- VoIP vs. Landlines: Which Phone System Is Right for Your Business?
- Types of telephone systems
- 1) Analog
- 2) VoIP
- 3) SIP trunking
- Three benefits of an analog phone system
- 1) Availability
- 2) No bandwidth requirements
- 3) Analog equipment
- 1) Superior reliability
- 2) Greater flexibility
- 3) Lower costs
- 4) Advanced business features
- 5) Better sound quality
- VoIP vs landline comparison
- Breakdown of phone system costs
- Which business phone system is best?
- VoIP for Business: Why It Makes Sense
- What is VoIP?
- Benefits of VoIP
- Call quality
- Simplified equipment
- Ease of use
- Remote connectivity
- Advanced features
- Is VoIP right for you?
VoIP vs. Landlines: Which Phone System Is Right for Your Business?
Is VoIP better than landlines? What advantages does a traditional analog phone have over an IP phone? It’s crucial to understand these differences when choosing the right phone system.
You’re ly familiar with landlines installed by the phone company. As broadband internet connections are available to 95% of Americans, there are many alternatives to consider.
In this guide, we’ll tell you about the types of phone systems, explain how they work, and provide a comprehensive comparison of them. Let’s dig in!
Types of telephone systems
When considering a phone system for your business, you have many options. Besides handling phone calls, their functionality is much different.
There are three types of phone systems available today: Analog, VoIP, and SIP trunking.
Analog phone systems consist of traditional landlines installed by the local phone company. It’s also known as Plain Old Telephone Service (POTS). For business functionality, you might need extra telecom hardware.
Analog phones function in the same way they did more than a century ago. Sound is transmitted using electrical pulses on a wire. These wires connect to the phone service provider.
A company would configure an on-premises Private Branch Exchange (PBX) with one or more phone lines. A PBX creates an internal phone network, placing employees onto a shared phone system.
Dubbed “copper wire,” voice service can only travel wherever you trenched and laid wires. Traditional phone service is subject to bad weather, installation, and expensive long-distance charges.
Voice over Internet Protocol (VoIP) uses your existing internet connection for phone calls. It also includes many advanced calling features built into the service.
A VoIP phone system is also known as digital phone service or hosted phone service. It works by converting sound into data packets and transmits them to a VoIP provider. VoIP providers then direct calls between the Public Switched Telephone Network (PSTN).
This happens in milliseconds thanks to blazing-fast cable or fiber broadband internet connections. VoIP lets small businesses get all the best telecommunication features for a fraction of the cost.
In terms of features, landlines are no match against VoIP. If you prefer having more control over your calling experience, VoIP telephones are your best bet.
An example showing how Voice over Internet Protocol (VoIP) works.
With VoIP, companies can place and receive calls without any extra hardware. All they need is a computer, laptop, or cell phone to use their business phone system.
Keep in mind that employees are most comfortable with a desk phone. IP phones turn sound into digital signals and maintain connectivity with a VoIP provider.
Keep reading to find out if VoIP is a direct replacement for conventional landlines.
3) SIP trunking
SIP trunking provides an existing PBX voice connectivity from a VoIP service provider. Trunking requires steep technical skills to operate.
Trunking is a phone service without advanced features businesses might expect. You have to configure voicemail, call forwarding, call routing, auto attendants.
So, what’s the advantage of SIP trunking? If you’re already managing your PBX and want the cloud’s proven scalability and reliability, trunking is for you.
If this sounds your jam, you’ll enjoy our deep-dive into SIP trunking. For the rest of this guide, we’ll focus on VoIP vs. landlines.
Three benefits of an analog phone system
Analog phone systems aren’t always the wrong choice. In some cases, they can be the best option for business communications.
Landline telephones have time on their side. Millions of miles of copper wires have been installed over the last 140 years. Telephone companies built the telecommunications infrastructure for reach, not necessarily speed. For strictly voice calls, it works.
