Until recently, all businesses used traditional analog landline telephone systems. These systems were connected to the Public Switched Telephone Network (PSTN) and ran on the telephone company's copper wiring.
While these multi-line phone systems were extremely reliable, they required costly equipment that was expensive to install and maintain. Besides the copper wiring that had to be run through the business, landline systems also required a costly private branch exchange (PBX). The PBX is what is used to switch calls between the business and the telephone network. It's also what was needed to offer various calling features, such as voicemail, conference calling and automated attendants.
Today, traditional analog multiline landline systems are becoming obsolete. Telephone companies aren't developing new analog systems and are no longer providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems up and running is also becoming increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.
Nearly all new business phone systems use VoIP. Instead of running on copper wiring like landline systems do, VoIP systems run on a high-speed internet connection. It's the same connection most businesses already use to get online. When making a call, the user's voice is instantly converted into a data packet that is moved throughout the internet like other pieces of data, such as emails and images. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.
In addition, VoIP systems work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access calling features they previously couldn't afford, like an auto attendant, conference calling and call recording. VoIP systems easily integrate with computers, which lets employees make calls from their machines and have voicemails sent directly to their email, among other things. It can also be beneficial for businesses using customer relationship management (CRM) programs.
Similarly to how a traditional landline system works, the VoIP provider allows you to choose a phone number with a local area code, a toll-free number or both.
Scalability is also a big benefit to VoIP phone systems. Most VoIP providers allow you to add new lines on your own within the system's online portal. This makes the process of getting new employees set up with their own line a simple one.
When VoIP was first introduced, there was much concern over the call quality. Many felt calls sounded staticky, and others had problems with calls dropping off. As the technology has improved, so has the quality of the calls. In fact, the connection quality difference between VoIP and landline is now so insignificant that most users have no idea when they are using VoIP and when they are on a landline connection.
The only businesses that can't take advantage of VoIP phone systems are those in communities without access to high-speed internet service or with unreliable internet service.
In addition to offering on-premises systems like landline systems use, many providers offer hosted VoIP systems that have all of the equipment stored in the cloud. If you have a VoIP on-premises system, you will also need SIP trunking or PRI circuits in order to connect a dial tone to the system. Hosted VoIP systems include dial tone service.
A huge factor when choosing a phone system for your business is deciding how you want the PBX equipment, which is what's needed to run the system, hosted. Some phone system providers offer on-premises or cloud based systems, while others offer both options.
With the on-premises systems the PBX equipment is installed inside your business. Your IT team is responsible for securing it, keeping it up and running and upgrading it when necessary. Hosting on-premises gives businesses the ability to keep a few traditional landlines working alongside SIP-trunked VoIP lines.
Similar to landline systems, on-premises VoIP systems have all the equipment installed and housed on-site inside each business. The hardware is typically stored in your company's server closet. With this option, you are in total control of your system. You aren't relying on anyone else to make sure it is running, and you can configure it to your exact specifications. However, since it is located at your place of business, your IT staff handles all repairs and upgrades. On-premises systems need to be professionally installed.
Another difference is security. On-premises systems don't have the same security concerns as cloud-hosted solutions, since all the data is stored within your business. Experts say businesses with serious concerns about keeping their calls and phone system data private are best served by on-premises systems. This option allows businesses to configure their firewalls exactly as desired to protect the phone system from any type of intrusion.
Other businesses well-suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a system they can customize.
Cloud-hosted phone systems are becoming popular among small businesses. With this type of system, the equipment is housed and maintained in the cloud by your provider, which handles all maintenance and upgrades. The only equipment the business needs is the phones themselves.
Most cloud systems are essentially plug-and-play ready. Once you activate your service and receive your phones, they can be plugged into any Ethernet port, and calls are ready to be made and received.
The downside to cloud-based solutions is that businesses are at the mercy of the phone system provider to keep their service up and running. To ensure this happens, most of the top vendors have several redundancies built into their systems. This includes having multiple data centers so that if one goes down, the data can be transferred seamlessly to another to ensure the continuation of service.
One important factor to consider if choosing a cloud-hosted system is bandwidth. Consult your business's internet service about obtaining the bandwidth required to support a new phone service. The phones of most of the cloud-providers we considered required just short of 100 Kbps per phone call for the best quality. You'll also want to estimate internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.
Cloud-based VoIP systems are ideal for small businesses because they have few upfront costs and consistent monthly charges that can fit easily into a budget, and don't require trained IT experts to keep them running.
Businesses using these systems are best served by installing backup equipment that can reroute calls during power or internet outages. With these systems, new users and features can be added via an online portal. Cloud-based options also easily support multiple locations.
Nearly all of the providers we examined had an uptime of at least 99.990 percent. That means their systems are down for just a handful of minutes each year.
Some phone system providers also offer a hybrid hosting option. The hybrid option can be used as an intermediary step toward evolving to a virtual PBX. Hybrid systems combine traditional on-premises PBX equipment businesses already had with VoIP service.