PBX stands for Private Branch eXchange and it is basically a private network and/or switching station for telephone systems. It is mostly comprised of many telephone system branches, and it is used to switch, or exchange, connections within the system, i.e. telephones within the system are able to make and receive calls to and from the other telephones within the branch of systems.

They are generally used within enterprises, business, corporations, and offices. Where external lines and telephone calls are concerned, the phones within the PBX system share among them a specific number of external lines for making outside calls. Basically, companies use PBX in order to have all the phones within the company connected to an outside line, which allows them to use only one line with a lot of people utilizing it.

PBX is popular among large companies because using a PBX system is far less expensive than having to connect an outside line to every telephone within the system. Furthermore, it is more efficient to use a PBX system within the office or building, because calling from telephone to telephone inside the system generally only requires one to dial a few numbers - three or four numbers in all, rather than strings of seven, ten, or more. This is essentially a person's extension number within his or her company.

There is a new alternative for the PBX system known as centrex, which allows all of the switches and exchanges to take place at a local telephone company rather than the company using PBX. Hotels are a good example of whom and what can benefit from PBX, as well. Because PBX can save money, time, space, and resources, it is becoming one of the most popular telephone systems among large companies and offices. With new developments like centrex being made, its efficiency and convenience can only increase.