Written by Fernanda Alvarez Piñeiro Updated on 6 April 2023 On this page What is a telephone exchange system? How does a telephone exchange system work? The Big PSTN Switch Off What are the different types of telephone exchange? FAQs Expand Our site is reader-supported – by clicking our links, we can match you with a potential supplier, and we may earn a small commission for this referral. The big switch off happening by December 2025 will mark the end of traditional landlines. Homes and businesses will have to move over to a digital network.But what does this mean for your business?Telephone exchanges have been around since the dawn of telephone communication. Up until the 1960s, they were operated manually, with people employed specifically to connect one line to another on a manual switchboard. These days, however, all exchanges happen digitally. And with the rapid rise in popularity of remote work, these digital exchanges are reigning in on cloud-based telephone technology, transforming the way businesses communicate with each other and their customers. Despite being such an integral part of our communication system, we don’t really know too much about telephone exchanges. We kind of take for granted that we can magically pick up a phone, dial a number, and talk to someone halfway across the country, or even halfway across the world. This article aims to shed some light on the old telephone exchange system. Read on to discover what it is, how it works, and what its made from. What is a telephone exchange system?A telephone exchange system acts as an intersection between two phone lines. This is because a direct phone line between two establishments doesn’t actually exist. Think of it as taking the tube – sometimes you can’t travel to your destination directly. Instead, you have to switch lines at an intersecting station to reach it How does a telephone exchange system work?The Public Switched Telephone Network is a wired system through which landline telephone calls are made and received and the circuit is based on successful circuit switching. In order to connect one phone to another, a phone call will be routed through a number of switches which operate on local, regional, national or international systems. Connections which are established between the two phones is referred to as a circuit.Put simply, a telephone exchange links your line with the receiver’s line to create a circuit – this itself is a connected call. ▶ Read more: The 8 Best Phone Systems for Small Businesses The Big PSTN Switch OffPSTN stands for Public Switched Telephone Network and is the traditional telephone network in the UK. BT Openreach have now decided that the equipment is too old and these will now be switched out for fibre-optic cables. This means that every home and business will be moved onto a digital network.ISDN (Integrated Services Digital Network) is used by businesses to make phone calls, video calls, and transmit data over PSTN. Businesses still using ISDN for various technologies such as ATM machines, printers, and alarm systems will lose service once the PSTN has been turned off.In order to prevent losing service and to improve connectivity, businesses should switch to a VoIP (Voice over Internet Protocol) subscription. While the PSTN will be completely turned off by 2025, it has already begun so it's best to get ahead before you're forced to. If you need help on how to switch your phone service, check out our guide on how to change landline providers. ▶ Read more: Why is the PSTN Switch Off a priority for businesses? Save by Comparing Telephone Systems Quotes from Leading Suppliers Do you already have a Telephone System? Yes No What are the different types of telephone exchange?There are two types of telephone exchange system – public and private. Conceptually, both do the same thing. The only difference is a public telephone exchange system only serves external communications, while a private telephone exchange system serves internal and external communications. The public telephone exchangeAll lines within a certain area are connected to a local exchange. Your office is connected to a local exchange via a copper or fibre-optic line, depending on what type of line is available.In basic terms, this is how your phone call travels from your telephone to your receiver’s telephone.For international calls, there are few additional stages. Instead of travelling straight from one exchange to another, the call has to travel via a long distance telephone carrier. On a basic level, it looks a bit like this: The private telephone exchangeA private telephone exchange is often referred to as a private branch exchange (PBX). These units allow the internal transfer of calls, while providing a limited number of outbound call lines (trunks). Internal calls can be made from deskphone to deskphone, but one of the biggest benefits of a PBX is being able to transfer one external call to a range of multiple internal numbers. Most PBXs come with an auto-attendant, which allows callers to select which line extension they want to connect to. There are several types of PBX. These are:Traditional PBX (analogue)Hosted PBX (digital)Self-hosted PBX (both)An analogue PBX only sends and receives phone calls via traditional copper wiring. It acts as an internal exchange, connecting calls within the office, while also sending calls out to the local exchange. A hosted PBX uses the broadband network to send your digital phone call data to an offsite PBX server. Once there, it either continues as digital data to another digital phone system, or it’s repackaged into analogue data, suitable for the traditional telephone network. A self-hosted PBX can connect to both the traditional telephone network (via a SIP trunk) and the digital network. This means you can choose to make calls over the landline, or the internet, and you have a backup if the phone line or broadband network goes down. Did You Know? If you don’t already have a PBX phone system, it may be worth investing in one. A hosted PBX can be far more cost-effective than a 2-line or 4-line phone system, as well as being low maintenance – a real win-win. Verdict As UK businesses can no longer continue on the PSTN by December 2025, now is the best time to audit your current service. You might find that you no longer use some products or that you can switch to a different type to cater to your current business needs.The switch to VoIP won't just provide businesses with continued service but it will provide a more powerful and cheaper network. To get started, you can use our free quote tool to find the best phone system for your business. Get tailored phone system quotes for your business Receive Quotes FAQs What are the different types of telephone exchange? There are two types: public and private. All lines within an area are connected to a local exchange – this is the public telephone exchange. Private telephone exchanges come in several different forms including traditional and self-hosted. How does PSTN work? PSTN works through underground copper wires that are hardwired from businesses and homes to switching centers where calls are connected. Why is PSTN still used? PSTN has provided the infrastructure to facilitate telephone communication as it's made up of under and over ground wires, satellites cellular networks, and switching centers. What happens to landlines in 2025? Landlines will no longer be connected by December 2025 in the UK. In some areas this process has already started so it's important to begin the switch to VoIP soon. Should I keep a landline after the Big Switch Off? You'll no longer be able to use a landline without an internet connection after the 2025 switch has been made. The only thing you'll be able to keep is your landline number. How can I prepare my business for the Big Switch Off? Our best recommendation is to switch to a VoIP service as it will provide a much more powerful and affordable network. Written by: Fernanda Alvarez Piñeiro Fernanda is a Mexican-born Expert Market writer, specialising in providing in-depth insights about business software to help businesses of all shapes and sizes thrive. From VoIP systems to project management software, she’s passionate about helping businesses find the tools and methods that will help give them an edge over their competitors. Fernanda has ample journalistic experience, having written for a multitude of online magazines about topics ranging from Latin American politics to cryptocurrency.