2) No bandwidth requirements
The 5% who don’t have access to broadband impacts more people than you might realize: 16 million people. For a small office, digital phone service requires 100 Kbps per line, which could be more bandwidth than available.
Broadband reaches nearly 94% of the United States. (Microsoft)
3) Analog equipment
Some offices have devices that need landlines, such as alarms. These depend on a wired phone line to transmit information. An Analog Telephone Adapter (ATA) solves this in many circumstances. Some equipment exchanges data on the line (akin to days of dial-up), and VoIP codecs can interfere.
If you don’t have broadband or must keep specific legacy equipment, then analog-based landline service is better for you. If you have a high-speed internet connection, a virtual phone system is best.
1) Superior reliability
Voice over Internet Protocol relies on trusted and proven internet technologies with proven reliability. Data packets reach their destinations reliably. Nextiva’s business communications network uses several redundant data centers across North America for enterprise-grade reliability.
VoIP lets you handle calls without busy signals or static on the line. You can adjust your call flows instantly. Even if you experience an internet or power outage, you can direct calls to your cell phones. You got this.
2) Greater flexibility
VoIP technology lets you work from home without clients or coworkers noticing a difference. You might even boost productivity without the commute or interruptions. Your work number is secure and private and goes wherever you go — even on your mobile phone.
If you have a computer or smartphone, you can stay connected to the office. Need to take a vacation? You can direct calls to your team or direct them right to your voicemail and screen them via your email. VoIP provides your team with all the top calling features without any extra hardware. It just works.
3) Lower costs
The internet has brought down the costs of many products and services. Pricing for business phone service is no different. Companies can save up to 65% off their communication expenses with internet phone service.
Besides the lower monthly rate as low as $18.95, there are additional savings with no installation fees or bulky telecom equipment. To use VoIP, all you need is a computer or mobile device. Businesses stretch their budget further with built-in advanced calling features included, such as automatic call routing, auto attendants, text messaging, and video conferencing.
4) Advanced business features
Every company has distinct communication needs. Voice over IP delivers premium business features to stay in touch with your team and serve customers.
- Auto attendants direct callers to the right person or department with an intuitive phone menu.
- Call queuing lets multiple customers wait on hold until your team takes their call.
- Call recording stores phone calls in the cloud so you can listen to them
- Call forwarding routes calls to another number, team, or answering service when you’re unavailable.
These advanced calling features let you handle more customers and enhance your team’s productivity. Be sure to check out our guide to the top VoIP features for your business.
5) Better sound quality
Are you tired of dealing with low-quality phone calls? Customers are. They’re tired of repeating themselves. If there’s static on the line, you can’t do much to improve it other than replacing wiring.
HD voice increases the audio quality of your phone calls. Cloud phone systems leverage wideband audio codecs to improve the sound quality in every VoIP call. Compared to landlines, you’ll sound much better and hear every word with higher fidelity.
VoIP vs landline comparison
How do landline phones stack up against their modern successors? Here’s a side-by-side comparison of VoIP vs. analog phone systems.
|Phone calls (PSTN)||Yes||Yes|
|User-to-user calls||Yes||PBX required|
|Ease of setup||★★★★★||★★★|
|Requires internet||Yes, 100 Kbps per line||No|
|Wireless||Wi-Fi, DECT, and Bluetooth headsets available||DECT and Bluetooth headsets available|
|Reliability during internet/ power outages||Calls can be routed to another number or voicemail.||Calls drop or are routed to voicemail.|
|Technology||IP telephony (SIP, TLS, and SRTP)||Analog voice signals|
|Setup cost||$0||$110 per jack|
|Auto attendant||Included||PBX required|
|Phone number privacy||Included||Varies|
|Phone number changes||Included||$27|
|Phone extensions & hunt groups||Included||PBX required|
|Remote work capable||Yes, softphone apps||Call forwarding|
|Call encryption||Yes (TLS & SRTP)||No|
|Integrations (CRM, text messaging, surveys)||Yes||No|
|Sources: VoIP information Nextiva’s business phone plans. Analog information is business rates published in ILEC tariffs for Arizona. Updated on January 20, 2021.|
Related: Pros & Cons of Cloud-Based PBX Phone Systems
Breakdown of phone system costs
If you haven’t examined the costs of your commercial phone system lately, you should. Some of your phone bill charges will shock you.
