Over 60% of businesses with landline telephones make the switch to a VoIP telephone system once their traditional landline phone contract has come to an end.
Given that recent studies show Internet telephony can cut small business start-up costs by 90% and save over 30 minutes of daily call time, it’s no wonder the global VoIP market has an estimated compound annual growth rate of 3.1% from 2021-2026.
With over 204.8 billion VoIP subscribers, you’re practically guaranteed to find a solution that fits perfectly with your business communication needs.
While these numbers speak for themselves, let’s take a closer look at why VoIP is a worthy alternative to landlines — and whether or not virtual telephony is the right choice for you.
Table of Contents
- How Do Landlines and VoIP Phones Make Calls?
- Features of VoIP vs. Landlines
- Phone Hardware for VoIP and Landlines
- Comparing the Costs of VoIP Calling vs. Landline Phone Services
- Who Should Still Use a Landline Connection?
- Who Benefits the Most From VoIP Services?
- How To Find the Best Business VoIP Provider
Analog landlines rely on a PSTN telephone network of fiber optic cables and copper wires to make and receive calls. Voice Over Internet Protocol, (VoIP) as the name suggests, makes telephone calls over the Internet.
In a virtual phone system, SIP trunks serve as digital phone lines that can make local, long-distance, and international calls over Wi-Fi and routers.
Because of this, you’ll need to ensure that you have a reliable Internet connection with bandwidth to be able to handle VoIP calls. The speed you’ll need depends on the number of simultaneous virtual calls you’d like to make, but generally, 10 KBPS is a good starting point.
Contact your Internet service provider for more details about your current connection.
In 2004, more than 90% of American households had a landline telephone. But in 2020, only about 40% of households still have a landline at all — and just 6.5% use only a landline for phone calls.
Landlines are also becoming obsolete in the workplace, especially given that an estimated 79% of businesses use VoIP software in at least one of their locations.
One of the biggest reasons why so many are abandoning landlines in favor of VoIP?
The clear advantage VoIP offers over analog phones when it comes to convenience and calling features. The table below illustrates just a few of the top VoIP features that tip the scales in the favor of virtual telephony.
|Makes Calls via Internet||X||✓|
|Requires Internet Access to Function||X||✓|
|Offers Location Mobility||X||✓|
|Voicemail to Email||X||✓|
|Voicemail to Text||X||✓|
|IVR and ACD||X||✓|
|Virtual Auto-Attendant||Limited options||✓|
|Advanced Call Analytics||X||✓|
|Call Recording||Requires purchase of additional hardware||✓|
|Call Whisper, Barge, Monitor||Limited capabilities||✓|
|Call Parking and Host Desking||X||✓|
When making calls from a landline service, you can only move as far as the cord or calling range of a cordless phone takes you.
So, if you’re expecting a call at your office desk phone, you have to decide between missing it, giving out your personal cell phone number, or sitting around after-hours waiting for a client to call you back.
None of these options are particularly appealing.
One of the biggest advantages of VoIP phone systems is that you can make/receive calls from any location — and any device — with an Internet connection, including your mobile phone.
Make business calls from your smartphone while waiting in line at the grocery store, on the bus to work using your tablet, or from your desktop computer or dedicated VoIP phone at the office.
Virtual telephony allows you to keep your personal phone numbers private by following customizable call forwarding rules that route calls made to your business phone number to your other devices.
Though call forwarding is possible with a landline, it comes with an additional cost and often requires multiple steps.
Though both landline and VoIP telephones have a voice mailbox, the ways in which you can access your voice messages differ greatly.
You’ll need to either wait until you return to the office to check your traditional phone’s voicemail, or follow several confusing steps to dial into your office voice mailbox to access your messages.
Virtual voicemail sends an immediate notification when you have a new voicemail, and gives you the option of forwarding that voicemail to another device. A virtual voice-to-email feature sends an audio file of the voice message to your inbox, while voicemail-to-text sends you a text transcription of the message.
IVR, ACD, and Auto-Attendant Features
Interactive Voice Response (IVR) systems within VoIP solutions help customers get the information they need without ever needing to directly connect to a live agent.
The IVR system uses voice analytics to help customers make reservations, check order status, or answer questions that will provide helpful recorded responses or connect them to a representative if they still need assistance.
Different ACD (Automatic Call Distribution) settings can also help to route calls to the agent who is the most qualified to help with a specific customer service or sales issue.
Though there’s certainly nothing wrong with an office receptionist, virtual auto-attendants are an excellent way to free up your agents to be available for more pressing issues and allow for a higher level of customer self-service.
