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A PBX (Private Branch Exchange) is a system that connects telephone extensions to the Public Switched Telephone Network and provides internal communication for a business. An IP PBX is a PBX with Internet Protocol connectivity and may provide additional audio, video, or instant messaging communication utilizing the TCP/IP protocol stack.
VoIP gateways can be combined with traditional PBX functionality to allow businesses to use their managed intranet to help reduce long distance expenses and take advantage of the benefits of a single network for voice and data (converged network). An IP PBX may also provide CTI features.
An IP PBX can exist as a physical hardware device or in software.
Because a part of PBX functionality is provided in software, it is relatively inexpensive and makes it easy to add additional functionality, such as conferencing, XML-RPC control of live calls, Interactive voice response (IVR), TTS/ASR (text to speech/automatic speech recognition), Public switched telephone network (PSTN) interconnection ability supporting both analog and digital circuits, Voice over IP protocols including SIP, Inter-Asterisk eXchange, H.323, Jingle (extension of XMPP protocol introduced by Google Talk) and others.