A business phone system’s cost isn’t just the monthly price, especially if you manage a PBX.
There are several additional costs you have to factor in as well:
- Installation (wiring)
- PBX equipment
- Labor costs to configure
- Advanced features
- System updates
- Training and support
- Commercial real estate
- International calls
Landline phone systems can easily cost several hundred dollars per user every year. Landlines aren’t wise in the era of remote work and abundant broadband internet access.
A virtual phone system Nextiva absorbs these costs into a straightforward monthly rate per user, starting at $18.95.
Which business phone system is best?
A business counts on its phone system to keep employees connected and to serve customers. Most workplaces now have an operational need to enable staff to work from home.
Landline phone service can’t match VoIP’s flexibility, features, and ease of use. If your existing phone system works and you have no plans to change how you use it, it might be acceptable to keep it.
VoIP phone service is a top choice among enterprises and small businesses. It provides organizations the most scalable and secure ways to communicate. With today’s reliable internet service, uptime is never an issue. Plus, it can cut costs by more than half.
As an industry, Unified Communications market growth surged by 25% CAGR last year, while landlines declined by 10%.
Reviewers at U.S. News & World Report named Nextiva the best business phone system eight providers. No other solution could top its value, advanced features, and friendly customer support.
Joe Manna is a content marketing manager for Nextiva who obsesses over the Oxford comma, embraces the em dash, and thrives on authoring content that compels people to take action. He is savvy with networking technology, a staunch privacy advocate, and in tune with today’s business needs. His expertise helps companies large and small serve more customers.
VoIP for Business: Why It Makes Sense
VoIP (Voice over Internet Protocol) phone systems make good sense for small businesses. In fact, recent research finds that more than one-third of all businesses are now using a VoIP phone system, with the vast majority of those being businesses with fewer than 50 employees.
“With VoIP, voice data is sent [via an Internet connection] in digital form rather than plugging into a traditional phone jack you would over the public switched telephone network (PSTN),” Tina Liu, senior product marketing manager for 8×8, told Business News Daily.
What is VoIP?
Voice over Internet Protocol (VoIP) is internet-based phone service. Rather than transmitting voice conversations through traditional phone lines, the conversations are digitized and routed through internet lines.
First introduced commercially in the 1990s, VoIP technology has improved significantly since then, and so has its popularity. In the early days, users complained that the sound quality wasn't as good on VoIP as it was on a landline, but those issues aren't a concern today.
Editor's note: Looking for a VoIP phone system for your business? If you're looking for more information, use the questionnaire below to have our partner, Ring Central, provide you with information for free:
Computer software records your voice and then codes it into a digital signal, which is then sent over the internet. All of this happens instantaneously.
Benefits of VoIP
There are several reasons why more businesses are switching to VoIP phone systems, which don't necessarily revolve around cost.
VoIP systems now take advantage of advanced high-definition codecs that have vastly improved the voice quality, making modern VoIP networks sound even better than landline networks, said Matt McGinnis, associate vice president of product marketing for VoIP provider RingCentral.
In addition to better sound quality, the cloud is also making VoIP a more viable option for small businesses. Rather than having to run special wiring and install special equipment, companies that choose a cloud-hosted VoIP phone solution don't need to purchase any equipment or employ an IT staff to install and maintain it.
“Cloud VoIP systems dispense with most of the upfront hardware and software and only require a broadband connection to activate,” McGinnis said. “This reduces the amount of capital expenditure needed and makes it easy to turn up and deploy.”
The advancement of VoIP technology and its relatively low cost make VoIP an ideal choice for small businesses, but businesses should still do their homework before committing.
Ease of use
Lisa Chu, owner of the children's formal clothing company BlackNBianco, said that she s that her VoIP system has eliminated all of the complicated tech support that her landline required.