These auto-attendants will guide your incoming callers through menu options, send them to the departments, and even accept payments.
And if you still decide you’d prefer to go with a live support agent? Most VoIP providers offer virtual receptionist features that connect incoming callers to real people who can answer their questions or take down detailed messages.
Landlines are able to store limited call log information, such as the overall length of calls, phone numbers, and information that’s available via basic phone records.
But VoIP telephony offers calling insights that can help you to optimize your customer service, improve call scripts, evaluate employee productivity, and pinpoint exactly where agents are struggling.
Users can choose between different types of report templates, or create their own customized call reports based on their most important KPIs.
Today’s VoIP call analytics can track:
- Average daily/weekly/monthly call volume
- Average call length
- Number of calls made/received by individual agents
- Average hold time
- Real-time call logs and agent status
- First call resolution rates
- Call abandonment rates
- Customer satisfaction
Advanced VoIP Calling Features
Landline telephones offer basic calling features such as caller ID, call waiting, call blocking, speed dialing, and basic audio conferencing capabilities.
However, in addition to the above features, VoIP offers advanced calling options that make life easier for both your employees and your customers.
- Call recording
- Call parking
- Call queuing
- Advanced call routing options
- Hot desking
- Find Me/Follow Me
- Call whisper, call monitoring and call barging
The below table provides a basic overview of the essential hardware needed to operate standard telephones and VoIP hard phones.
If you want to be able to make calls with VOIP technology in the event of a power outage, also buy a backup power supply.
|Telephone||✓||IP phone optional|
|Analog Phone Adapters||X||Needed if you want to make calls from a POTS|
|Loudspeaker/Intercom||Add-on hardware||Usually included with IP Phone|
|Webcam||Requires separate hardware/computer||IP phones with built-in webcam display screens available|
Landline hardware is more affordable and less complex to set up than VoIP hard phones and accessories.
In most cases, landline phone users need the telephone itself, a phone jack, and potentially wired headsets for a hands-free experience.
Most standard office telephones cost $40.00, plus an additional monthly $20.00-$30.00 per phone line. More advanced analog phones with features like Caller ID, fixed feature buttons, an Intercom system, and a fixed LCD display screen are also available.
The hardware you’ll need for a VoIP phone system depends largely on the devices that you want to be able to make calls from.
Thanks to softphone apps, you can access VoIP calling from your existing mobile devices and computers, meaning that you won’t need to purchase new VoIP hard phones. However, most medium-to-large business owners do end up purchasing IP telephones, often from the same provider that they purchase VoIP services from. Though these can be expensive, remember that they aren’t required.
However, IP phones do come with features that improve the overall calling experience, like touch-screen displays, HD audio/superior speakers for better call quality, long indoor ranges, USB and RJ9 ports, and Bluetooth connectivity.
Our list of the top IP phones has options ranging in price from $75.00-$719.00.
In addition to the phone itself, other VoIP hardware needs may include:
- Ethernet cables and router
- Phone headsets
- A webcam, if video calling capabilities needed
- IP conference hard phone
- PCI cards
- Backup power sources (UPS)
- Analog telephone adapters or gateways
Recent studies on VoIP cost savings indicate that virtual telephony saves businesses:
- 90% on international calls
- 75% on operating costs
- 40% on local calls
How is this possible? Let’s take a look at the numbers.
Cost of Subscription
Average landline phone system plans usually cost an average of $42.00 per phone line per month, with each line costing an additional $25.00 monthly. These plans usually include unlimited local calling only.
Long-distance and international calls are not included in standard landline plans and can cost an additional $0.12/minute for long-distance calls and up to $0.39/minute for international calls.
Though some VoIP phone companies providers may provide a set number of minutes per month within each plan, the vast majority offer free unlimited calling within the United States and Canada as a part of their monthly plans.
This means that VoIP customers avoid the costs of local, long-distance, and interstate phone calls, and must pay extra for international minutes only. International calling costs will vary by country, but many VoIP providers allow subscribers to purchase a set monthly number of international minutes for a flat rate.
In general, VoIP subscriptions cost between $20.00-$40.00 per user every month, often with unlimited phone extensions included. These plans are highly scalable, so the more users you add, the lower your average monthly cost will be. Some plans charge a flat monthly rate for multiple users in blocks of 5-10.
Note that customers who opt to subscribe to an annual VoIP plan as opposed to a month-to-month option can see a significant cost savings, usually between 10-20%.
