POTS, PSTN, or VoIP – What Is the Best Option for Your Business?

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Is VoIP right for your business? Or should you stick with your current telephone system?

If you’ve been considering a new phone system, then you’ve likely come across the acronym VoIP, which is short for Voice over Internet Protocol. It’s also referred to as internet calling because it involves making and receiving phone calls via an internet connection.

By contrast, POTS (Plain Old Telephone Service) and PSTN (Public Switched Telephone Network) use copper wires to transmit voice data. Both POTS and PSTN mean mostly the same thing and are often used interchangeably.

The only significant difference is that PSTN can utilize other technologies other than just copper wires. These technologies include ISDN and fiber. POTS, on the other hand, refers to the basic landlines that people have running in their homes that don’t use VoIP. That’s why they refer to it as “plain” and “old.”

Without getting overly technical, we’ll discuss more of how each of these works and which one is right for your business.

How POTS and PSTN Differ from VoIP

When you pick up the phone and dial a phone number, your call is passed along a series of switches and exchanges in a continuous line until it reaches the intended party. As you can imagine, this process takes time, which is why you sometimes notice a delay when you’re talking to someone long-distance on a landline.

For businesses, calls go through another step referred to as PBX or private branch exchange. A PBX routes a call internally to extensions and offers additional features like voicemail.

First introduced in 1973, VoIP is a relatively new technology that is now becoming more prevalent in businesses of all sizes. It replaces PBX and routes calls across a data network instead. It utilizes packet switching technology to send and receive voice data digitally.

VoIP also uses CODECS, which allows you to send other types of data signals, not just voice. This flexibility allows for the transmission of video (video calling), images, and multimedia files.

The line between VoIP and PSTN is somewhat blurred as those old copper wires are being replaced with digital technology. Still, there are distinct differences, which we’ll cover here. By the end of this article, you’ll have a better idea of whether PSTN or VoIP is better for your business.

How VoIP Shines Above PSTN Systems

In general, we recommend VoIP over PSTN, primarily due to its cost efficiency and integration capabilities. PSTN can be expensive to set up and maintain, and it’s going to limit the flexibility and scalability of your business.

It Embraces the Future

As new technology emerges, it naturally replaces the old. Not long ago, VCR tapes were replaced by DVDs. Today, DVDs are becoming obsolete as everyone adopts streaming service.

You can think of PSTN as a DVD and VoIP as streaming. Yes, people still use and watch DVDs, but most people aren’t buying new DVD players if they want to watch a movie. Instead, they subscribe to a streaming service.

Another parallel has to do with hardware. PSTN systems require significantly more equipment than VoIP. In many installations, the VoIP hardware requirements are minimal. This is because VoIP doesn’t need the infrastructure of a traditional phone system. Instead, it shares the same network as all your other Internet services.

It’s Cost-Effective

Businesses pay for VoIP as a subscription, while PSTN’s monthly fees are based on the number of users and the overall system usage. Companies that make long-distance calls, especially international, can be crippled by the massive costs.

Unlike a PSTN, which requires hardware to run, a VoIP system relieves businesses from capital expenditure outlays and depreciation expenses. With VoIP, companies don’t need a significant upfront investment other than a small set-up fee and minimal hardware (when applicable).

We should note that even though VoIP is typically a flat monthly subscription fee, some providers charge based on the number of users. There’s also a set-up fee to initiate service and set everything up, and there could be add-on fees for additional services. Still, the monthly cost is usually significantly less than a PSTN system, especially when you consider the hardware expenses associated with PSTN infrastructure.

It’s More Productive

VoIP systems can integrate with your CRM, email, and other Internet-based software. This allows companies to manage all of their processes in one place and through their phones. When a customer calls your office, their records automatically show on your screen.

VoIP systems also allow you to send missed call texts, transcribe voicemails to emails, and send automated texts and emails based on your preferences. On average, each VoIP user can save 60 to 90 minutes per day. Multiply that across your organization, and you can see the productivity add up!

It Allows for Mobility

Remember waiting at home for the phone to ring? Thanks to mobile phones, you never have to do that again!

VoIP provides the same flexibility for your business. Employees can take and make calls on the road, and even though they’re using their cell phones, they’ll be connected to your business. Their caller ID will show as your company name, and they’ll be able to access your entire system from the palm of their hand.

And if you do want to use traditional handsets, that’s okay too! VoIP can be used on hard phones, softphones, and video conferencing equipment. With VoIP, each phone is attached to a person, not a location. This allows you to integrate teams, even if they’re not in the same building or city.

Scalability

PSTN systems get more expensive as you grow. You have to pay for additional hardware for each employee, account for higher call volume, and figure out what to do if you plan on opening another location that still requires connectivity to your other sites. If you plan on growing your organization and you prefer not to have the added expense of a higher phone bill and more complicated infrastructure, then VoIP is the way to go.

Feature Set

PSTN systems tend to offer a variety of features, but they come at an additional cost. With VoIP, features like voicemail to text or email, call forwarding, auto-attendants, DND functionality, “follow me,” and call transfers come standard.

In addition, VoIP services offer additional communication options, including video conferencing and multimedia filesharing at no extra costs.

Wireless Capability

If your employees are stationary, never switch desks, and you have multiple people to cover your front desk at all times, wireless capability might not be important. However, most businesses will benefit when their staff can make and receive calls from remote locations.

For example, an employee can answer the phone and have the customer’s complete records even she’s not at her desk. If she’s in transit to the office, on a business trip or making her way one side of the building to another, she’ll be able to chat with current and potential customers without skipping a beat or sending the call to voicemail.

Add-On Communication Services

If you’ve got a traditional telephone service but need to communicate with your team internally for conference calls and virtual meetings, you’re going to need to purchase a subscription to a video conferencing service. However, with VoIP, these capabilities come standard.

Reasons VoIP Might Not Be Right for You

Despite the recent improvements with VoIP, it might not be an ideal choice for every organization. Let’s discuss the most common objections companies have about making the switch.

Unreliable Service

If your business doesn’t have a reliable internet connection, then it could adversely affect your ability to use VoIP because this service requires internet bandwidth. However, today’s internet speeds are fast and reliable, so if your company has spotty connections, then it’s a good idea to call your service provider.

Reliance on Electricity

Similarly, if your business has issues with power outages, you would need to have a secondary device that doesn’t rely on electricity to run. For most companies, blackouts are few and far between, but it’s still something to consider.

Voice Quality

In the early days of VoIP, call quality was a legitimate concern. Insufficient bandwidth caused networks so struggle with voice data, even as recently as ten years ago. Today, most companies have access to high-speed internet, allowing VoIP voice quality to match that of PSTN systems.

The Learning Curve

A final consideration is ease of use. One of the factors that prevent companies from making the switch from PSTN to VoIP is the perception that PSTN is easier to use. It’s an understandable viewpoint because most people are familiar with PSTN systems, and a VoIP system might require a bit of training.

However, the business convenience and growth advantages of VoIP far outweigh the potential learning curve. It’s normal for people to be afraid of change, but as VoIP becomes more prevalent, you’ll begin to see PSTN systems get phased out. As a result, it’ll be harder to find parts and support for repair and upgrades.

Because VoIP has improved drastically and allows businesses to integrate their other software systems, it is quickly becoming the standard. The added features and functionality of VoIP over PSTN are another reason to consider making the switch.

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