VoIP business phone systems offer lower costs and more features than traditional PSTN landlines.
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There are several ways to communicate with customers and team members — chat, social media, collaboration software and Web conferencing, to name a few — but for many people, old-fashioned phone calls are still the way to go.
Small businesses have two main business phone systems from which to choose: Voice over Internet Protocol (VoIP) and Public Switched Telephone Network (PSTN), also sometimes referred to as Plain Old Telephone Service (POTS). VoIP uses the Internet and cloud technology to make calls, while PSTN uses traditional landlines. How do the two compare? To help you find the right phone system for your business, here are the pros and cons of VoIP and PSTN business phone systems.
Voice over Internet Protocol (VoIP)
The chief benefits of using a VoIP business phone system are low costs (compared to traditional landlines) and advanced features. For instance, Vonage's business solutions start at only $14.99 a month with features such as call forwarding, voicemail to email, multi-device access (desk phone, laptop or smartphone) and Outlook integration, while RingCentral starts at $24.99 a month and includes voice calls, Internet fax, texts, Web conferencing and high-definition video meetings. [Cutting the Cord: Are Landlines Dead to Small Business?]
"The cost savings can be substantial because most VOIP plans include your service and all of your calling for one low monthly price," said Michael Bremmer, CEO of Telecomquotes.com. "VoIP features allow you to have big company features for a small company price."
These features include being able to set up customized phone infrastructures based on the business's needs. Roberto Mejia, vice president of search and technology at Zizinya Web Solutions, said using VoIP (RingCentral) allows them to create a professional-sounding automated system that can route calls to the right person.
"We can create several phone numbers for each team member, several toll free numbers and even vanity phone numbers," Mejia said. "We get all of these features and much more for about the same price or less than traditional landlines."
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Although VoIP business phone systems can save businesses on phone costs, there is one primary drawback. Because VoIP relies on making calls online, its availability depends on having reliable Internet access. A business's Internet connection can affect both how calls sound and whether users can make calls at all.
"VOIP requires a high-quality Internet connection and most small businesses do not have the capabilities to manage quality of service or Internet prioritization," Bremmer said. "This can give you very poor call quality."
Moreover, if the business's Internet connection goes down, so do VoIP lines. To maintain access, users will need to re-route calls to alternative phone services, such as mobile phones.
"The downside to using VoIP is that if the Internet is down, so are the phones," Mejia said. Nonetheless, the flexibility VoIP phones have to offer more than makes up for this drawback, he said. "For example, we can set our phones to forward calls to any phone, several phones one after another, or several phones all at once until someone answers. Therefore, if the Internet is down, we can set it to forward calls to all of our cellphones."
This kind of setup is typical of VoIP services, which allows users to always stay connected.
"The risk [of downtime] is minimized by having a cellular backup to VOIP services," said Ken Morris, principal at management consulting firm Boston Retail Partners. A VoIP connection combined with a cellular backup is available with service-level agreements that have 99.999 percent uptime, he added. "This uptime is higher than the electric grid."
Public Switched Telephone Network (PSTN)
The obvious benefit of using a PSTN-based business phone system is that it is the most familiar. Setup is a breeze and requires only a phone call to a phone provider and a technician to hook up the lines. No additional software and hardware are necessary, and there are no learning curves or training required for employees to start using landline phones.
Where PSTN business phone systems ultimately fall short is when it comes to costs. As compared to VoIP, traditional landlines can cost hundreds more per month — many landline-calling plans start around $25 per month, but are limited to local or regional calling; features such as long-distance calling, toll-free numbers, unlimited minutes and call forwarding can double or even triple a business's monthly bill.
Furthermore, unlike VoIP that can bundle services into a low monthly plan, PSTN services typically offer only calling plans. To take advantage of other communication tools, users will need to seek separate vendors, which will incur additional costs on top of already high monthly fees.
Given the high costs of PSTN business phone systems, the cost savings offered by VoIP can be enticing. But depending on a business's current setup, making the switch may also result in additional expenses on VoIP software and hardware. This includes VoIP-friendly phones, VoIP enabled routers, and wiring and installation costs.
Originally published on Business News Daily.