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Business Telephone Systems

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This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.
- Western Union Telegraph Company internal memo, 1876.
I've suffered from all of the hang-ups known,
And none is as bad as the telephone.

An internet is an interconnected network. The telephone network is an internet, much older than what we call 'The Internet', and with an even greater global reach. And it's a fast-moving technology too. Here is an introduction to some of what at present lies behind that oh-so-useful and oh-so-annoying business telephone.


The backbone of any country's telephone system is what is known in the UK as the Public Switched Telephone Network (the PSTN). This is the network of cables, connections and exchanges or switching systems that allows anyone with a telephone connection to call, or receive calls from, anyone else with a telephone connection, in the same country or in any other country whose PSTN is linked.

Because of 'diversity' (at any point in time not everyone on the system is engaged on the phone) the total number of 'lines' or 'speech paths' available need only be a fraction of the number of telephones in existence, and Exchanges are needed to route calls from origin to destination. A PSTN 'line' is called a Trunk, and an individual Trunk will be allocated to, or 'seized by', a call only for the duration of that call, at the end of which it is 'dropped', and becomes available for someone else's call.

The Switch

Within the business environment too (or in any other organisation), in many cases there will be diversity, since not everyone in the business who has a telephone will be using it constantly, and some only rarely, so again it is not usually necessary to provide a dedicated 'line' to the PSTN for every phone installed. Instead some form of local Exchange is used, and this tends still to be rather quaintly called in official terminology the Private Automatic Branch Exchange, or PABX - colloquially (but accurately) known as the Switch.

A typical business with 100 extensions will probably need some 12-15 PSTN lines. Larger installations will usually have greater diversity, and smaller installations perhaps a little less diversity. Most businesses find that the optimum number of PSTN lines is in the range 10%-15% of the number of extensions installed.

Least Cost Routing

The switch can be programmed to handle Least Cost Routing automatically. This allows it to examine each outgoing call and select the carrier or telephone company ('telco') which the business wishes to use for that type of call. To take a simple example, it may be cheaper to use one telco for local and national calls, but another for international calls.


Centrex is the generic term for Switch facilities provided by the selected telco's local exchange rather than by a Switch installed on the customer's premises. Advantages include not having to install and maintain switch equipment on the premises. Centrex also makes it easier for a business with multiple locations to have a central point of contact and a single telephone number for all locations.

There are however disadvantages to using Centrex. The communications function of most businesses is vital to the success and profitability of the business, and using Centrex can involve considerable loss of control. The quality of the service provided is no longer under the direct control of the business. Neither is the cost. The business will probably have to commit itself to a contract of several years, and if things go wrong extrication can be difficult. And Least Cost Routing is not usually possible with Centrex: the Centrex service provider will use its own routes at its own tariffs.

Handsets or Terminals

Traditionally, PABX systems would terminate in a fairly simple desk telephone. Smaller businesses, and certain departments within larger businesses, might instead use a Key System involving a rather more sophisticated desk terminal with a handset (and/or headset) and an array of buttons and indicator lights. And there are Hybrid systems combining Key System and PABX features.

There are also PABX systems with optional 'Executive' telephone terminals which also present the user with rows of buttons and lights, giving the high-powered executive access to any of a range of features and facilities at the single touch of a single button - if only she can remember which button does what. And it is now possible to use a computer as a telephone terminal.

So there is no longer any necessarily clear-cut distinction between Key Systems and PABX. There are also specialised systems for use in call centres, financial dealing rooms and other special situations, for example hotels and hospitals where there is both business and residential use of the telephone.


The Switchboard and Operator are now largely the legacy of a bygone era, and though they may never be totally abolished their former role has in great measure been automated. Many smaller businesses no longer feel the need for a dedicated Operator, and instead install an 'Auto-Attendant' system which routes calls according to the caller's preference ('Press 1 for Sales, 2 for Accounts' etc), or allows the caller to dial the extension number they require - if they know it - or by default transfers an incoming call to any of a group of employees who field general calls and transfer them as appropriate.

