Business phone systems

Types of business phone systems


There are three main types of business telephone systems: key system units (KSUs), private branch exchange (PBX) and virtual phone systems. Each has different features, functions and cabling requirements.

Key telephone systems

Many small businesses use key system units (or KSUs) to manage incoming calls. Calls come in via landlines to the central switching unit (sometimes called a keyphone or a key station). The device has buttons that the operator can use to:

  • view the status of lines and extensions
  • select outgoing lines or incoming calls
  • transfer incoming calls to other extensions
  • facilitate connections between extensions and external lines

The key system is reliable and easy to use but offers only basic telephony functions, such as voicemail and call forwarding. It takes a limited number of phone lines, so may not suit a larger business or one with more complex needs.

What is a PBX phone system?

PBX stands for a private branch exchange, which is a private telephone network used within a business. A typical PBX system:

  • connects the internal telephones within a business
  • allows users to share a number of external telephone lines for outgoing calls

Depending on its capacity, a PBX can handle tens or hundreds of telephone lines. Most PBXs today are digital, with computers managing and switching the calls, although some businesses may still use human-operated PBXs.

PBX vs key phone system

A typical private branch exchange offers more functions than the key system. These include various calling and messaging services, including:

  • call logging
  • call transfer
  • automated routing to individual extensions (also known as direct dial-in or DDI)
  • individual voicemail
  • fax and computer modem integration

You can host the PBX system on-premise and manage the switchboard system in-house. Alternatively, you can choose a third-party provider to manage the switchboard externally, or even virtually in the cloud.

PBX systems generally suit small businesses that are planning to grow, or businesses requiring 40 or more lines for handling higher volumes of incoming calls.

Virtual phone systems

Virtual phone systems deliver the PBX functionality and services over the internet and enable workers to stay connected wherever they are. When used with Voice over Internet Protocol (VoIP) software, virtual PBXs can include additional features, such as video conferencing, video calling, document sharing, instant messaging, etc.

Virtual phone systems are more flexible than traditional, on-premise systems and suit small and large businesses alike. They don't need extra hardware, since they are delivered over the broadband connection and they work with existing phones, including landlines and mobiles. As a result, they usually involve lower start-up costs for businesses.

Read more about the advantages and disadvantages of VoIP.

If you're looking for a new phone system for your business, it's essential to consider your specific needs and plan your purchase carefully. See business phones: buyer's checklist.

You should also note that changes are expected in the coming years which will see the traditional UK 'copper wire' telephone network closed by 2025 and replaced by digital services. Read more about the future of fixed telephone services.