Private Branch Exchange - This is the term used to describe your typical phone switch. A PBX is an in-house telephone switching system that interconnects telephone extensions to each other, as well as to the outside telephone network. It may include functions such as least cost routing for outside calls, call forwarding, conference calling and call accounting. Modern PBXs use all-digital methods for switching and can often handle digital terminals and telephones along with analog telephones. PBX's can date back to the late 1800's and almost every company has one today.