The A to Z of Business Telephone Systems

A Quick Guide to the Types of Business Telephone Systems

Business communication systems are the means by which businesses pass information along. This can be internal, among employees or external, to the general public and to customers. The most basic form of a communication system is email support and/or phone. More robust business communication systems come with support for instant messaging, video conferencing, and audio transmissions via the Internet.

How businesses choose to communicate also determines the effectiveness of that communication. This may be through text, audio, video, or a system that utilizes all three. When choosing any communication system, the important thing to realize is that communication is not just talking. While talking can convey information, it doesn’t always mean that the person being spoken to understands the information.

Talking, listening, and responding are important parts of a business’s communication systems. If there’s not a system in place to allow for the process of receiving feedback and responding to that feedback, the communication system is not going to be effective.

Why Do Effective Business Communication Systems Matter?

When communication is effective, the message is clearly transmitted and received as well as understood. It’s not always possible for the person communicating to know whether the message was understood.

Why do Business Communications Break Down?

When breakdowns in communication do occur, it’s often for one of a few reasons:

  • The message was not clearly conveyed, in easy-to-understand language.
  • There was a language or cultural barrier between the message and the receiver.
  • The wrong mode was selected to deliver the message.
  • The message did not seem important enough for the receiver to remember it.
  • There was a distraction that caused the receiver to not be focused on the message.

How Does this Affect your Bottom Line?

While it’s not always easy to quantify the results of good business communication systems, poor communication comes with a sizable overhead. According to the Society for Human Resource Management, a survey of 400 companies with 100,000 employees each cited an average loss per company of $62.4 million per year. This was primarily because of inadequate communication to and between employees.

Smaller companies of 100 employees stand to lose an average of $420,000 per year. That’s just the loss due to internal communications! If you were to extend this to customer communications, it’s not hard to imagine how much higher this could be.

Types of Business Telephone Systems

Business use of the telephone has come a long way since the first phone call by Alexander Graham Bell in 1876. For decades, business people received phone calls and made phone calls from one line, at one desk. Once the telephone became more ubiquitous, call centers made it easy for businesses to reach customers without full time, in-house employees.

Voicemails ensured that you still conveyed your message even with a busy tone on the receiving end. Eventually, full adoption of the mobile cell phone allowed business to communicate without a landline plugged into one line at one desk. This allows business to take operate remotely and on a global scale. It also made it possible to let a remote workforce or a business owner make calls on the go.

1) Commercial Business Phone Systems

Businesses today can choose from various types of commercial phone systems, such as PABX/PBX, key system, and VoIP phone systems.


A private automatic branch exchange (PABX) is most often just called a private branch exchange (PBX) today. Originally, the “exchange” required the use of a live operator. Now, the transfer of a call is automatic. PBX phone systems are available as hosted, virtual, or on-premise solutions that allow many users to share a line to make calls.

3) Key System

The key system is another major type of phone system in today’s market which is best for smaller companies. A key system has telephones with multiple buttons (“keys”) and lights that indicate which lines are in use. This is a business communication system utilizing hold buttons, intercoms, speakerphones, on-hold music, and memory dialing.

4) VoIP Phone Systems

This is the next generation of business communication, which allows for the transmission of phone calls over the internet, instead of using traditional telephone landlines. VoIP (pronounced “voyp”) saves money because traditional long-distance calling fees do not apply. There are no additional infrastructure overheads such as individual desk phones for employees.

VoIP utilizes all of the advancements of the previous ages of digital business communication technology. Users can take advantage of capabilities such as chat, conferencing, instant messaging, fax, and much more, all in one system.

How to Choose the Right Business Communication System

When selecting from your business communication system options, consider the following situations. This will ensure that your system meets your needs.

  • Working remotely – Internet-based communication allows you to use devices that are handheld and portable. Make national or international calls from wherever you are and avoid paying traditional long-distance fees.
  • Additional features – Are you comfortable using a button system to put people on hold, transfer calls, or see which lines are busy? Internet-based communication allows you to utilize additional features such as call waiting, caller ID, and voicemail, but don’t require a physical button system like Key Systems do. VoIP systems allow for video conferencing, chats, instant messages, and other features, all utilizing the same internet system you use to check your email.
  • Convenience and flexibility – Desk-based systems require an operator to be at their desk to make, receive, or transfer calls. If convenience and flexibility are important to you, consider internet-based systems that don’t have these limitations.

How Business Communication Systems Evolved

Telecommunication methods have made astronomical leaps through the ages. Starting with the telegraph and then moving into telephone, radio, television and now email, instant messaging, video, and audio transmissions. Decades ago, a business owner dictated a memo, which then tricked down to each employee. The management style was top down and employees either accepted it or moved on.

Today, tools such as group emails, group chats, and internal messaging tools allow for a much less hierarchical form of company governance. Employees now have an easier way to respond and participate. Opening up communications this way also leaves employees feeling more valued.

The more open communication also has benefits to the business owner or manager. They are easily able to get a real-time view of how business processes are operating.

Data Communications Then and Now

Data communications have made many advancements through the years. Radio got its start in 1920. In 1947, television broadcasting became normalized. In 1963, the first geosynchronous communications satellite launched. The first email was sent at Massachusetts Institute of Technology in 1965.

The internet’s first iteration went online in 1969. In 1976, the world’s first personal computers made their appearance. Early adopters started using the first mobile phone in 1981.

The first text message was sent in 1992. Internet radio broadcasting went online in 1994. Skype launched in 2003.The iPhone launched in 2007. As you can see, advances started happening in less and less time as the years went on. Today’s business communication systems are able to harness some form of all of the innovations that came before. In a modern business communication system, all of these come together as an all-in-one web-based system.


Good business communication systems boost business profitability in a number of ways. Good communication encourages employees to take ownership of their actions and it allows everyone on a team to be “on the same page.” It allows customers to feel respected and knowledgeable. On the other hand, businesses pay for poor communication in both lost money and lost opportunities.

Photo via Shutterstock

More in: ,

Nextiva Nextiva is a business communications company dedicated to empowering organizations to manage their communications, productivity, and customer relationships on a truly unified platform. Learn more at