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The PBX: What It Is, How It Works

Lee Goeller's "The PBX: What It Is, How It Works" was Chapter One of The BCR Manual of PBXs, a ring-bound information service published by Business Communications Review from 1980 to 1990.

To reduce file sizes, we have posted the chapter in five parts, and configured diagrams to open as separate windows.

The PBX: What It Is, How It Works

Part One: The PBX and Its Competitors

PBX stands for Private Branch Exchange, and each word has a very special meaning. "Private" and "branch" are fairly straightforward; private implies non-public, or something used by a single organization or group, while branch suggests some sort of remote subsidiary. However, both modify "exchange," and that is the most interesting word of all. In American telephony, the word "exchange" has no separate meaning in the professional literature, although an "exchange area" is usually defined as a geographical region in which telephone charges are uniform. In common usage, an exchange is sometimes taken to mean a telephone "central office" or CO, a telephone company building to which local customers are connected, although there may be several COs in an exchange area. Office, in turn, is further taken, incorrectly, to mean the switching system within the central office building that is used to connect one customer to another or to a trunk to another central office. Just to add to the confusion, an "office code" is the first three digits of a regular seven digit telephone number, and one central office switching system may serve five or more office codes, while a PBX, set up for direct inward dialing (DID), may share an office code with several other PBXs as well as individual telephone customers.

One early writer points out that an exchange, at one time, was a club or private organization. Vestiges of this meaning continue today in "labor exchange," "stock exchange," and also in some churches where women's clubs are called "women’s exchanges." Members of such organizations subscribe to the principles of the organization and thus may be called subscribers. In the early 1880s, the relatively exclusive clubs of people with telephone services called their members subscribers in just this sense. The practice has continued to this day, much to the annoyance of telephone company public relations people who have been trying for years to make the conversion to "customer."

In any event, a PBX, or Private Branch Exchange, is a (usually) small switching system on a customer’s premises (remote from the telephone company’s central office) and dedicated to the private use of that one business or organization. In recent years, "tenant service" in an office building or industrial park has permitted several organizations to share a PBX (along with WATS lines, access to specialized carriers, etc.), blurring the meaning of "private," while some of the newer digital central office switches can support remote concentrators or remote switching units on the customers premises, creating branches of the main CO switch that differ from a PBX in various technical ways but can be arranged to perform the same service.

A PBX differs from a central office switch in two very important ways: it must, in general, have somebody available to say "Good Morning, XYZ Company" and then complete the call. Then, if the call reaches the wrong person, some means must be provided to transfer that call to another extension. Central offices no longer have their own operators and, for many years, we have been conditioned to try again when we get a wrong number in the public telephone network.

At the smaller end of the spectrum, Key Telephone Systems, epitomized by the ubiquitous 1A2, compete with PBXs. A key system may have fifty or more telephones associated with it, and many advanced features. However, there is a philosophical difference between a PBX and a key system: a PBX has a relatively high proportion of calling among telephones it serves, while a key system has most of its traffic with the outside world and is used very little for internal calling.

An intercom system is like a PBX in many ways, and may use very similar equipment. However, an intercom system does not connect to the outside world. Intercoms are for internal use only. Don’t confuse an intercom system with the intercom channel normally provided between key telephone sets. The latter is an adjunct to the key system, usually provided to assist in announcing calls after the secretary or receptionist has screened them. Even so, the intercom feature of a key system does not access trunks to other systems or to the central office.

It is not uncommon for telephone designers to hold the belief that PBX systems are for relatively large customers, while key systems are for smaller business and institutional customers. Although key systems are often more economical than PBXs in small sizes, it is important to note that their method of operation and features are quite different from those of a PBX; indeed, key features are of primary interest to station users. A key system can render service without a PBX, but it is relatively difficult, as we will see, to render PBX service without key systems or something similar which performs their functions.

One of the somethings similar is the so-called hybrid system. A hybrid looks like a key system in that it has multi-button telephone sets on user desks which can handle several lines, put calls on hold with a hold button, etc., but it is actually a small PBX with electronic telephone sets. The name "hybrid" was first applied in the early days of Interconnect when state PUCs permitted telephone companies to charge much higher rates for the same CO trunks if they served a PBX rather than a key system. Thus it became economically important not to call a small system a PBX, and various elaborate rationales were developed for the name "hybrid." One suggested that if you could get "outside" without dialing 9, it was a hybrid, while another definition suggested use of hybrid because the voice path is analog while the path for control signals is digital. However, if one insists on being rational, there is no technical rationale for differentiating hybrid systems from PBXs.

