VoIP Gateway vs PBX: What Is The Difference?

Are you tangled up in the never-ending dilemma of VoIP Gateway vs PBX? Are you holding back your system upgrade because you’re unsure which system to choose to maximize your resources?

Choosing the right option can be a challenging task for businesses as each of them offers their unique sets of benefits, and each comes with their obvious holdbacks. 

This article offers a clear overview of each system’s pros and cons, helping you understand its workings and choose which system to use. 

What is a VoIP gateway?

VoIP gateway can be a physical device or a software application, primarily working to convert analog telephony traffic into digital data packets and vice-versa. They aid in the seamless transmission of voice over the internet. 

Signals from one system would not be able to transfer to another device without a bridge in between to help with compatibility issues, which is where VoIP gateways come in.

The incompatibility between the two systems will result in signals getting trapped during the transition between the systems. 

Types of VoIP Gateways

VoIP gateways are the bridges that connect telephony systems with IP networks. They convert voice signals into digital packets, which aid in VoIP communications. There are generally two types of VoIP gateways. They are given below:

I. Analog VoIP Gateways

These gateways connect analog telephony equipment to VoIP networks. The equipment can be anything from telephones to fax machines. The analog signals are converted into digital packets, which are then transmitted over IP networks and vice versa.

Legacy phone systems still use these gateways to integrate themselves with VoIP infrastructures. Analog VoIP gateways typically support analog interfaces and they can also handle multiple lines simultaneously.

These gateways are important for businesses to transition from traditional phone systems to VoIP or to just integrate with existing analog devices. 

The primary function of these gateways is to bridge the gap between outdated technology, find efficient communication solutions, and ensure seamless connection. 

II. Digital VoIP Gateways

As the name suggests, Digital VoIP gateways serve as a bridge between digital telephony systems and VoIP networks. Examples of those systems can be ISDN or T1/E1 lines.

The primary function of these gateways is to convert digital signals from digital telephony lines to IP packets and vice versa. These systems also let you integrate advanced features like routing calls, protocol conversion, and multi-line handling.

They are essential for businesses as they help to connect PBX systems to VoIP networks. Using gateways will help ensure smooth communication transitions and maintain the quality and reliability of digital telephony services. 

Another major advantage of Digital VoIP Gateways is that they help to reduce costs. 

How Does VoIP Gateway Work?

Here is a step-by-step process of how a VoIP gateway converts analog telephony traffic into digital data packets: 

1. A user initiates a call connected to the Public Switched Telephone Network (PSTN).
2. VoIP gateway receives the signal from the traditional phone. 
3. The analog voice signal is then converted into digital data using codecs. 
4. Converted digital data is then divided into packets for transmission over an IP network.
5. Packets are then routed through the internet to the destination VoIP device. 
6. They are finally transmitted, possibly taking different paths to reach the destination. 
7. VoIP receiving gateway receives the packets. 
8. The receiver gateway reassembles the packets into a stream of voice data. 
9. Digital data packets are then re-converted into analog signals at the gateway. 
10. The recipient then hears the caller’s voice, completing the call.

What is PBX?

PBX stands for Private Branch Exchange, a telephone network that allows features like inbound and outbound calls. As its name suggests, it is a private telephone network used within a company or organization. 

PBX systems allow users to share numbers of external phone lines. They are used to enhance communication efficiency and reduce costs by centralizing call management. 

These systems can handle multiple phone lines and provide features like call routing, voicemail, conference calling, and automated attendants.

Types of PBX Systems

The different types of PBX systems are given below: 

I. Traditional PBX Systems

These systems are landline-based and heavily dependent on physical hardware. A PBX unit manages incoming phone lines and distributes them to various office desks. Setting up a traditional PBX system can be costly.

The average cost ranges around $1000 per user or employee, not including the expenses of installing analog phone lines. They can be outdated as their hardware, like trunk and extension cards.

They’re a bit more reliable than other systems, but that’s not enough. Maintenance and upgrades in these systems can also be a hassle as the suppliers provide limited support. 

II. Digital PBX Systems

Digital PBX systems are upgrades to their Analog counterparts as they can support both analog and IP phones. They provide better sound quality and offer enhanced features like background music for callers on hold.