Remember that some VoIP vendors may charge regulatory service fees to recover costs they’re required to pay to the Universal Service Fund, TRS Fund, and the FCC.
Make sure to review our breakdown of VoIP taxes and fees to avoid getting taken for a ride by a disreputable company.
Cost of Hardware
Hardware costs for VoIP systems will vary greatly based on whether or not you choose to purchase a VoIP telephone, or if you want to make calls from an existing computer or mobile device.
The price of a VoIP phone itself starts at about $75.00, while standard analog phones can be purchased for from $40.00
Routers for VoIP phones generally start at $25.00, while headsets for both landline technology and digital phones range in price from $25.00 to $200.00. Analog phone adaptors can be purchased for as little as $27.00.
Studies show that the installation of landline phone jacks and wiring can cost anywhere from $150.00 to $300.00.
If you already have a working Internet connection, your VoIP setup costs are significantly lower than they are if you need to upgrade/install your office Internet service. Internet setup generally costs between $100.00-$200.00, as most providers charge a flat rate. Electricians, if needed, will cost about $40-$120/hour.
Both VoIP and landline providers may also charge you a one-time setup fee which starts at around $50.00. Quality VoIP companies, however, usually waive this fee.
Cost of Upgrades
In order to upgrade a landline, you’ll need to purchase an entirely new telephone or purchase additional calling features.
The physical phone can cost anywhere from $40.00 to well over $200.00, while the cost of adding features like caller ID comes with an initiation fee plus a monthly charge of $3.00-$10.00.
VoIP services run automatic free upgrades/updates, usually on a weekly basis.
While newer features like video calling capabilities can be purchased a la carte, most VoIP providers include features like Caller ID and advanced call routing in their standard plans — so you won’t have to pay an additional fee for them as you would with a landline phone.
Maintenance fees for business phone systems will vary depending on:
- The number of users
- Whether or not you have an internal IT team
- The quality/warranty of your hardware
- Any necessary team training
- If you have hosted or on-premise Private Branch Exchange (PBX)
- The level of system maintenance, hardware repairs, and service included within your VoIP plan/contract
Studies show that the average maintenance fees for a landline phone are $145.00 per repair, with VoIP maintenance costing $75.00 per repair.
The below table provides a side-by-side comparison of the average VoIP vs landline operating costs.
|Cost Factor||Landline Costs||VoIP Costs|
|Monthly Subscription Cost||From $42.00/month per phone line, plus $25.00 for an additional phone line, long-distance calls not included||From $20.00/user per month with volume discounts and unlimited long-distance calls|
|Phone Hardware Costs||From $40.00||From $125.00|
|Installation/Set-Up Fees||From $250.00||From $50.00 with existing Internet, from $140.00 without|
|Cost of Annual Upgrades||From $76.00||Free|
|Maintenance Fees||From $145.00 per repair||From $75.00 per repair|
|Overall Average Annual Cost||$1,015||$490.00|
As the table shows, VoIP services save customers an average of $525.00 per user, per year.
Though many experts believe that landlines will be obsolete by 2025, until then, they may still be useful for certain business models.
Companies that don’t rely on phone communications to get new business and those who offer online or in-store customer service only will likely be able to get by with a landline. Traditional business phone service may also work for sole proprietorships or micro-businesses that don’t get frequent voice calls from clients and don’t need advanced telephone features.
If you do opt to stick with your landline, be sure to look into other business communication solutions like email marketing software or social media management tools.
VoIP services will benefit companies of any size across a variety of industries, but they’re especially impactful for medium to enterprise-level businesses that do most of their marketing, selling, and customer service over the telephone.
VoIP software is also ideal for call centers that have numerous agents making simultaneous calls throughout the day, as well as those using a business communication solution like video calling and CRM software that need to integrate with their business phone system.
Startups or businesses in a current growth phase that need scalable phone plans, as well as primarily remote teams, will benefit from the advantages VoIP phone service offers.
Above all, VoIP is right for any company requiring advanced calling features like IVR customer self-service, call queuing, and call analytics.
If this post has convinced you to ditch your landline for a VoIP phone system, you now need to research which provider is the best fit for your company.
Consider factors like available pricing and plans, standard and add-on features, guaranteed uptime, and mobility.
Our table of the most popular and best-rated business VoIP and residential VoIP providers is an excellent starting point. Compare vendor pricing, read user reviews, and learn the right questions to ask a potential provider before you make a commitment to their telephone services and unified communications platform.