While Auto-Attendant can be maddening for the casual caller or a member of the public (especially if the only 'music on hold' is 'Greensleeves'), it can also be very useful for the regular business caller as well as saving money for the business. If you know the extension or at least the department you want, it should be much quicker to get through direct in this way than to have to go via the operator, who may also be the person who operates the fax machine and photocopier, keeps the keys to the stationery cupboard, waters the potted plants, does the post, signs receipts for couriers, makes coffee for visitors, and has to have a manicure every half-hour...

Direct Exchange Lines

At the office, a DEL is often referred to as a 'private line'. It's what people have at home: a telephone connected straight into a telephone line with its own telephone number. At the office it's a status symbol, often the preserve of directors or senior executives. It may even have a 'Planset', a local facility for a secretary to take calls and transfer them to the boss. You can use a DEL to make a private call without fear of the Operator listening in, since it bypasses the switchboard completely. People who know the number can call you direct. But perhaps the most common business use of the DEL is for fax machines.

DELs have a number of disadvantages, however, and except in the smallest businesses there is usually a better way of achieving the same result. One increasingly popular alternative is DDI.


DDI stands for Direct Dialling-In 1 . This is the system whereby every extension has its own telephone number which outsiders can call direct. DDI becomes much easier to get and more popular where digital PSTN exchanges are available, but it was available even on the old analogue systems of years ago, though usually only for the largest organisations such as oil companies and government departments.

DDI involves reserving a block of telephone numbers provided by the telephone service provider, and renting a block of special DDI trunks to carry the calls. Again, because of diversity, you need far fewer DDI trunks than extension numbers. And with a bit of luck, somebody will have had the wisdom to arrange things so that the last three or four digits of your DDI number are the same as your extension number, although such a convenient numbering system is not always feasible.

A DDI extension gives you, at one fell swoop, access to the PSTN for outgoing calls, your very own telephone number for incoming calls, and direct access to the Switch. Having access to the Switch has the advantage not just of allowing internal calls, but gives you a host of other facilities such as voicemail, call diversion, hunt groups, abbreviated dialling, and so on (see Glossary below).

DDI also makes it much simpler to connect equipment which needs an outside telephone number, which would previously have involved the trouble, expense and inflexibility of installing a separate Direct Exchange Line. Fax machines are a good example. Using DDI, many employees can easily have their own fax (or at least a departmental fax), since you don't have to install a dedicated Exchange line for each new fax machine. This goes for modems too.

One example of the flexibility of this system is that a business which receives a lot of fax communications could set up a bank of fax machines in a Hunt Group with a single published DDI number. An incoming fax would be received by the next available fax machine in the group, instead of the sender getting a busy tone and perhaps having to try several alternative fax numbers before getting through.

Trunk Types

PSTN Trunks

To make a PSTN call obviously requires a connection from the telephone instrument to the PSTN. The business will install a suitable number of PSTN Trunks, and also a Switch to connect each desk telephone, or 'Extension', to a Trunk as and when required.

Each Trunk is a dedicated connection between the customer premises and the local PSTN exchange: such a connection is known as the 'local loop'. As with residential customers, the business will pay a rental for the use of each Trunk, plus a charge for each call made. The charge for each single call may be based on a number of factors, including the day of the week and the time of day, and both the destination and duration of the call.


Where a business regularly makes calls to another premises, for example a branch office, it may be useful and sometimes even cost-effective to install a Private Wire or 'tie-line' to the branch. This is more important where a PSTN connection might be slow or even unavailable for a while. To hear a recorded message such as 'Lines from your locality are engaged, please try later' can be a regular frustration.

A tie-line provides an immediate dedicated link which does not have to contend with other public users of the system. It attracts a much higher line rental for exclusive 24-hour use of a circuit (the rental is normally based on the length of the circuit), but no call charges. A special form of private circuit is the so-called 'Hotline' reportedly installed between the major world powers during the Cold War so that they could rapidly set up personal conversations in the event of an international emergency.

Out-of-area Lines

It is possible to combine a tie-line with a PSTN connection, in the form of an 'Out-Of-Area' line. Suppose a business is located outside the local telephone area of a large town but makes a large number of calls to various telephone numbers within the town. It can rent a tie-line from its premises to the nearest exchange within the town's telephone area, so that its calls are charged as if they originated in the town.

