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EVERYTHING YOU NEED TO KNOW ABOUT IP telephony and VOIP phone systems (pbx)

To understand what a VOIP phone system (PBX) is it’s important to understand the various technical terms related to the phone system and the various technologies involved. This text targets business owners who want to better understand this technology. If you are an IT specialist, you are probably already familiar with most of these terms.

Traditional phone lines and their limitations

Traditionally, phone lines were provided exclusively through the public switched telephone service known in the industry under the acronym: PSTN.

This is the type of phone lines most business customers are familiar with. These phone lines were also the only type of phone line available for residential homes until the birth of VOIP around 2004.

The PSTN was built upon analog signaling and uses circuit-committed protocols for voice communications. In layman terms, this means that every phone call traveled along copper phone lines and was hardwired to the phone provider’s equipment.

Basically, the phone calls were traveling on their own network used exclusively for phone calls and fax transmission. You can think of the PSTN as an analog version of the internet with a single role: routing phone calls.

These traditional phone lines have some limitations. For example, if you need to add lines, a technician needs to come on site and physically connect an additional phone line. This phone line must be connected to your phone system (PBX) if your business has one. This usually requires the intervention of another technician from your phone system provider.

Another major limitation of traditional phone lines is that your phone number itself is tied to a geographical location. In some instances, if you want to relocate your business, your original phone number may not be available in the new location and you would have to get a new phone number and forward the old number if possible.

While traditional phone lines were and still are a reliable method of routing phone calls, the invention of the internet quickly disrupted the industry.


The internet is a digital network, and it became quickly obvious that this network could easily be used to route phone calls as well. This gave birth to VoIP.

Birth of VoIP

VoIP is the abbreviation of the term: Voice over Internet Protocol. This technology is also known under other names: IP Phone, IP Telephony, Broadband Telephony, Internet Telephony, etc. VoIP is the digital protocol that allows businesses to route phone calls directly over the internet instead of using the PSTN.

Initially, Voice over IP was used almost exclusively to bring phone calls to businesses and connect them to an onsite phone system (PBX) that provided all the other functionalities.

This was a significant improvement since it allowed businesses to relocate easily without losing their phone number. In most cases, VoIP phone lines were connected to existing traditional phone systems or to “onsite” aka On-Premise VoIP phone systems. These systems were and still are very expensive. A typical installation with all the features can range from a few thousand dollars to tens of thousands of dollars for larger enterprises.

These phone systems, also known under the acronym PBX (Private Branch Exchange System) provided all the phone features you are probably already familiar with. You can think of these phone systems as dedicated electronic computers with a single role: providing phone system features and routing phone calls within a business. Most providers of VoIP phone systems used their own proprietary protocol to control the phone calls, allowing them to keep control of the PBX market.

Engineers quickly realized that computers could be used to replace dedicated phone systems. Since relying on old phone systems cost a fortune, why not program a phone system and have it run on computers instead of expensive specialized equipment?

Open source (freely available to all) protocols were invented to accomplish just that.

Evolution of VOIP phone systems

The SIP (Session Initiation Protocol) and RTP (Real-time Transport Protocol) protocols were invented to route phone calls and the voice/sound content of those phone calls through the internet or any other network without having to rely on proprietary protocols. These technologies were first adopted by cellular networks and quickly spread to phone systems.

These new technologies allowed the creation of a new generation of “software-based” phone systems that were usually installed on a computer or server (another type of computer used by businesses) onsite/on-premise.

Since computers were relatively cheap compared to traditional phone systems and could be used for other activities besides managing the business phone system, significant savings were realized by business owners. Suddenly, they could build an affordable and powerful phone system with a simple computer and some software. One downside of this solution was that businesses needed someone with a good understanding of computers and computer networks to support this type of solution.

Still, it made a lot of sense for bigger businesses since they already had departments of computer specialists who could support these new phone systems. The benefits were not so clear for smaller businesses with limited access to computer specialists since, more often than not, they would require support from an external firm to support them, thereby increasing their costs.

One important point to understand is that the IP phones in those systems are connected to the server (providing the phone system features) of the business via the local computer network, also known under the term local area network. This network is very similar to the internet but is for the private use of the business.

This led to the last and arguably the most important innovation: the birth of hosted PBX systems.

Hosted PBX PHONE systems

Since VoIP phone service providers already maintained their own servers to route the phone lines and calls, they quickly realized they could easily install (host in technical terms) the phone system software directly on their own servers. Those servers are usually located in data centers. These data centers are facilities where servers can be installed (hosted) and easily connected to the internet backbone and various phone line providers.

This way, a business’s IP phones could connect directly to the VoIP provider’s own servers. The advantages were numerous for business owners. Now they could benefit from all the phone system features without even having to buy servers or computers! It also allowed smaller businesses to reap the same benefits big businesses were used to since the VoIP provider could take care of the support, eliminating the need for a department of computer or network specialists.

There was, however, one catch. All the open-source software PBX systems were initially designed to be installed on-premises and to address the need for a single business.

VoIP service providers could hardly buy a server for each of their customers. This is where most VoIP providers decided to leverage virtualization and the “cloud” to solve this dilemma.

Instead of using real physical servers for each customer, they used virtualization. Virtualization is a technology that creates “virtual servers”.

These virtual servers are software emulations of real servers. Basically, a virtual server is a piece of software that plays the role of a server and is itself installed on another real physical server. As you can see, this is not simple and is less performant than an installation on a real dedicated physical server. Virtualization is a great technology for a lot of applications, but we believe its use in hosted PBX’s is ill-advised and affects performance.

To make matters even worse, a lot of VoIP providers install those virtual servers with “cloud providers.” A cloud provider is a type of data center that provides cheap virtual servers. These virtual servers usually operate/run on another software layer spread across multiple physical servers. This forms the “fabric” of the cloud. It allows the cloud provider to relocate those virtual servers to other physical servers easily in case of peaks of traffic, or if some servers are burdened with too much work. It allows businesses (in this case the VoIP providers) to “share” physical servers with others and save on their server’s hosting cost.

If this sounds complicated, it’s because it is!

It also potentially greatly affects the performance and quality of a phone call. In this scenario, a call goes through multiple layers of virtualization and travels over a network that is not under the control of the VoIP provider and can be affected by a multitude of external factors, leaving the VoIP provider powerless and unable to resolve them.

We decided to take a different approach that wouldn’t compromise on call quality and performance. The AgileIP hosted PBX system was designed from the ground up to easily run on dedicated physical servers without the need for any virtualization. We own these servers, and we have complete control over the network where they are operating, ensuring maximum call quality and reliability.

This is only one of the many factors that make our offering unique.

If you want to learn more, feel free to reach out via our contact form to set up a visit or give us a call.

The AgileIP hosted PBX system

The AgileIP hosted PBX system was designed from the ground up to easily run on dedicated physical servers without the need for any virtualization. We own these servers and we have complete control over the network where they are operating, ensuring maximum call quality and reliability.
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