VoIP vs. Landline: Which is Better for Business Phone System?

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Choosing between VoIP and landline phone systems can get quite tricky. Both phone systems have their advantages and disadvantages.

On the one hand, VoIPs are cheaper and easy to set up. However, you’ll need a stable internet connection to make a VoIP phone system work smoothly.

On the other hand, landline phones are reliable and give you more control over your business’s phone system. That comes at a cost, though.

So which option might be the right choice for your business? In this article, we’ll get into the details of how each system works, compare their features, and have a look at their pros and cons.

So let’s get to it!

VoIP vs Landline: Key differences

The most significant difference between VoIP and landline is that VoIP uses the Internet to make phone calls, while landline phones use a physical wire to make the call.

This means that VoIP calls can be made from anywhere with an internet connection, but landline calls are limited to specific geographic locations.

Therefore, VoIP is more flexible and typically cheaper than landline. In business, VoIP phones are often preferred by companies as it allows greater scalability and flexibility.

Let’s get to more details about how VoIP and landline phones work to help you better understand their differences.

What is VoIP, and How does VoIP work?

In short, a VoIP (Voice over Internet Protocol) system makes phone calls through an internet connection.

A VoIP system takes voice signals and breaks them down into small data packets. These data packets travel the internet via IP addresses until they reach their destination. Once these data packets reach the recipients, their turned back into audio data, allowing recipients to hear your message.

As such, you can make VoIP phone calls through various methods: You can either use a desktop, mobile phone, or VoIP-compatible desk phone.

How do Landline Phones work?

Landline phones are your traditional phone systems. They turn your voice into electrical pulses that travel through copper wires until they reach your telephone service provider. After that, these electrical signals are converted back into sound and sent to the recipient.

Since landline phones rely on physical wires, you’ll need to set up a dedicated on-premise phone system, of which there are two types: Key System Units or Private Branch Exchanges.

Key System Units

A Key System Unit (KSU) is a central hub that’s connected to multiple phone lines, allowing businesses to handle operations like internal calls. The KSU can take the form of a desk phone, as it has multiple buttons dedicated for each phone line.

This phone system offers basic features, like hold buttons, intercoms, speakers, and paging. Although a KSU is cheaper and easier to install than its counterpart, the Private Branch Exchange, it still has plenty of drawbacks.

On the one hand, KSUs use central switching units to manually direct calls to a central calling hub, or a Public Switched Telephone Network (PSTN) exchange. However, you can opt for KSU-less systems which do not rely on central switching units.

On the other hand, KSU systems can only hold up to 40 lines, making this option unsuitable for scaling businesses.

Private Branch Exchanges

A Private Branch Exchange (PBX) is a private phone network that enables businesses to handle internal communications and get access to a pool of external lines so agents make and receive calls outside the company.

Unlike KSUs, a PBX does not rely on a manual central switching unit. It uses programmable switches to automate call routing.

Moreover, a PBX includes more features than a KSU, such as auto-attendants, call transfers, queues, customized greetings, voicemails, etc. Not to mention that a PBX can hold much more than 40 phone lines, making it perfect for scalability.

The drawbacks? A PBX is significantly more expensive, requires plenty of hardware, like an external power source, and takes a long time to set up. Since a PBX system is quite bulky, you’ll also need a room dedicated to holding all that equipment.

Difference between VoIP and Landline phone systems

Let’s compare VoIP and landline phone systems in more detail.

VoIP vs Landline: Features

Landline phones include all the features you could expect from a business phone system. More specifically, a traditional landline phone system can handle:

  • Call transfers
  • Call forwarding
  • Call recording
  • Call barring
  • Voicemails
  • Hold music
  • Personalized greetings
  • And more.

VoIP providers can offer a lot more than that. Besides the features found in a traditional landline phone service provider, VoIP services include in-depth call analytics, native integrations with sales or team collaboration software, extensive customization options, video conference calls, etc.

Some VoIP solutions also provide AI-powered functionalities, like automatic spam detection and blocking. Most notably, the majority of VoIP providers offer unified communication. In other words, you can manage and monitor phone calls, video calls, and text messages within a single dashboard.

VoIP vs Landline: Pricing

Most VoIP providers offer tiered pricing plans. That said, you could expect to pay anywhere from $10 to $60/user/month depending on the selected pricing plan. Note that sometimes pricing depends on the number of employees you have. The more team members you sign-up up for the VoIP service, the less you’ll pay/user.

You also need to factor in equipment.

If you decide to use existing equipment, there are no extra costs involved. However, if you wish to purchase new VoIP compatible desk phones, the price costs from $60 to over $300 per unit.

In contrast, a landline phone system requires dedicated in-house infrastructure. Considering the hardware, installation, and maintenance needed, a traditional landline system can cost several thousand dollars.

Additionally, since VoIP systems use the internet to handle global communication, international rates tend to be much lower than those of a traditional landline service provider.

VoIP vs Landline: Reliability

Landline systems are generally more reliable. You have full control over your in-house system’s maintenance, while call quality should always be top-notch.