Of course it will have to pay a comparatively high rental on the tie-line for this facility, but this can be cost-effective. It can also use the facility in the reverse direction, allowing people in the town to call it at local rates although it is outside the town area.


Because of the comparatively high charges for PSTN calls to mobile telephone networks, it can often be cost-effective to rent a land-based tie-line to a cellular or mobile service provider. This would be particularly true of a business that has a sizeable fleet of mobile phones all on the same cellular network.

Access Levels

When you dial a call, the Switch has to determine what type of call it is - to another extension, to the PSTN, to branch A via a tie-line, to branch B, and so on. Even where there are no tie-lines the Switch has to know whether it's an internal or external call that is wanted.

Normally, for an internal call you just dial the extension number. No outside line is needed, and the Switch routes the call internally to the extension, free of charge. If you dial an Access digit - usually 9 for the main PSTN connection, the Switch will take that as an instruction to seize a free Trunk from a defined PSTN Trunk Group, which will provide you with a connection to the outside world. The Switch does not send the 9 to the PSTN, but will send all subsequent dialled digits.

In the UK and some other countries, the convention is that you dial O for the Operator and 9 for an outside line. Elsewhere, however, the drill might be O for an outside line and 9 (or some other digit) for the Operator.

Where 'Level 9' (as it is called) is used for PSTN access, no extension number may start with a 9, for obvious reasons, and the numbers used for different Access Levels must be chosen in conjunction with the Extension numbering system.

Call Information Logging

Although recording of telephone conversations is used in certain situations, Call Information Logging (or simply 'Call Logging') is in more general use. As soon as each call is terminated the PABX will output a stream of data relating to the call, which can be captured and analysed in various ways.

Itemised billing is now commonplace, and as well as listing all outgoing calls - which would be information overload in a business setting - call logging systems can produce reports based on filters or parameters. Such reports could include an analysis of, for example:

  • The most frequently dialled numbers throughout the business or a department
  • The most costly destinations dialled
  • The most frequently used, alternatively the most costly, extensions

Reports can also be compiled of calls to particular numbers, or calls to certain classes of numbers (eg mobile phones, premium rate services, overseas calls, or other pre-defined groups).

Incoming call information is also logged, and this can provide data on ring times or time-to-answer (average ring times, longest ring times, and so on). And information on incoming and outgoing calls can be combined to show how much total time the whole business, a department or an individual is spending on the phone.

Call logging data also includes information on how trunks are used, so usage reports are available on individual trunks or groups of trunks, showing how much (or little) they are used. (The unit of telephone traffic measurement is the Erlang. One trunk occupied continuously for one hour would have a traffic density of one Erlang 2 ).

Call Logging is also very useful for analysing actual call data to determine which of several competing tariffs is actually best for which types of call. This enables a highly cost-effective implementation of Least Cost Routing.

All these reports can be configured by time of day or other parameters, to show peaks and troughs and highlight possible problem areas. They can also be configured by department or by extension, and the period covered by each report could be a day, a week, a month, a year, or some other specified time-frame.


Convergence is what is referred to as Computer-Telephony Integration (CTI). As telephone systems become more computerised (the modern PABX is actually a computer) and computers take over more of the traditional role of the telephone, what used to be two separate technologies are converging. This has led to the development of the integrated Call Centre, where an operator (in call centres they are usually called 'agents') uses a computer not only to manage calls (deciding which call to answer, and using functions such as putting calls on hold, or forwarding calls to another agent) but also to display and modify data relating to the caller.

CTI also enables use of the Internet in telephony applications, and use of IP (Internet Protocol - the method which the Internet uses for controlling data passing through it) for telephone conversations. Such technologies are bringing closer the day when we will no longer be content to hear someone's voice on the telephone, we will have to see their face too. Even if they are chatting by the water cooler, or stuck in a traffic jam, or lying on the beach at the time.

The Home Switch

It is quite feasible to enjoy a number of the advantages of the office telephone system on your home telephone. You can easily install SCRA, or Single-line Call Routing Apparatus, as a DIY project. You can also at not much extra cost have a two-line system. Single-line systems tend to cope with up to four or five extensions, while two-line systems will normally handle perhaps eight or ten.