“When the landline goes down, diagnosing and fixing the issues are never easy or quick, leaving me and my employees extremely frustrated,” Chu said. “VoIP is very user-friendly, and having the proper network, we have yet to encounter any significant issues that hinder our ability to communicate with our customers.”
Using a cloud-based solution also makes it simple to add phone lines when new employees are hired, said Tyler Yost, director of strategy at the marketing company Blue Corona. He said his company has grown numerous times over the past five years, and each time, it was a simple process to add phone lines.
“We click two buttons on the interface online, the phone arrives a few days later, we plug it into an Ethernet port and we're off and running,” Yost said.
One of the biggest advantages of VoIP, especially for businesses with employees who work remotely or in multiple locations, is that it allows employees to bring their business phone line with them anywhere they go.
Most VoIP providers have a mobile app that can be set up to ring when a customer or client calls an employee's business line.
Additionally, these apps allow employees to use their business line to make outgoing calls from their mobile phones.
Elizabeth Becker, a client partner for the Florida-based IT staffing firm Protech, said she s that their VoIP system allows for employees to be location-independent.
“VoIP systems allow for business as usual, no matter where your employees may be physically sitting,” Becker said. “By having a VoIP system, it's easier to give a little flexibility to employees while still staying connected.”
Cost is another reason businesses are making the switch to VoIP. Most VoIP providers charge a monthly per-user fee, rather than a fee how many minutes everyone in the company spends on the phone. In fact, there are VoIP providers that allow free access to their services.
Free providers typically offer fewer features than paid services, but it highlights how low the cost of VoIP can get.
That, along with not having to spend exorbitant amounts of money on special equipment — as well as on an IT staff to keep it up and running — can be a significant cost savings for many small businesses.
Some cloud-based solutions are as cheap as $10 to $25 per user, per month.
“A major advantage of VoIP and Internet telephony is that it avoids the tolls charged by ordinary telephone service,” Liu said. “In addition, all of your business phone service, IM/Presence, mobility, videoconferencing service and calling charges including local, long distance and toll free can be consolidated with one VoIP provider.”
VoIP can match traditional calling features holding, transferring, call forwarding, caller ID and more. Further, with VoIP, features call recording are much easier. The call is already digitized, so adding a feature to record the digital file is extremely easy.
VoIP services can offer business tool integration. This allows your calls to integrate with other communication services chat and email. These features can organize communication by party and time, meaning you can seamlessly review a conversation that took place across multiple media.
VoIP also provides more powerful conferencing features, such as video integration, which is something every business should ensure they can access.
Is VoIP right for you?
Determining if a VoIP phone system makes sense for a small business all depends on the quality of its network and its needs, said Chris Sherwood, an Oregon-based phone system consultant.
“Most importantly, you want to ensure they have enough upload bandwidth for the amount of phone calls they expect to have running concurrently,” Sherwood said, commenting on what he looks at when deciding if VoIP is a good option.
In addition, businesses also have to factor in whether they have enough bandwidth to handle the other traffic on the network, and whether or not their firewall and router can prioritize VoIP traffic over regular Internet traffic, Sherwood said.
If the network can support it, then VoIP is ly a good option for many businesses.
“For businesses where VoIP does makes sense, there are many benefits, including [a] reduction in costs in terms of both maintenance and monthly recurring usage, ease of use and enhanced features that you would previously only find in an enterprise-level PBX,” Sherwood said.
Voicemail, virtual receptionists, call forwarding, call recording, on-hold music, voicemail-to-email, conference calling, video conferring, instant messaging, call screening, missed alerts and call logs are among the many features offered by most VoIP providers.
If you think VoIP phone systems are right for your business, check out our recommendations of the best VoIP phone systems, as well as a comprehensive list of VoIP providers.
If you are interested in learning more about what to look for in a business phone system, check out our phone system buyer's guide. If you know what you want, we would encourage you to read about what we recommend as the best phone systems for a range of business types.