Voice communication technologies have continued to evolve and they remain an integral part of any business operation. One leading voice communication technology is the Public Switched Telephone Network (PSTN). It is a vast collection of copper lines, fiber-optic cables, wireless transmission links, satellites, and submarine cables that lets you make calls anywhere in the world. An alternative to PSTN is the cloud Hosted PBX (Cloud Hosted Private Branch Exchange) technology that uses the internet to make voice calls.

Let’s compare the two and understand what requirements each one caters to.

How does PSTN work?

PSTN is a vast array of global telecommunication channels managed by many different businesses and government bodies. It is made up of local offices and international gateways that govern different geographic areas. They switch calls between regions until the call reaches your destination. While it takes only a few seconds for the call to be communicated between 2 sets of phones, the above components function in the background to ensure that the connection takes place.

The process can be summarized as below:

  1. Your phone set converts sound ways into digital signals.
  2. The signals are transmitted to a terminal that forwards them to the central office.
  3. The central office routes the call to a tandem office. If this is the final call destination, the tandem office will send the call to the destination terminal. If not, the call will be further transferred to an International gateway for non-local calls.
  4. The terminal sends the call to the destination phone, which re-converts the signal to a sound wave.

How does PBX work?

PBX converts your business into a local exchange by establishing a single large connection, so all company phones are linked centrally. This minimizes the need for multiple telephone lines connecting to PSTN. You can set it up by purchasing PBX hardware like switches, hubs, and routers, or you can use a cloud-based PBX service that routes your calls over the internet.

Traditionally, PBX systems had their proprietary phones; more modern enhancements mean users can access this technology on compatible devices.

PSTN vs. PBX – Key Differences

PSTN vs. PBX - Key Differences

The main point in the discussion of PSTN vs. PBX is that PBX allows businesses to have more phones than PSTN or physical line connections. Moreover, PBX also has additional features like voicemail, call transfer, IVRs, call recording, call queues, etc.

  • PBX is popular in the private sector, whereas PSTN is widely used in public sector enterprises.
  • PBX is limited in its scalability in comparison to PSTN technology. For example, PSTN can support hundreds of thousands of devices (telephones), but PBX is only limited to a few thousand.
  • PBX technology makes use of proprietary protocols for controlling telephone communication. PSTN, on the other hand, makes use of open-standard protocols while communicating between telephones and switches.
  • PBX is highly suitable for connecting remote branch communication systems. And PSTN is used for connecting to other telephones, PBXs, and PSTN Switches.

Overall, hosted PBX gives better call capacity, bandwidth utilization, customization, and sound quality performance.

 Which service should I use?

PSTN is useful for low-cost operations with minimal long-distance communication requirements. On the other hand, companies with geographically dispersed locations and long-distance communication needs can benefit more from hosted PBX services.

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