Short for private branch exchange, a private telephone network used within an enterprise. Users of the PBX share a certain number of outside lines for making telephone calls external to the PBX.
Most medium-sized and larger companies use a PBX because it's much less expensive than connecting an external telephone line to every telephone in the organization. In addition, it's easier to call someone within a PBX because the number you need to dial is typically just 3 or 4 digits.
A new variation on the PBX theme is the centrex, which is a PBX with all switching occurring at a local telephone office instead of at the company's premises.
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