More features like digital answering automated assistants, voicemail, and call forwarding are integrated into Digital PBX systems, making them a better choice for businesses with less reliable internet and older wiring.

The primary goal of Digital PBX systems is to provide a balance between modern features and traditional infrastructures. 

III. Onsite IP PBX Phone Systems

Onsite IP PBX phone systems are also known as VoIP phone systems and they are popular because they maximize the use of internet bandwidth and other functionalities.

Some of the advanced features provided by these systems are excellent call quality, stability, voicemail-to-email, video calling, and mobile integration. 

SIP trunks are used for enhanced features like disaster recovery to fully leverage a VoIP system. Even though the initial cost can be high, businesses tend to use these systems due to the lack of ongoing service fees. 

IV. The Cloud-Based Virtual PBX Systems

These systems are also called Hosted PBX as they facilitate both inbound and outbound calls. Cloud-based virtual PBX systems use internet connection making it an ideal option for businesses to use local numbers in different countries. 

Companies with international clients typically opt for these services. There is no need for buying or installing hardware making it a cheaper option for businesses. Even though these systems have low installation costs, they operate on a subscription basis, which can cost more with time.  

V. Virtual PBX Phone System

They are the simple version of cloud-based systems. Although virtual PBX systems may not have as many advanced features as cloud-based systems, they provide enough features to sustain smaller businesses or remote teams. 

These systems reduce costs massively, as the setup costs are significantly less. There is less need for maintenance. Organizations that need an economical choice with basic functionalities and flexibility prefer Virtual PBX phone systems. 

How Does PBX Work?

The workings of PBX can be difficult to understand. The step-by-step process of how it functions is given below:

1. The PBX system receives calls from external lines.
2. PBX system then receives the call and routes it based on the dialed number or extension. The call routing process follows the confines set by the organization. 
3. When a call is made to an internal extension, the system connects the call to an appropriate internal phone. 
4. When the recipient is unavailable, the PBX system redirects the call to voicemail. The system can sometimes also use features like call forwarding, call waiting, and call conferencing. 
5. PBX system also manages the connection to an external line, allowing users to dial without needing a direct line to the PSTN. 
6. The system keeps all call logs and queues in check. PBX also provides analytics on call usage and performance. 
7. Modern PBX systems can also integrate with necessary communication tools, such as email, video conferencing, and video chat, for enhanced functionality. 

VoIP Gateway vs PBX: Key Differences

Here are some of the key differences between VoIP gateways and PBXs:

Pros and Cons of VoIP Gateway

Here are some of the major pros and cons of VoIP Gateway:

Pros

• Cost Efficiency

VoIP gateways enable voice calls over the internet. Using the internet instead of traditional phone lines will significantly cost less. With VoIP gateways, you do not need to add different phone lines. Also, there is no need for regular maintenance which saves a lot of money. 

• Scalability

Traffic on communication channels is increasing daily, so it is important to choose a scalable architecture. VoIP gateways allow businesses to resize their call capacity according to their growth. These gateways can add more users without altering infrastructure too much. 

• Flexibility

VoIP gateways provide flexible communication options. You can integrate different features into them, which in turn allows users to make and receive calls from different locations. VoIP gateways allow users to access the features with any device, including mobile phones and computers.

• Enhanced Features

VoIP gateways are often integrated with advanced features like call forwarding and Interactive voice response (IVR). These features will help to improve the customer experience and result in seamless communication between the parties. 

• Improved Call Quality

Having a stong internet connection always results in high-quality voice communications. So, using VoIP gateways helps to improve call quality. There are additional features like Quality of Service which help to reduce echo and jitter. 

• Remote Access

VoIP gateways support remote access, which allows employees to access phones from anywhere. All users need is a steady internet connection and they can use VoIP phones regardless of their location. This is useful as remote work ensures that traveling employees can stay connected and productive. 

• Integration

With all of the advanced features already available on the systems, VoIP gateways allow users to integrate seamlessly with other business systems like CRM software and email platforms. This process smoothens workflows and improves data management, which in turn enhances overall operational efficiency.