On the other hand, the quality of your VoIP calls depends on your internet connection. That said, a reliable internet connection is a must for buffer-free, high-quality VoIP calls. Moreover, VoIP phone systems are prone to security risks, like data breaches and frauds.

VoIP vs Landline: Flexibility

VoIP phone systems take the cake here. Since they’re not bound by any wires or other on-premise hardware, VoIP systems allow businesses to make and receive phone calls from anywhere, unlike landline services. This makes it a perfect option for those who work with remote teams.

Besides, VoIP systems are not picky in terms of the devices you can use. You can make calls from desktops, mobile phones, or VoIP-compatible desk phones.

Additionally, VoIP phone systems are much more scalable. Adding new features, phone lines, or team members is a matter of purchasing an extra add-on or upgrading to the next pricing plan.

In contrast, any landline system upgrade requires you to purchase extra hardware or install new wires, which can significantly increase the costs.

VoIP vs Landline: Setup & Installation

Again, VoIP systems win. The setup and installation process is a matter of creating an account, assigning business phone numbers, adding users to your account, and that’s it! You’ll be ready to go within minutes.

If you wish to install a VoIP desk phone, most providers will guide you through the setup process.

Conversely, setting up a traditional phone system can cause you many headaches. You’ll need to install wires, and lots of equipment, and seek specialized support for the setup process.

Pros and Cons of VoIP phone systems

Advantages of using VoIP

  • Versatility: Most VoIP providers offer extensive integration options—from sales and CRM software to team collaboration tools, eCommerce platforms, etc. Some also provide built-in features to handle specific business operations.
  • Flexibility: Since wires do not bind you, you can make calls from anywhere. Moreover, you can make VoIP calls from any device, be it a desktop, desk phone, or mobile device.
  • Scalability: VoIP providers offer multiple pricing plans and extra add-ons, making it a suitable option for both large and small businesses. You can scale your VoIP system with just a few clicks.
  • Unified communications: VoIP services allow you to handle text messages, and phone or video calls from a single dashboard. Some services also cover social media communication.
  • Features: VoIP services give you access to a plethora of features that go beyond call management. They provide automation tools, in-depth analytics, video conferencing, voicemail transcription, AI-powered functionalities, and more.
  • Customization: You can easily modify your VoIP system according to your needs—from tweaking the dashboard for having easy access to important features to receiving personalized reports tracking metrics crucial to your business, and more.
  • Low costs: VoIP systems do not require dedicated on-premise hardware, making it an affordable option. Moreover, international rates are lower than traditional phone service providers.
  • Easy set up: Since VoIP systems do not depend on on-premise hardware, the setup and installation process is much easier.

Disadvantages of using VoIP

  • Unstable call quality: VoIP systems require a reliable internet connection. Otherwise, you may experience jitters, delays, etc.
  • Security risks: Since VoIP relies on the internet, it shares most security risks that come with it. As such, VoIP a VoIP system may be susceptible to cyber-attacks, data breaches, and frauds.
  • Emergency calls: VoIP phone numbers are not tied to a specific geographical location. Emergency services will likely have trouble identifying the caller’s location.

Pros and Cons of Landline phone systems

Advantages of using Landline

  • Reliability: Landlines do not require an internet connection, so you can expect steady phone call quality at all times. Moreover, landline telephones use little electricity. In case of a power outage, you can easily keep your phone system going with generators.
  • Emergency calls: Traditional landline phones are easy to geo-locate. Emergency services can quickly identify your location without verbal confirmation.
  • Security: Traditional landline systems are more secure than VoIP phones. They do not rely on an internet connection, thus you won’t be vulnerable to data breaches, cyber-attacks, etc.
  • Familiarity: Your employees are likely used to analog phone systems. You won’t need to train your team members on how to use the phone system.
  • Foolproof technology: Landlines have been around since the 19th century and are still going strong. That said, the chances of something going wrong with your landline phones are next to zero.

Disadvantages of using Landline

  • High costs: Unlike a VoIP system, landlines require high equipment and installation costs. Not to mention that you’ll have ongoing costs for maintenance and landline service subscriptions.
  • Hard to scale: As your business grows, you’ll need to add new telephone lines and purchase more equipment, which means more installations and higher costs.
  • Limited communication options: Landline business phone systems can only handle voice communication. In contrast, a VoIP provider also offers video and text communications.

VoIP vs. Landline: FAQs

Is VoIP better than landline?

Overall, yes. A VoIP phone service is much cheaper, easier to scale, and offers access to more advanced features, like automation tools and AI-powered functionalities. However, a landline still has its uses, especially in areas where there’s no access to a stable internet connection.

Can VoIP replace a landline?

Yes, a VoIP phone system can easily replace a landline—if you have access to a reliable internet connection, that is. A VoIP phone system requires little to no dedicated equipment, is easy to set up, and has more capabilities than traditional landline phones.

Do you need a landline for VoIP?

No, all you need is an internet connection. A VoIP phone system strictly relies on the internet to get your message across.

