VoIP gateway vs. PBX: What is the difference?

What is a VoIP gateway?

First, let's define a VoIP gateway. It's a piece of hardware that breaks down the conversation and stuffs the bits into IP packets at the network edge for transmission over the IP network. The old, analog voice network thinks it is going to transmit over the plain old telephone service (POTS) network, but the gateway packetizes the conversation into VoIP digital packets. It's a useful piece of technology for businesses that want to use VoIP services but may still be wed to a legacy communications infrastructure.

What is a PBX?

As its name implies, a PBX is a private phone system that enables an organization to share lines and route calls. Traditional PBX systems were analog and relied on copper telephone landlines. Today, PBXs can be IP-based, which means phone calls are transmitted digitally, using the IP protocol. With an IP PBX, the phones and phone switch are native IP, meaning the conversation is put into voice packets at the source and then transmitted as a native IP packet to be reassembled at the receiving end.

VoIP gateway vs. PBX: What is the difference?

The main difference between a VoIP gateway and an IP PBX is where packetization begins. A VoIP gateway stuffs a conversation into IP packets at the edge of the network before they are transmitted over the IP network to their final destination. An IP PBX, on the other hand, uses phones and switches that are native IP. Conversations are bundled into voice packets at the source where they are sent as a native IP packet to the receiving end, where it is reassembled.

Legacy PBX is disappearing

The adoption of IP-based communications has accelerated sharply in the last decade, spurred in large part by a shift away from copper-based POTS. Today, there are only about 41 million POTS lines in use, according to the Federal Communications Commission (FCC), a 66% drop from the 122 million POTS lines in operation in 2010. Carriers are moving rapidly to decommission their copper networks as they follow a 2019 order issued by the FCC.

At the same time, consumers are cutting the cords anchoring their home telephones even as large unified communications (UC) and contact center service providers replace analog services with internet-enabled applications. As a result, the PBX is dying on the vine in favor of cloud-based or even local IP options.

The benefits of IP communications

Organizations are taking advantage of IP-based and feature-rich voice services, and developers are actively adding functionalities that go far beyond simple communications. Equipment is evolving as well. Many routers now include VoIP gateway capabilities. Network switches can power phones. As PBXs age and parts to repair them become more difficult to find, IP gateways let companies transition from legacy communications models to new services.

Softphones present another benefit to companies. These are software that enable users to communicate via laptop, tablet or cellular device. Desk phones are no longer needed, which gives employees and other users more flexibility in how they interact with others.

The combination of softphones and UC translates into the creation of a variety of features, among them voice-to-text transcription, integration with other systems (think Active Directory, security systems, database systems, access control and badges), enhanced call logs, video features, screen sharing, conferencing, collaboration and voicemail enhancements.

Barriers to IP communications, meanwhile, have largely subsided. If internet connectivity is available, communications can be established.

Case in point: Many residential modems have built-in phone lines that allow analog phones to be used over cable or fiber access. These systems, known as over-the-top, allow the delivery of additional features and functions -- for both residential and commercial purposes.

Remote work changes the landscape

Enterprise adoption of remote work in the wake of the pandemic has fueled services engineered to ensure security. Protective mechanisms, such as SD-WAN, port trunking, port aggregation, packet prioritization, zero-trust network access, single sign-on and a variety of protocol enhancements, have ushered in an era where communications is flowing safely in near real time.

Today, we can transmit anything that can be packetized. When VoIP was developing, the attraction was the elimination of long-distance charges. Now, the decision to migrate to IP is based solely on features and price. Even the smallest enterprise can benefit. Add cloud capabilities to the mix, and communications is taking place in ways that were still on the drawing board 10 years ago.