Centrex is another PBX competitor, more often than not at the large end of the customer size range. In a Centrex system, two features are added to basic PBX service: direct inward dialing (DID) (bypassing the switchboard attendant), and identified outward dialing (IOD). As originally offered, Centrex was divided into two types, depending on the serving vehicle: Centrex CO, using central office equipment, and Centrex CU, using a PBX modified to receive incoming calls from the public network via tie trunks rather than CO trunks.

Obviously, any PBX that can handle tie trunks can handle DID from the CO. For years, however, very few COs could outpulse toward PBXs with information appropriate to identifying the called extension. A CO considers a PBX to be a piece of station equipment like a Princess Telephone; a telephone set has little reason to receive dialing information. Traditionally, a CO rings toward station apparatus, and accepts dial pulses or DTMF signaling from the station. Thus only COs arranged for "line side out-pulsing" can provide DID service to PBXs.

IOD, in the classic Centrex arrangement, worked only on toll calls on one group of dial-9 equivalent trunks. Not working on FX lines, tie trunks or WATS facilities, it was of small interest to most business customers. In the post-divestiture world, this artificial limitation on IOD has, in many telephone companies, been lifted, and service competitive with PBX call detail recording is available. IOD, now mostly automatic rather than operator handled, is tricky. When a PBX is arranged to be a Centrex vehicle, it must transmit the identity of the calling extension to the CO so that the CO can enter the callers identity on the automatic message accounting (AMA) tape. Because AMA is associated with specific trunks going from the CO to some other telco switch, it is usually quite difficult to get a CO to record AMA information on calls that do not go via its own trunks. This explains why FX and WATS lines, as well as tie-trunks, were not monitored in Centrex CU, and Centrex CO followed the same tariffs.

For some years prior to divestiture, AT&T policy favored PBXs rather than Centrex, and efforts were made to phase Centrex out. When the split cane, AT&T got the PBXs, while the operating companies retained the Centrex CO switches that provided service to many very large customers. Ownership of the telephone sets served by Centrex switches clouded the issue, but with nothing to sell but CO switching, the Bell companies are now aggressively pushing Centrex CO once again. Their alternative is to have several million lines of CO switching lying idle if their customers move to PBXs sold by AT&T, the interconnect companies, or their own separate subsidiaries. If that were to happen, residential customers and small businesses would have to pay more in regulated rates to support the idle former Centrex equipment.

Centrex has certain advantages from the customer point of view. Over the years, the two most important have turned out to be the central office battery, which can keep the system operating for at least 30 days when external power is lost, and the ability to integrate a number of scattered locations into one system. This latter feature is particularly valuable to municipal governments and banks. Both have a number of offices in the same general area (city hall, police and fire departments, school board, library, etc., for government, and countless branches for banks), and a single unified system offers both economy and efficiency.

Other possible Centrex advantages include switching equipment on telco property rather than that of the customer, continuing updates of equipment to the latest "state of the art," centralized maintenance, etc. As we have seen, the principal disadvantage of Centrex, the limited capability of the available CDR, has been eliminated. Further, customer access to the system for administration, one of the most important features of modern PBXs, is being added to some CO Centrex switches. However, another very important modern PBX feature, non-modem data transmission, is somewhat harder to deal with.

A CO Centrex switch is, by definition, in the central office and not on the customer premises. Thus the wires from the user telephones to the switching equipment tend to be longer than similar PBX wiring. This length, both for cost and esoteric electrical engineering reasons, makes high speed data to the user's desk much more difficult. Further, most of the central office switches (older crossbar and newer No. 1, 2 and 3 ESS) use analog space division switching matrices (see Section V of this chapter) that offer some problems for handling modern data.

One solution is for the Bell and non-Bell operating companies to install modern digital CO switches such as Northern Telecom's DMS 100, AT&T's 5ESS, and similar switches from Ericsson, ITT, GTE, and others. These switches can support remote switching units on customer premises, connected by fiber optics to the central switching equipment, and can handle not only local data like a digital PBX, but also data between customers served by the same CO. Further, these switches are also being used for "equal access" to long distance carriers such as AT&T and MCI, both of which are putting in digital toll switches and digital long haul trunks which promise desk-to-desk digital connectivity for widely scattered business users. However, digital PBXs can connect to local digital CO switching systems as easily as remote switching units and offer the advantages of ownership vs. lease and a higher degree of autonomy in their administration. Thus the tradeoffs between Centrex and PBX must be carefully studied in the mid-1980s.

A very recent factor that may help is new standards for the ISDN, or Integrated Services Digital Network. After many years, CCITT, an international standards organization, has finally come up with some more or less concrete standards for the world's future all-digital telecommunication network. Although there is still a long way to go, and not all participants are happy, both PBX and CO switching may be on the verge of productive standardization that will let us enter a digital future where modern technology will permit advances in telecommunication to go beyond cost reduction for voice conversations.

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Copyright 2006 Lee Goeller. All Rights Reserved.