What Is a Business Telephone System?


What Is a Business Telephone System?

When a person calls your office, who answers? It’s likely someone at the front desk, such as a receptionist. The call probably has to go to another employee at your company, and sometimes multiple calls will come in at once. Luckily, we have a business telephone system to make seamless transitions from line to line.

The advancement of the business telephone system is a fascinating one that dates back to the 1800s. As technology has continued to become more of a part of our everyday lives, it has, of course, crept into the world of business telephone systems as well. Today, cloud-based phone systems have become a viable option for business people.

If you’re considering a business telephone system for your office, you’re going to want to educate yourself on the topic before coming to a decision. That’s why, in this article, we’ll define a business telephone system as well as explain the various types and necessary components. We’ll even delve into cloud-based phone systems in case you’re thinking of getting one of those.

What Is a Business Telephone System?

As we hinted at in the intro, a business telephone system is designed to accommodate busy office environments and allow for multiple calls to be rerouted at once. This is incredibly convenient for all employees at the office because the calls can be directed to the appropriate parties. It also benefits the caller, who can immediately reach the desired party even without necessarily knowing the number to their direct line.

A business telephone system is not the same as a central office line. These are an element of key telephone systems, which we’ll discuss later in the article. With central office lines, call handling is the crux of the system. Business telephone systems can accommodate many other features, as you’ll soon learn.

A Little Bit History of Business Telephone System

To understand what an asset a business telephone system is, it helps to refer back to the history of the telephone network. These networks first began appearing towards the end of the 1800s. To route a call, the telephone company had to use a manual switchboard. Yes, it was someone’s job to move all calls to the appropriate parties back then.

What came next was a private branch exchange or PBX systems. At the time, they were referred to as private automated branch exchanges or PABXs, but the A was later dropped.

It wouldn’t be until the 1960s that PBX systems were introduced as a solution to skyrocketing telephone network costs. PBX systems at the time still made use of a switchboard, as late as 1975. Still, businesses then were thrilled to have another solution than manual switchboards, and so they gladly used PBX systems.

PBX Systems, Like Any Other Tech, Continued To Evolve.

Eventually, Time Division Multiplexers or TDM PBX systems rolled out. Now, companies had the option to add hold music, use auto-attendants, transfer calls, and have a dial tone. This was huge!

For a while, PBX system technology kind of stalled until the Internet boomed in the late ‘90s/early 2000s. This was a good thing, too, because if your company had a ‘70s-era PBX system, it was very pricy and difficult to update it.

Voice over Internet Protocol or VoIP became the norm in 2008. We’ll talk a lot more about VoIP systems later in this article, so don’t miss it. For now, we’ll say the creation of VoIP PBX systems allowed for speech-to-text features in voicemail, call recording and unified messaging. It also helped businesses get rid of their old, clunky PBX systems from decades prior.

These days, business phone systems have become even more advanced thanks to the cloud.

What Are the Types of Phone Systems?

Private Branch Exchanges

As we mentioned in the last section, private branch exchange or PBX phone systems helped make huge leaps and bounds to bring us to business telephone systems as we now know them.

With older PBX systems, you couldn’t have more than maybe 50 lines. Given that some other phone systems allowed for 1,000 lines and you could see how this would be a major hindrance. That was especially true for large businesses.

PBX-linked devices are called extensions. We say devices rather than phones because you could also hook up your computer modem or fax machine to a PBX system. Extensions would go under a numbering plan.

When they were first introduced, PBX systems were cost-effective and pretty much the only effective option for businesses juggling multiple phone lines. As we discussed above, though, with time, PBX systems became kind of antiquated thanks to the dawn of the Internet and all the tech that came with it.

That’s why there are now Internet Protocol or IP PBX systems. These are VoIP-ready systems that are much more modern.

Key Telephone Systems

Then there are key telephone systems, which date back to at least the 1930s. These systems require the user to choose their line selection via a button. There are two subtypes of key telephone systems: electronic shared-control systems and electromechanical shared-control systems.

Electromechanical shared-control systems came first. These used a series of relays. There were a variety of key systems back in the day, such as 1A1 and 1A2, 6A, and 1A. The latter were the first of their kind and thus the oldest. They included up to three key telephone units.

By the time 1A1 systems came around, they could use just a single key telephone unit. By 1964, 1A1 systems were replaced by 1A2 systems for easier maintenance and setup.