An SCRA enables you to take a call for your teenage daughter, put the call on hold, ring your daughter's room, announce the call, persuade your daughter to dry her eyes and speak to him after all, and put the call through. The two can then talk without being overheard by anyone else on the system. While this call is in progress an equally private 'internal' conversation can be in progress between the girl's mother in the living room and her father in the potting shed. Some SCRA systems can be linked to a door phone, so that you can speak to a personal caller from any telephone extension.

By default an incoming call will ring all extensions. You can set up Do Not Disturb on individual extensions, however, so that incoming calls do not ring there. On two-line systems you can configure which line rings which extensions. Even a single-line system can be used in a small organisation, for example a doctor's surgery. A Priority feature lets you nominate one extension to ring on an incoming call. This would be the receptionist's extension, who could then consult the doctor and put the call through or redirect it elsewhere.

Such systems can accommodate all the usual telephone apparatus such as cordless phones, headsets, fax, modems, answering machines and so on. They are extremely useful for purely residential purposes, let alone a home business, and this Researcher cannot begin to imagine coping with family life without one.


Abbreviated DiallingFrequently dialled numbers can be stored and dialled by using a short code, hence the alternative term 'Short-Code Dialling'. Some of these can be set up centrally for everyone to use, and others can be set up on a personal basis by the extension user.
Broker's CallThe extension user can put the caller on hold while making an enquiry to another extension, and can then switch between the parties while maintaining secrecy. Also called 'Shuttle Call'.
Call BarringAn extension can be prevented from making any calls or certain classes of call, eg all PSTN calls or overseas calls.
Call Diversion or Call ForwardingIncoming calls are automatically sent to another designated extension either unconditionally or under certain conditions such as if the first extension is busy or does not answer within a pre-determined period.
Call PickupAn extension user can answer a call ringing on any other extension within the same pre-determined 'Pickup Group'.
Call Progress MonitoringAlso known as 'On-hook Dialling', allows the progress of an outgoing call to be heard via a loudspeaker without lifting the handset. Once the call is answered the handset is needed for speaking to the called party. Full Hands-Free Operation utilises a built-in microphone so can dispense with the handset.
Call WaitingAn indication during a call that another caller is waiting. The user may be able to handle both calls by 'Brokering' or 'Shuttling' between them.
Camping On BusyIf a called extension is busy it will automatically ring the caller back as soon as it is free.
Conference CallAn exchange line caller and several extensions can be connected together in one conversation.
Do Not DisturbPrevents the extension from ringing.
Executive IntrusionAn authorised person can break into a call in progress, perhaps to announce an important call or meeting.
Follow MeAn extension user moving around the building can successively divert calls to the nearest extension.
Hunt GroupTwo or more extensions are in a designated group such that any incoming call will attempt to connect to each extension in turn until a free one is found.
Interactive Voice ResponseIVR allows the caller to interact directly with information in a computer database. The caller receives messages or 'prompts' from a synthesised voice and can enter numeric items such as an account number, or use a simple numeric code (Eg 'Press 1 to confirm, 9 to cancel').
Night ServiceWhen no Operator or Attendant is available, incoming calls are diverted to one or more pre-determined extensions; alternatively Night Bells are rung and any extension can pick up calls.
Voice MailAlso known as Voice Processing or Voice Messaging. A message storage and retrieval system for each extension and even for selected outsiders, similar to an answering machine, and often with a 'message waiting' indication. Usually a supervisor is able to track unanswered messages on the system.
1 Not to be confused with DID (Direct Inward Dialling), DISS (Direct Inward Station Selection) and other acronyms referring to a system whereby the caller first calls the business then enters the extension number, as with Auto-Attendant systems. 2 Agner Krarup Erlang (1878-1929) was a Danish mathematician who joined the Copenhagen Telephone Company in 1908 and began applying probability to various problems arising in the context of telephone systems. In 1917, he gave a formula for loss and waiting time which was soon used by telephone companies in many countries including the British Post Office.

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