PBX vs Key Telephone Systems


Phone geeks tend to categorize business telephone systems into either "PBX" or "key". People often ask what the difference is.

It turns out that the terminology has evolved over time, and the distinction had become quite blurry by the turn of the 21st century. To fully appreciate the implications and subtle nuances of meaning, one has to understand a bit of telecom history.


PBX = Private Branch Exchange
KSU = Key Service Unit
CO = Central Office
PSTN = Public Switched Telephone Network
VoIP = Voice Over Internet Protocol


This terminology arose pre-divestiture , back when all telephone equipment in the USA was owned and operated by Bell Telephone (AT&T and its many related companies). People and companies could only subscribe to services from Bell. The subscription service included all wiring and equipment. So, if you were a big business with hundreds or thousands of phones, you still needed to get it all from Bell.

So, it used to be that a PBX was operated by the telephone company using a "real" telephone switch, just like they used for towns, cities, etc. Hence the name. It was an exchange, operated as a private branch off the public telephone network. All stations (individual telephones) were generally connected to lines running all the way back to a CO. If the business was big enough, Bell might well install dedicated equipment on-site, but it will still all Bell's stuff, and the PBX was still a "real" phone switch.

A key system, on the other hand, was not a "real" telephone switch. It was for small customers for had only a handful of telephone lines, and maybe a few more stations. Bell would install equipment at the customer's site. Each line had a dedicated button, and the user would select the line by pressing that button. In the world of telephones, buttons are called "keys". Hence "key system". The common equipment in the customer's phone closet was called the KSU. (Presumably, they didn't call it a "switch" because to Bell, a "switch" was something that look up an entire building.)

The fundamental distinction was that a key system didn't switch calls to other subscribers -- it simply selected which line your call used. The switching happened back at the CO, just like for a single-line plain-old-telephone. In contrast, a PBX was a "real" phone switch.


After the Bell System was broken up, "anyone" could manufacture, install, own, or operate telephone equipment. Other companies started making telephone equipment for businesses. Digital trunk lines (T1, etc.) became more affordable. The terminology drifted.

"Key system" came to mean a phone system which looked to the CO like a bunch of individual telephones. The customer got a bunch of individual plain old telephone lines, and plugged them into the KSU. Each line had its own telephone number. The telco might not even be aware there was a KSU in use. They still generally had one key per line.

In contrast, a "PBX" would generally be connected to the CO using some sort of digital trunk carrier, like a T1 (DS1). There might be tens or even hundreds of channels available in a digital trunk system. There would be no one-to-one correspondence between channels and telephone numbers. Channels were allocated for calls as they were switched. The CO would signal the PBX what the called number was, or vice versa.

The fundamental distinction is still how calls and lines are handled. On a PBX, the number dialed is decoded and communicated to the PSTN, independently of the trunk lines. On a key system, all the KSU does is present a line to the user, and send the digits to the CO switch, the same way a plain old telephone does.


As technology evolved, capabilities which used to be available only with a PBX started to become available on key systems.

Circa 2000, most key systems didn't actually need to have a physical key (button) for each line. The KSU could pick a line automatically, and hide line selection from the user. (Most still had the option of having each line appear on a dedicated key, but it's not required.)

Digital trunks became supported on many key systems. In such a system, the KSU will function much like a simple PBX, with phone numbers and channels functioning independent of each other.

So in more modern equipment, the distinction between "PBX" and "key system" equipment became quite blurry. Often the only reason for calling something a "key system" is historical -- if a product line began life as a key system, it would continue to be called a key system. It also served as a marketing distinction -- big systems with more capabilities were PBXes. Smaller, simpler systems got called key systems.


With the rise and domination of VoIP, the distinction between PBX and KSU became obsolete. In such designs, often the same software and hardware is used throughout the product line, from smallest to largest. The only difference between a large system and a small system is the size of the equipment. Calls aren't switched by the telephony equipment at all — instead it is IP routers and Ethernet switches that do the work. The term "IP PBX" came to describe it all, most likely because the term "PBX" was slightly better known than "KSU".