Landlines may eventually become a thing of the past, but ditching them for VoIP and cell phones is still a big decision for small businesses.
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Many consumers are dropping their landlines for cell phones and Internet-based phone lines to save some cash. For businesses, however, the decision isn't quite as easy. Whether you're a startup weighing your options for business phone systems, or an established business considering dumping your landline, money isn't always everything.
There are two primary alternatives to landline-based plain old telephone service (POTS): Voice over Internet Phones (VoIP) and cell phones. Although these alternatives offer many benefits, landline phones still have their place in businesses, said Gail Goodman, president at communications and phone training company ConsulTel. "Unless you have a constantly out-of-the-office profession, a landline phone is worth the cost for several reasons," she said.
One reason is that landlines offer constant availability, as they don't require an Internet connection or strong cell phone signal to make calls. This is particularly important during bad weather; an old-fashioned landline may be the only working connection during a storm or hurricane, Goodman said. [Phone Options: Landline vs. Cellphone vs. VoIP]
Another reason is voice quality. "Background noise is diminished when you sit in an office on a landline," Goodman said. Conference calls are also clearer, she added. "Clarity of sound is more critical than most people realize. Keep that in mind when considering which phone line will be best for your company."
To help you decide whether it's time to axe your landline, here are four factors to consider about VoIP and cell phones: cost, accessibility, voice quality and the future of business phone systems.
The cost-savings offered by VoIP and cell phones make it very tempting to drop landline phone systems altogether. While VoIP plans have lower monthly fees, using cell phones exclusively eliminates the extra expense of paying for two phone systems.
By switching to VoIP, businesses can potentially cut their monthly phone bills in half. Rajendra Hariprashad, a former U.S. Marine and owner of Ena's Driving School, switched to VoIP and reduced his bill from between $900 to $1,000 a month to approximately $450 to $550 a month, even with a higher volume of calls.
"I save tons of money monthly," Hariprashad said. "Our offices handle about 500 calls daily. There is no way I can go back to the landline system."
Still, the amount that individual small businesses will save depends on many factors. "Arriving at a reasonably accurate number can be quite difficult and time consuming," said David Boone, CEO at IT consulting firm Paranet. Businesses should thus ask the following questions, he said.
- How much will the new equipment cost?
- What will be the difference in the monthly bill?
- How do you place a value on the use of new calling and system management tools not currently available or in use?
- Can you save money by reducing the need for an onsite private branch exchange (PBX) system manager?
As with VoIP, businesses should weigh several cost considerations before choosing to rely on cell phones exclusively.
"For mobile businesses, you can't beat cell phones," said Ben Levitan, a telecommunications consultant and expert witness. "For costs, they are the worst." Those costs include monthly charges, as well as issues such as equipment maintenance, he said. "Cell phones break a lot. They get lost, and batteries die. Landlines get the least wear and tear."
Cell phones also come with one more cost that many small businesses might not expect: liability.
"Too many business people are getting into accidents because they are talking on their company-owned phones while driving," Levitan, said. As a result, companies are getting sued, lawsuits that Levitan handles on a regular basis. "Even if a company has a written policy against it [using cell phones while driving], they get sued because they should have known their employee talked and drove," he explained.
In addition to costs, a major argument in favor of landlines is accessibility; you can always access a landline phone. Unlike VoIP and cell phones, landline phones don't need an Internet connection or a strong carrier signal to make calls.
But that advantage may be exaggerated. "One would argue that landlines are more reliable, [and] that may still be true in some cases," said Ari Rabban, CEO of Phone.com, a small business phone system provider. Nevertheless, connectivity shouldn't be an issue with most VoIP solutions, he said.
While Internet downtimes and outages do happen, Rabban points out that today's broadband connections are much more reliable than in the past. VoIP also offers workarounds in the event users cannot access the Internet. "With most VoIP services, one can easily reroute to another phone, such as your mobile, until the local office Internet is fixed," he said.
Moreover, the fact that VoIP relies on an Internet connection may actually make it a more appealing option for small business owners and employees who wish to access their office lines wherever they go.
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"If you are not at your desk, the same phone can ring your cell or home office or even a temporary phone you set up," Rabban said. "Some VoIP services [also] have apps that you can download to laptops, tablets or smartphones that will let you dial out of those devices using your office number as your caller ID," he added.
For instance, Liran Hirschkorn, an insurance agent who runs BestLifeQuote.com, said using VoIP allows him to run his business from anywhere.
"I have an 800 number that forwards to my cell phone, and I can make outbound calls by dialing a softphone [a software that enables calls over the Internet] on my computer that dials out through my cell phone," Hirschkorn said. Using this technology, he was even able to sell a life insurance policy from a cruise ship, he said. "Next month I will be traveling overseas, and I already have a SIM card for my cell phone so it will work overseas, and I simply have to forward my VoIP 800 number to my cell phone [while] traveling."
On the other hand, cell phones come with their own set of accessibility issues. First, because these phones rely completely on a carrier's signal, the strength of your cell phone signal dictates where you are able to make calls. And this signal strength often depends on your building or location.
Mike Marlow, who runs Veteran Home Inspections, a one-person business, said that relying on a single cell phone for his communication needs means that customers can reach him any time. "[But] if I'm on a roof or in an attic or crawl space, it can be interesting trying to talk to a client," he said.
Additionally, cell phones can only take two calls at any one time, making it an extremely limited option for businesses that receive a good amount of inbound calls. "I only have one phone, so if I'm on the phone with a client, vendor, or [taking] a personal call, I have to put them on hold to answer, or even worse, let it go to voicemail," Marlow said.
Whether relying on cell phones would be the best solution for your company depends entirely on your business' needs and characteristics. Overall, as the only employee of his small business, Marlow said using one cell phone as his business phone has been the right choice for him.
As any cell phone user knows, voice quality largely depends on equipment, carrier signal and location. VoIP systems have historically suffered from poor voice quality, making many businesses hesitant to switch over. Today, however, VoIP advocates say voice quality is no longer a problem.
For those worried about this issue, many VoIP vendors allow businesses to try the service before making the switch, Rabban said. "It is not hard to set up [and is] easy to test."
These test drives should show users that VoIP voice quality has improved immensely in recent years.
"Early VoIP's call quality and reliability was, to be kind, sketchy," Boone said. As a result, not only was VoIP slow to catch on, but many early adopters also became frustrated and either returned to traditional landlines or relied solely on their cell phones, he said. "Now, thankfully, most of those early quality and reliability issues have been resolved."
The future of business phone systems
Technology changes every day, and some tools change more rapidly than others. As a small business owner, one of the toughest decisions you have to make is whether to stick to what's familiar or change with innovation. As the telecommunications industry continues to undergo a transformation, business phone systems will change dramatically, too. Although traditional landlines have yet to reach obsolescence, to date, all signs point to VoIP as the lead player in phone systems.
"Last year, individuals and businesses spent $66 billion on VoIP services and equipment," Boone said. VoIP spending is growing 7 percent annually, with forecasters expecting that it will reach $75 billion by 2015. "At that rate, experts who study how long it takes technologies to move from the cutting edge stage to 'must-have' say it will be standard in the next six years."
The latest moves by a major telecommunication company already forecast this impending shift, Boone said.
"Clearly, VoIP is the next big thing," Boone said. "So much so that AT&T is already taking the technical and legal steps to begin decommissioning its conventional landline network sometime after 2020."
Originally published on Business News Daily.