From Phones With Cords to Mobile VoIP: Business Phones Throughout the Decades / Marketing Solutions / Last Modified: February 22, 2017

A well-chosen business phone system makes your business more efficient and plays a vital role in your company's success. A poorly-chosen...

A well-chosen business phone system makes your business more efficient and plays a vital role in your company's success. A poorly-chosen or dysfunctional phone system can lead callers to hang up, give up, or go to your competitors. A good business telephone system simplifies communication with customers and among staff members and is designed to address a company's unique communications needs. Here's how business phone systems have evolved over the years.

The Manual Switching Board

The manual switching board was introduced in 1878. It allowed many phones to connect through a single exchange, and the first switchboard was located in New Haven, Connecticut. The first switchboard operators were boys, but a shift was made to female operators because of their "better behavior."

Early Business Phones

By the 1950s, direct dialing that bypassed operators was introduced, and from 1950 to 1960, most households went from shared party lines to individual phone service. During this time, business switchboards became more sophisticated as well.

It was in the 1950s that the dial tone replaced an operator's voice saying "Number, please." Automated long distance switching arrived in this decade as well, and that allowed one operator to make the connection by dialing a series of routing codes to activate an electromechanical switch. By the 1960s, however, area codes obviated the need for these actions.

Private branch exchange, or PBX systems, came into their own in the 1950s and 60s, allowing up to 60 lines to be connected at a place of business, easing internal communications among employees and with outside callers. The Western Electric 608 was a PBX switchboard from this era that could serve up to 2,400 lines. This switchboard also marked a shift from wood construction to plastic and fiberglass. Cordless PBX switchboards were also introduced. Though cordless switchboards could only accommodate 12 lines, they were perfect for smaller businesses with lighter phone traffic.

Pre-VoIP Business Systems

By the close of the 20th century, PBX systems had services like caller ID, call forwarding, conference calling, intercom service, and voice mail. One hallmark of PBX systems was control over numbers that could or could not be dialed from within the system. This kept employees from calling long distance and international numbers or "900" numbers that would have been costly to the business. Today, smaller PBX systems cost in the hundreds, rather than thousands, of dollars.

VoIP Business Systems

VoIP stands for voice over internet protocol, and is the future of business telephone systems. VoIP systems optimize efficiency and reduce costs. The systems work by breaking down voice data into digitized "packets" of data which are segmented and transmitted by a packet switching network to a designated internet protocol address. The call is received by another computer that reassembles the data into a voice on the receiving phone. These systems all but eliminate the need for landlines.

Because telephone functions are digitized with VoIP systems, and due to the huge capacity of the internet, VoIP systems virtually eliminate overburdened phone lines and many of the expenses of traditional phone services.

Businesses today are migrating from traditional landline telephone systems to VoIP to cut costs. By 2008, some 80% of new PBX lines were VoIP systems. VoIP systems are evolving into unified services for all business communications, including phone calls, voice mail, email, and fax. By allowing both voice and data communications over a single network, business infrastructure costs are greatly reduced.

Mobile VoIP

Mobile VoIP (sometimes called "MoIP") is the next evolutionary step in VoIP telephony. Mobile VoIP allows voice calls to be made on mobile phones using VoIP and are available as an additional phone option for VoIP subscribers. Many VoIP systems allow subscribers unrestricted calling to other subscribers in the VoIP network. When mobile phones can access WiFi hot spots, users save even more money on voice and data charges, particularly during international travel. Though it is primarily marketed to ordinary consumers, mobile VoIP is rapidly becoming popular among those who use smart phones for business as well.

In 2012, mobile VoIP users are expected to exceed 100 million, and some even project 288 million mobile VoIP users by 2013. The biggest adopters of mobile VoIP systems are expected to be campus and corporate users. An open source project called Asterisk uses software including many popular PBX features -- like voice mail, conference calling, and interactive voice menus. Because Asterisk supports traditional and VoIP telephony, businesses can either build new phone systems or migrate existing systems to the new technology.

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