Later came electronic shared-control systems. These reduced wire cabling and even used PBX elements. With electronic systems, businesses could now use station-specific limitations, speed dialing, signaling sound selection, remote supervision, caller ID, call accounting, and answering machines.

Hybrid Systems

A newer business telephone system that came to fruition in the past few decades, hybrid systems combine the best features of PBX and key systems. These are often seen on trading floors at financial companies, used even today. That’s because hybrid systems are surprisingly modern and sophisticated with their digital features.

VoIP Systems

Once the Internet became commonplace, business telephone systems evolved even further. That gave us VoIP or Voice over Internet Protocol systems. These rely on the broadband Internet. Not only is a VoIP business telephone system more affordable than many other telephone systems, but setting one up is a breeze.

Another perk is if your staff is too busy to take on calls at the front desk, you can always rely on your virtual receptionist. This digital receptionist makes use of app technology to transfer calls.

Remember that PBX systems can use the Internet as well. These IP PBX systems can also be considered a VoIP business telephone system. If you already use customer relationship management or CRM software at your office, you can link your VoIP tech to it to add call logging to your CRM.

Multi-Line Systems

Finally, there are multi-line systems. These operate on a single unit that has multiple phone lines passing through it. An operator must be stationed at the phone to decide whether the call gets picked up. Voicemail functionality is available for the missed calls.

There are also four-phone systems, which would fall under the multi-line system umbrella. As the name suggests, these allow four phone lines to connect at the same time, including toll-free or local numbers.

Who Needs a Business Telephone System?

If you’re a company with more than a few employees, then you need a business telephone system. From startups to small businesses and Fortune 500s, today’s telephone system technology has evolved to the point where the system can handle far more than the several hundred lines of yesteryear.

While it’s true that nowadays everyone has their own smartphones, these are not replacing business telephone systems anytime in the foreseeable future. For a professional appearance, a company needs its own dedicated business phone system.

Smaller or mid-sized companies may need just a single phone system, but the bigger your company becomes, the less this is the case. If you’re a large Fortune 500 with many employees, then your phone needs change. You may instead require multiple business telephone systems for all the communications your company does on a daily basis.

What Are the Components of a Call Center Business Telephone System?

Call center business phone systems operate differently than your standard business telephone system does. Instead, these call center systems are more focused on outbound and inbound phone calls. Outbound calls are those the call center is making itself while inbound calls refer to people calling in.

Comparing the two types of phone systems, outbound systems are more sales-driven. After all, when you’re making a call in a call center environment, it’s likely to potential clients to attempt to drum up business. Inbound calls, on the other hand, are not sales-driven. Instead, your goal is to provide information, answer questions, and solve problems.

Both systems are valuable and crucial to a call center. We’d argue that a call center might require a more dedicated business telephone system for inbound calls than outbound ones. This is because most call centers receive constant, continuous phone calls during their hours of operation. They need a system that can meet their often strenuous demands.

Call centers might make lots of outbound calls as well, but perhaps not quite at the volume of inbound calls, they’re receiving. The call center can also reduce the number of outbound calls they make, whereas they cannot control how many people call and how often.

Cloud-Based Telephone Systems, a Modern Marvel

We promised we would touch on cloud-based phone systems, and now we’re going to. Cloud computing is becoming more and more commonplace, and that’s for a very good reason. Being able to secure your data in a cloud and then take that data with you anywhere, anytime is incredibly convenient.

A cloud-based phone system would similarly be accessible no matter where your employees are. That could make your company even more efficient as your staff can work from just about anywhere.

Not only is a cloud-based phone system cutting-edge tech, but it’s relatively cheap compared to other business telephone systems.

You can set up your own cloud-based system on your preexisting VoIP system or even an IP PBX system. While cloud-based systems take a lot of work off your plate since a third party is handling the hosting, if the third party is having issues, that can affect your phone capabilities. That said since the third party typically takes care of maintenance, that’s even less work you have to do.

If your company grows, which any healthy business should continue to do, cloud-based phone systems are a stellar solution. You can add on more lines as needed and never have to worry about the phone system hogging up valuable room in your office. Remember, the cloud-based system is all off-site.


Business telephone systems have existed in some form since the 1800s. We’ve come a long way from having to use manual switchboards to address and redirect calls. Today, the Internet has made it much easier for companies to create a business telephone system that works for them. Whether it’s an IP PBX system, a VoIP system—or today’s modern marvel—the cloud-based phone system, there are many options no matter the size and scale of your business.