Can I use a VoIP phone on a landline?

Yes, VoIP phones can also connect to landlines. Once VoIP data packets reach a PSTN system, they’ll be translated to analog voice data, allowing a landline recipient to hear your message.

Is VoIP landline free?

There are plenty of free VoIP service providers. However, free VoIP services are often not suitable for business communications.

Is VoIP worth it for a small business?

Yes, VoIP services are an excellent option for small businesses. They do not require dedicated equipment, and the setup process should only take a few minutes. VoIPs are cheaper than landlines, easier to scale, and give access to various advanced calling features that are unavailable with traditional systems.

Is VoIP reliable for business?

Yes, as long as you have a stable internet connection. Otherwise, you may experience jitters, delays, dropped calls, and generally poor sound quality.

Do businesses still use landlines?

Yes, although landline phone services are considered old-fashioned, there are still in use. Some businesses may stick with landlines because they offer stable sound quality or are located in an area prone to power outages or with poor internet access.

Is VoIP a good choice for home phone?

Yes, a VoIP service is also a good option outside of business communications. It’s often cheaper than a plain old telephone service, and you can make international calls without worrying about high extra fees.

What’s better, VoIP or landline?

It depends. VoIP might be the superior choice, as it offers unified communications and access to various advanced features which are not found in landline systems, but VoIPs are completely dependent on the internet. In other words, if you live in an area with a poor internet connection, VoIPs will likely cause you many headaches.

Is it worth switching to VoIP?

Yes, switching to a VoIP provider will save you significant money in the long run. VoIPs are easier to scale and maintain, highly customizable, provide you with plenty of advanced features, and you can make international calls without worrying about high fees.

Additionally, many VoIPs integrate seamlessly with other software, like CRM and team collaboration tools, allowing you to improve productivity and streamline business communications.

Is it worth keeping a landline phone?

If your business expects significant growth and has a reliable internet service provider, no. Upgrading landline phones is expensive, as you’ll need to add more phone lines and purchase new equipment.

In contrast, VoIPs come with various pricing plans designed for businesses of all sizes, and VoIP systems do not require expensive on-premise equipment.

Is VoIP cheaper than a landline?

Yes. VoIPs do not rely on on-premise hardware, meaning you’ll save money on installations and maintenance. Additionally, international rates are usually lower compared to landlines.

Do landlines sound better?

Both VoIPs and landlines have excellent sound quality, but VoIPs tend to sound better. Landlines gain the upper hand by being consistent. Since VoIPs rely on the internet, a poor connection will cause a significant drop in quality.

How much is a business landline?

A landline service subscription may cost you from $30/month to several hundred/month. This excludes the setup, licensing, and equipment.

A full-fledged PBX setup with hardware, licensing, and one year of maintenance from the manufacturers may cost a one-time fee of $1000/user.

Do businesses still have landlines?

Yes, landlines are still useful for businesses that live in areas prone to power outages or have limited internet access.

How do I set up a landline for my business?

Research and contact your local phone company and ask the provider about equipment requirements and wiring. Most companies will bring the copper wires outside your company building at no extra cost, but they’ll charge for internal wiring.

If that’s the case, make sure that your building already has internal wiring in place. Otherwise, you’ll need to purchase a PBX setup, which can cost you a thousand dollars. After the wiring is set up, connect the desk phone cables to your PBX and you should be ready to go.

What’s the best phone system for a small business?

Nextiva is the best small business phone system. Starting from $14.95/user/month, Nextiva is one of the most affordable VoIP solutions in the market. The platform also offers a solid set of features, like call monitoring tools, analytics, auto-attendants, etc.

Here are some other best VoIP service providers:

Do small businesses still use landlines?

Yes, especially if they have poor internet service. Moreover, if they already have a landline infrastructure in place and they’re not planning to scale their operations, there’s not much reason to switch to VoIP.

Why is VoIP cheaper than a normal telephone call?

Since VoIPs make calls through the internet, they do not rely on cables. In contrast, traditional landlines charge extra to cover the cabling costs.

Is VoIP better quality than a landline?

VoIPs may sound better than landline phones. However, VoIP quality depends on your internet. If you have a poor connection, the call quality will experience a significant drop.

Are VoIP phones reliable?

VoIP phones are generally reliable. However, since they use the internet, they are prone to security risks, and the sound quality may be inconsistent.

Are landlines more reliable?

Yes. Since landlines do not rely on the internet, they are not prone to internet-specific vulnerabilities.

Conclusion

Overall, VoIP is the better choice for businesses. VoIP systems are cheaper and offer plenty of features that are otherwise not available with landlines.

Moreover, VoIPs allow you to make phone calls from any device, be it a desktop, desk phone, or mobile device. Not to mention that they are also suitable for video and text communication.

Still, that doesn’t mean landlines are redundant. On the one hand, they do not share the security risks VoIPs are subject to, like fraud, data breaches, and other cyber-attacks.

On the other hand, landlines offer consistent call quality, as they do not rely on an internet connection.