Cons 

• Internet Dependency

Without a stable internet connection with high bandwidth, VoIP gateways can not function effectively. So, switching to these facilities means that you always have to trust the internet to hold strong.

In cases where the internet bandwidth falters, the call might drop completely or provide poor voice quality. This is highly concerning for business communications, as a gap in operations results in a loss.

• Security Risks

VoIP systems possess many security threats, which, if not dealt with properly, can lead to cyberattacks such as hacking and DoS (Denial of Service) attacks. To take full advantage of VoIP systems without being vulnerable to cyberattacks, it is crucial to maintain robust security measures. 

• Power Dependency

Since VoIP gateways need power to run, there is a heavy dependency. As any power outage can result in downtime, companies need to implement backup power solutions like Uninterruptible power supplies. 

• Latency Issues

Latency in communication means a delay in voice during transmission. It is a big issue as it causes misunderstandings in long-distance travel. Internet issues can sometimes cause latency, and it is one of the biggest disadvantages of using VoIP, as a lot of companies face it.

• Complex Setup

Setting up a VoIP system is a complex task for laypeople, so organizations need to hire people specifically for that job, which increases the setup cost. The setup process may involve configuring network settings and integrating with existing systems.

Pros and Cons of PBX

Even though people are opting for modern services over PBX systems, some advantages still make them a viable option for some. Let us look at the pros and cons of PBX systems.

Pros:

• PBX systems offer customers control over their phones
• Monthly recurring costs are lower than those of other services
• PBX providers provide services like installation and training
• Integrating other useful software programs like CRM systems
• Larger organizations still benefit from these systems as they already have the infrastructure and host their phone system
• Using familiar hardware like landline phones will be more comfortable for the general users and employees. 
• They offer high-quality calls, and the audio reliability is not affected by the bandwidth of the internet connections.
• Onsite PBX phone systems use SIP Trunks to access VoIP phones. 

Cons:

• Initial costs are higher as there is a need for hardware and software licensing.
• Customers are responsible for the maintenance costs. 
• In cases with no backup power, there is a risk of downtime.
• Customers are also responsible for network security.
• They use PSTN systems, which are outdated in almost all countries. 
• PBX systems offer far fewer features and integration is hard.
• Requires a fully dedicated IT team and space for server hosting. 
• It might become completely outdated in the next 5+ years, hence the name, legacy system. 

Conclusion 

To conclude, choosing between VoIP gateways and a PBX system is never an easy task. This choice depends on your business needs and existing infrastructure. While VoIP gateways offer facilities to integrate traditional telephony systems with modern VoIP networks, PBX systems manage internal communications.

Before making a choice, you need to assess your organization’s demands, budget, and growth potential to figure out which choice aligns best with the goals set within your organization. 

Using trustworthy service providers like Dialaxy helps maximize your resources, ensure proper growth, and ensure seamless integration of the systems into your workflow. 

FAQs

What is a SIP Gateway?

A SIP gateway is a device that enables users to place VoIP calls using the SIP(Session Initiation Protocol) protocol. It transmits voice data from analog to digital devices. 

Generally, SIP gateways are used with legacy phones as they transform analog signals from legacy phones to digital data. The converted digital data can be sent through a router over the internet. The data is received by other gateways or a telephone network. 

Is PBX digital or analog?

PBX systems can be both analog and digital. While analog systems use Plain Old Telephone Service(POTS) and copper wires, digital systems have features like voicemail, call forwarding, call recording, and auto attendant. 

Does VoIP need a router?

Yes, using VoIP will require a router. While advanced routers will make your job easier, any standard router will do the job. 

Some VoIP applications can be used without any specific hardware, but a router will help to ensure a stable connection and support VoIP features when the router is configured properly. You can use VoIP enabled router to make the configuration easier. It is important to choose compatible and optimized routers for VoIP services. 

Is VoIP cheaper than PBX?

The setup cost of PBX systems is significantly higher than that of VoIP systems. This is because PBX systems require power supply networks, adapters, and physical phone sets. 

But in the long run, the cost of VoIP setups can add up to even more than PBX systems in some cases. So, you can’t only base your choice on cost, as the price of the systems is variable. 

What is the difference between PBX and virtual PBX?

Here are some of the major differences between PBX and virtual PBX systems: