VoIP vs. Landline: What's The Difference Between Phone Services?
When it comes to phone systems for small businesses, the two main options are the traditional landline systems and systems that use Voice over IP (VoIP) technology. Since each of these systems have their own unique benefits and drawbacks, the right option will depend on which one better suits the needs of the business.
This guide will cover the ins and outs of both systems, including their pros and cons, to help small business owners decide which one will work best for them. To start, it will focus on the benefits of VoIP, which is typically the right choice for many businesses of various types.
VoIP – A Highly Recommended Phone System for Small Businesses
In past years as VoIP technology just started to catch on and become mainstream, the user would need to make certain compromises to set up their own VoIP service, making it a difficult choice between that or landline service. But with how much technology has improved, VoIP has been catching up with landline service in areas where landlines were previously far superior, and this will only continue as internet connectivity gets even better. That’s why VoIP service comes highly recommend for small businesses, because it’s the technology of the future, it’s a flexible option and it’s very cost efficient.
Comparing VoIP and Landline Service
Cost is an important factor for most people, and VoIP costs less than landline phone service both for installation and for ongoing service. VoIP has a wide range of features, the setup process is quick and easy, and it allows the user to make and receive calls from a variety of devices, including office phones, cell phones or computers.
Although VoIP service can provide excellent sound quality and stability on calls, that’s one area where landline service stands out. Landline service will also continue to work in the event of a power outage, whereas this would affect VoIP service because it relies on power and internet connections. A major drawback of landline service is that it has become obsolete and because of that, improvements aren’t being made to it anymore, whereas VoIP continues to get better.
VoIP is an excellent choice of phone service for businesses that need the most economical phone service, businesses that want to have the most modern phone service available and businesses with remote employees. Landlines are good for businesses that don’t have stable high-speed internet and those in remote areas.
The Cost of VoIP and Landline Service
The underlying technology may be important, but most small business owners need the option that gives them the most bang for their buck, which means cost is often the deciding factor. With phone service, there are typically setup costs and ongoing monthly costs. Some service providers waive their setup fees, though. The following prices will compare the two options using prices from Vonage, a VoIP provider, and Verizon, a landline provider. Residential VoIP is typically a lot less than traditional home phone service.
The VoIP service has no setup fee, and the monthly fee depends on the number of users. With one to five users, the monthly fee is $39.99 per user. That drops to $29.99 per user with six to nine users, $24.99 per user with 10 to 20 users and $19.99 per user with over 20 users.
The landline service has a $70 setup fee. Its monthly fee is simpler, but also higher, as it’s a flat rate of $82.90 each month per user, and that’s for any number of users.
Both plans offer unlimited domestic calling. Rates for international calling depend on the destination of the call, but they start at $0.01 per minute with VoIP service and $0.05 per minute with landline service.
It’s important to note that rates can vary depending on the small business’s location and the time of year. The numbers above should only be considered estimates that may not be applicable to a person’s specific area. However, they do show the typically difference in prices between the two services.
Landline systems allow the user to select from having individual phone lines set up or an in-house private branch exchange (PBX) system. With a PBX system, there are more features available, including call transferring, call queuing, group ringing, a directory and much more. The problem is that the hardware for a PBX system can cost thousands of dollars, and there will be installation and maintenance costs.
This is an area where VoIP is the much better option, because it already has those features without any extra costs, and there’s no additional hardware required.
VoIP is certainly the more technologically advanced option, and it’s primed to take over in the future. Many businesses are making the transition, and its companies of every size, from small businesses to Fortune 100 companies.
How Does VoIP Phone Service Work?
Traditional landline phone service uses the phone company’s copper wires to convert and transmit voices through data. VoIP phone service does the same thing, but it uses an internet connection instead of copper wires. Most people have already used VoIP, because it’s how many calling apps, such as Skype, work. The difference is that those apps are for individuals, but companies, such as Vonage, RingCentral and Nextiva, have brought the same technology to the business world.
With business VoIP systems, the business owner can purchase the equipment for it, and then have their IT team handle hosting and management, or the business owner can simply rent the equipment from a VoIP service provider, which handles hosting through the cloud. A typical small business won’t have the resources to dedicate an IT team to its VoIP service, making cloud-based solutions much more common among small businesses.
How Does Landline Phone Service Work?
Landline phone service is also called public switched telephone networks (PSTN), and these are analog systems that operate using the aforementioned copper wires that the phone company has set up.
For a business to use landline phone service, it needs PBX hardware so that it can set up different phone extensions and get all the features it will need to handle incoming calls, including call transferring.
The Benefits of VoIP Phone Service
Not only are VoIP services very advanced, but they provide an assortment of usual features that the business owner doesn't need to pay extra for. Everything with VoIP is user-friendly, including setup, configuration and management, and it will almost always cost less than landline service.
