When talking about phone systems, many lay people use the terms PBX and Key System interchangeably. This is incorrect. As you will see below, a PBX is a certain type of phone system and a Key System is another. While most modern phone systems have aspects of both technologies, it's important to understand the difference. If you are shopping for a system, this knowledge will enable you to avoid a costly misunderstanding.
Key Telephone Systems
A Key System is a type of phone system where the telephone instrument is a specialized phone with a number of buttons on it for outside lines. These are called Central Office lines, or CO lines in phone parlance. This is the most common type of phone system for small businesses. The phone is a proprietary device. This is the most common type of phone system for small businesses. The phone is a proprietary device made by the system manufacturer. It can only work when connected back to that same manufacturer's KSU, which is the central switching unit installed in your phone closet. These phones are fairly expensive and are not compatible with any other band of KSU. It's a package deal. The advantage of these phones is that they have a lot of buttons and lights which can be used to make access to other users and system features very simple. With buttons marked "John Smith" and "Conference Call", all you have to do is press the buttons to talk to John or make a conference call. The downside is cost: each Key System phone can run as much as $500 (installed).
What's important to know is that for the last 10 years or so, every Key System made has some PBX capability also. See below for more info.
Price: Allow $500 per phone including cost of central switching unit (KSU) and installation.
PBX
PBX stands for Private Branch Exchange and it's a different animal from your Key System. When you go to a hotel, and use the phone in your room, you're using a PBX. The phone instrument is very simple and relatively inexpensive. Except for the "Message Waiting Light", it's exactly the same type of phone as in your home. If you were so inclined you could literally take the hotel phone home with you and use it. And by the same token, you could bring your home phone and make calls from your hotel room with it. What the hotel has there is a miniature version of the public telephone exchange. Think about it. When you pick up your phone at home you: A)hear dial tone and B) dial some digits to call someone. The more digits you dial, the further away these people can be. On a PBX, which is literally a private version of the same thing, you A)hear dial tone and B) dial some digits to talk to someone. Usually, you would only need to dial 3 or 4 digits to ring someone else on the same system. Dial 405 to ring the person in room 405. Dial 9 to get outside your private exchange and into the public system. The strength of PBX's is that they cost less per phone than Key Systems because the phone instruments are much cheaper. Their weakness is that complex call handling such as transferring calls, conference calling, etc. are more difficult to do.
Most PBX's also have some Key System features, including an expensive proprietary phone set. This is useful because, as in the case of the hotel, you need a large number of inexpensive phones that are real simple to use (for the rooms), but you also need a few full-featured phones for hotel staff use. So key System type phones can be used in the hotel management and staff offices, with the simple phones every where else.
Price: Allow $350 per phone including cost of central switch (PBX) and installation.
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