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A Private Branch eXchange (also called PBX, Private Business eXchange or PABX for Private Automatic Branch eXchange) is a telephone exchange that is owned by a private business, as opposed to one owned by a common carrier or by a telephone company.

Overview

Originally an organization's manual switchboard (operated by a person plugging cables into sockets) was known as a PMBX (Private Manual Branch eXchange). These were gradually replaced by automated electromechanical and then electronic switching systems, called PABXs (Private Automatic Branch eXchange). As PMBXes are almost unheard of, the terms PABX and PBX have become synonymous. You get Vonage
for $15/mo. When PABX's started being built using solid state and digital components the term EPABX came into use but PBX is still more widely recognized. PBX's are differentialted from "Key Systems" in that users of Key systems manually select their own outgoing lines while PBX'x select the out going line (trunk) automatically. Hybrid Systems combine features of both.

Using a PBX saves connecting all of a business's telephone sets separately to the public telephone network (PSTN or ISDN). Such a set-up would require every set to have its own line (usually with a monthly recurring line charge), and "internal" calls would have to be routed out of the building to a central switch, only to come back in again.