When it comes to a discussion of telecommunications, referring to a telephone exchange may be used in a couple of different ways. One usage refers to specific forms of telephone equipment, while the second has to do with the use of it as a term of designation.
As a reference to telephony equipment, a telephone exchange is often also called a telephone switch. Originally, the exchange was created as a means of a provider receiving an inbound phone signal, interacting with a subscriber, and then switching the signal to whomever the subscriber wished to speak with. This was referred to early on in the history of telephony as "exchanging a call."
Over time, the process became more complicated, as technological advances allowed for the creation of exchanges that would allow calls to be routed from a local exchange to one in neighboring cities, states, and ultimately to international locations. The creation of switching overlays that worked in conjunction with the local exchanges led to the creation of the term “telephone switch.”
The first hints of the automatic switching to come came in 1891, with the creation of the stepping switch. A stepping switch allowed for the first real automation, which involved being able to reach subscribers in the immediate area by using a telephone dial to signal a four number sequence. This allowed the phone exchange operators to focus on exchanging inbound and outbound signals that needed to be processed outside a local calling area. The stepping switch helped with the designation of the terminating number, however, as the caller could ask the operator to connect the call to a neighborhood and then give the four digit number for the subscriber in that neighborhood.
In time, the term “telephone exchange” came to also be associated with the actual location and number designation for an individual subscriber. The four digit number referred to a local exchange within the city or town, while the addition of the name of the neighborhood calling area added to the front end of the numbers allowed operators to switch a call from another telephone switch into the local area.
Eventually, the procedure of using both proper names and a number sequence became extremely complicated, and many areas began to switch to three digit number prefixes to replace the older neighborhood designations. Since the 1960s, all areas of the United States now use a local seven digit calling plan for local calls within the area, and have the ability to dial the numbers directly through an automatic switch.
In time, the creation of area codes were added to the overall number designation, allowing for direct dial of both national and international long distance calls with no operator intervention. While the amount of numbers used in the dialing plans of various countries varies, all of them now use numeric telephone exchanges, with no use of letters to access any point around the world.
Whether using the term to refer to the original designation for a telephone switch, or the newer designation to refer to a telephone number, a telephone exchange serves the purpose of connecting people around world, both locally and on an international basis.