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Should You Go with VoIP or Traditional Phone Lines?

By: Marc Prosser


Businesses of all sizes are switching to Voice over IP (VoIP) telephone systems instead of traditional “landline” telephones to decrease their total phone costs and gain new functions that help their businesses.

What Is A VoIP Small Business Phone System?
VoIP telephones differ from “Plain Ol’ Telephone Systems” (POTS) by turning your voice data into digital signals which can be transmitted very economically via your broadband Internet connection. This means you don’t have to have dedicated phone lines, potentially saving you hundreds or even thousands of dollars annually in line costs.
There are various ways to use VoIP, such as connecting a converter box for your current POTS phones (such as Vonage does) or application software for your PC or Mac (such as Skype). But most businesses looking for business-class quality and features turn to companies that specialize in business-class VoIP services, such as RingCentral and Nextiva.
Your business-class VoIP system will allow you to have multiple extensions with a central dial-in point, individual voicemail boxes, a digital receptionist to answer and route calls, the ability to transfer calls between extensions and direct dial phone numbers for each person. You can use your computer as a phone or you can connect digital telephones that are feature-rich versions of your traditional POTS phone. Some systems even allow you to make and take calls on your cell phone.
Traditional Business Phone Systems
Traditional phone systems are either standard telephone—connected together at the phone company’s central office or individual lines—or they are part of a Private Branch Exchange (PBX). Think of a PBX as a central processor in your own office that is wired directly to all your phones and controls your calls.
While many of the more advanced PBX systems have similar features to VoIP, they typically require investments of thousands of dollars and need to be installed by a professional. Conversely, with VoIP, you can usually start it up online by filling out a web-form or ordering via phone—then configure it yourself, either to use headsets on your computers or to plug digital phones into your local area network. There is no upfront system to buy with VoIP, and while you can assign an administrator to set up your system and maintain it, it requires no special skills. Plus, you don’t have to worry about the PBX going down.
Comparing Costs
While there are various factors that go into the prices of both types of systems, the two main cost savings of business-class VoIP systems over PBX systems are the upfront cost of the hardware and the monthly costs of operation.
From a hardware standpoint, by going VoIP, you don’t have to buy that PBX to get the advanced functionality, saving you thousands of dollars immediately. You have the option of buying digital phones (typically $70 to $150 each) or working through a “soft phone” on your computer ($50 to $300 for a good headset with microphone if you don’t already have one). Similarly, you don’t have to worry about spending hundreds of dollars in service calls to get somebody on-site for maintenance.
VoIP monthly service ranges from $20 to $30 (plus taxes, of course) per line per month including all the features. (VoIP Price data from FSB) In most markets, this compares favorably with with the $35 to $50 monthly fee per line for standard telephone and Centrex (phone company operated PBX systems). If you do business internationally, you’ll also want to compare the rates for international calls in your market.
Call Quality
Call quality has come a long way for VoIP. If you have a broadband connection (DSL, cable or fiber optic) to the Internet, you can probably handle 6 concurrent calls. Business website, Fit Small Business, suggests that your run internet speed test to see how many lines your internet connection can support.
Published: March 26, 2014

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