The Best Business Phone Service Providers of 2024

Business Telephone Service Explained

For the most part, business phone service comes in two variations:

• VoIP
• Traditional telephone service

Business VoIP Phone Service

VoIP, or voice over Internet protocol, is an alternative phone service technology to traditional phone service.

When considering a VoIP business solution, you should consider

• How VoIP is different from traditional telephone service
• How those differences will affect your business
• How those differences determine the price you pay
• Requirements for getting a VoIP system

The major distinction in how VoIP works is in the type of data it uses. While traditional telephone service transmits calls as analog data, VoIP transmits calls as digital data.

So, when you place a call with a VoIP phone, your voice is translated into binary which is then sent over the Internet to reach another VoIP phone or computer or an analog phone.

Digitized data, with a modern Internet network, is cheap and easy and moves quickly (the speed and price is because of the improved network infrastructure). And because calls are sent over the Internet, they are all essentially local calls, which ultimately saves you money. With VoIP, you have calls sent in a more technologically-advanced way over a more efficient network.

With a business VoIP service, it is easy to manage many phone lines through a software program on your office computer. And business VoIP systems come planned with many features to make your experience with your program better and easier.

VoIP business plans are often very cheap. VoIP service providers offer business VoIP solutions based on office size. This makes it easy to customize your phone service to fit your office size.

Hosted PBX

Business VoIP service providers offer a hosted PBX. A hosted PBX performs all of the same functions as a standard analog PBX, but they are much cheaper.

With a hosted PBX, you don't keep any of the PBX machinery on your business site. Instead, all of your PBX functions are hosted by your VoIP service provider. This means you don't have to spend money buying and maintaining a PBX system in your office. Instead, the $1,000 you might spend on a PBX and the $1,000 you might spend on installation go back into your pocket.

And with a hosted PBX, it is easy to add more phones or more phone lines, though there are often fees for adding additional lines. For example, at RingCentral, the RingCentral Pro plan costs $9.99/month and includes 10 extensions. Extra extensions cost $2.99/month and can be automatically provisioned from the RingCentral control panel. So that saves you another $100 on installation costs.

Traditional Phone Service

• What is a traditional telephone company?
• How does the structure of a traditional telecom company determine the prices you pay?

Traditional phone service providers include companies like AT&T, Verizon, and CenturyLink.

These companies send and receive calls using the PSTN, or public switched telephone network. The PSTN is composed of a system of cables, telephone lines, satellites, and cellular networks. It has been used to send calls since the days of the very first phone calls (this is one of the reasons the PSTN is expensive; it's big and old, so takes a lot of maintenance).

The PSTN is an analog system. While it is fairly inexpensive to send analog data, it is difficult to transmit over a long distance.

To transmit high quality analog data over a long distance, the data must stop many times along the way to be transferred. This means that to place a call from New York to California using the PSTN, your call has to make regular stops along the way so that the analog data won’t decrease too much in quality.

Because of all of this stopping, PSTN calls can get expensive. Much of the PSTN has now been converted to digital technology, but the “last mile” of standard telephone service is still analog -- and expensive.

Analog PBX

Almost all businesses have a PBX, or public branch exchange, which routes calls within an office. PBX allows for call forwarding, conferencing, and multiple phone line extensions, among other features.

With an analog phone system, a PBX can be kept either on business premises, or in a remote location. Generally, however, these PBX systems are very expensive. They require a lot of hardware and equipment, and many companies also charge consultation and installation fees.

For example, a standard 8 line PBX like the Grandstream 8 Lines PBX costs $869. After that, fees for maintenance and installation can cost $100/hour. And if your PBX is manually operated, a PBX operator is usually paid about $10/hour.

If you choose to keep a PBX on site, you also need to find climate-controlled storage for the PBX.

If you are going to use a traditional PBX system, you also need to be sure that your model can keep up with any anticipated business growth or expansion. Otherwise it can be costly to add more phones and phone lines to an old system.

Other Business Phone Options

Hybrid Phone System

For some people, the best solution for a business phone service is a hybrid of traditional phone service and VoIP phone service.

In these cases, a business will usually use one system as a backup for the other one. Hybrid systems fare well in the event of power outage, when a VoIP system becomes unusable, or for emergency calling.

In some cases, it may actually be cheaper for a business to use the traditional phone service for some calls, and a VoIP service provider for others. For example, if you already have a lot of analog phones in your office, you might find it too expensive to replace all of your phones at once or to purchase an adapter for each one.

In this case, the money that you would save by switching to a VoIP service from a traditional phone service would eventually make up for the costs of the adaptors or new phones. However, this is one case in which someone might choose a hybrid system. Usually, hybrid systems with have one analog line to use as a backup and convert their rest of their system, however slowly, to VoIP.

A SIP trunking-enabled business VoIP system is an example of a hybrid phone system.

The PSTN is an analog system. While it is fairly inexpensive to send analog data, it is difficult to transmit over a long distance.