The benefits make VoIP service the ideal choice for small businesses that want full phone functionality at a price that doesn't break the bank. It also works very well for businesses with remote employees that needs to give those employees access to its phone system, ensuring that clients don’t realize they’re talking to someone who works off-site. Long distance rates are typically much less with VoIP.
With cloud-based VoIP service, the business owner doesn't need to worry about getting or maintaining any hardware, with the obvious exception of the business’s phones. The service provider will handle the hardware, including maintaining it and upgrading it when necessary. For the business owner, this means upfront costs are far lower and they get all the latest features when they come out without needing to perform any upgrades themselves.
All the above benefits are great for businesses, but what may be the biggest advantage is the scalability of VoIP service. With a landline system, the business can only use the number of lines that are currently connected. To get more, they need to install more lines and make the required hardware upgrades, both of which will cost money. With VoIP service relying entirely on internet, there’s no limit to how many lines a business can have. As a business grows, it can add more lines with much less spending on setup and maintenance.
VoIP service tends to cost much less for everyone involved. Since voices are sent and received as internet data instead of running over copper lines, the costs for the service provider are much less than they would be for landline provider. The savings get passed on to the consumer, which means the business owner will pay less. Although both VoIP and landline service typically have unlimited domestic calling as a standard feature, when it comes to international calling, VoIP reigns supreme with significantly lower rates. The rates listed above are a testament to that.
Thanks to VoIP’s advanced technology, there are several features unique to VoIP service that landline providers can’t offer.
With VoIP, a business owner or employee can set up their cell phone as an extension of their office phone, meaning they can take and make business calls no matter where they are. Calls can be forwarded to the cell phone, and if the business owner makes a call from their cell phone, it can appear to come from the business’s phone number. This is very helpful for those who are out in the field quite a bit, such as members of a sales team or remote employees.
Tying into that, with VoIP service, people can use any phone or computer they want as their own personal extensions. They don’t need to be at their desk next to an office phone to get a call.
With cloud-based VoIP service, a business owner can go online with a computer or use a smartphone app to review their phone system and manage it. If they want to adjust how certain calls are handled, they can do that in minutes.
For those who are hearing impaired, VoIP service can have some helpful accessibility features. For example, VoIP service can transcribe voicemails and send the text to the recipient via email or text message.
Because of VoIP’s voice-to-text feature, it’s also simple and easy to connect VoIP systems with certain third-party apps, including CRM software. This means that when an employee has an incoming call, the CRM software could automatically display important data tied to the phone number where the call is originating from.
The Drawbacks of VoIP Phone Service
The call quality with VoIP is tied to the stability and speed of the business’s internet connection. Call quality used to be an area where landline service was far superior, but improvements in internet speed has changed this. Still, small businesses that don’t have high-speed internet may get better quality from landline service.
If a business’s power goes down, VoIP service won’t work. The good news is that many VoIP providers automatically send incoming calls to a designated backup number, such as the business owner’s cell phone, if the internet or power goes down.
The Benefits of Landline Phone Service
Landline phone service is reliable, and the business owner knows what they’re getting. This type of service is simple to maintain and will work fine even if the power or internet goes down. It’s important to remember that landline phone networks were designed specifically for that purpose, which means they function very well. Call quality is topnotch, the service works almost 100-percent of the time, connections are secure and landline service can handle substantial traffic.
At this moment, VoIP service can’t quite match landline service in those regards, simply because data networks weren't originally designed with phone service in mind. VoIP continues to close the gap, but there could be some areas where it falls a bit short of landline service.
The Drawbacks of Landline Phone Service
The most obvious landline disadvantage is that it’s running on obsolete technology. There are no plans for future developments. Quite the contrary, many places are planning to slowly phase out landline service. This means that landline parts will eventually be harder to find, making repairs more difficult.
Landline service will usually cost more than VoIP service, including for setup and for the monthly service fee. On top of that, many standard VoIP services will require PBX hardware for a landline, costing the business owner even more.
The main advantages of landline service are their reliability and quality, but this is an area where VoIP service is quickly catching up. Most service providers are making the switch to VoIP, and landline service will eventually be gone entirely.
Another Option: Virtual Phone Systems
For very small businesses, a virtual phone system could work as an alternative to VoIP and landline service. Virtual phone systems basically forward all calls made to a business number to a number for an employee or the business owner. Features available with these systems include automated receptionists, call forwarding and voicemail. But it will use minutes from the business owner’s mobile plan.
Although this option won’t work for most businesses, it can if a business has only a few employees or if it doesn't have a physical location yet.
The Final Word on Phone Service
At one point, VoIP was the new alternative to traditional landline service, but that’s no longer the case. It’s now a full-fledged replacement for landline service, as it can provide all kinds of features at a lower price. And with a cloud-based service, the business won’t even be responsible for any hardware besides its phones.
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