Pierre, North Dakota can handle the calls for fifty small department stores.
- And a host of station features: paging, intercom, transfer, conferencing, etc.
When digital trunks like T1 and ISDN came along, PBXs sorted out all the conversations and sent them where they needed to go. They did that using circuit switching, just like they did with analog trunks.
When IP telephony appeared, the role of the PBX changed. It became responsible for setting up and tearing down calls, implementing features and doing some kinds of digital signal processing, but most of the actual switching was performed by the local area network to which the PBX was connected. The PBX was turned on its head: it started out doing switching and not much more, gained a bunch of capabilities over decades, and then dropped the switching role.