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Phone Systems: POTS vs. VOIP

February 8, 2016

IP телефон Cisco SPA303I keep seeing spammy emails that apparently are trying to convince people that the time is NOW for them to convert to a VOIP phone system.  Of course, they want to sell you a particular system as well.  I thought I would write this to perhaps add some information for people thinking about this.

Most of the information here will be of use to people that have not already taken the plunge to some type of VOIP phone system.

VOIP is a phone interface method that uses the Internet instead of a telephone landline.  SIP is the protocol used by VOIP.  PBX stands for Private Branch Exchange which means you have your own phone switch for your extensions instead of a phone line for each one.

If you have a PBX switch today or are just relying on the phone company (Centrex, for example) faxing is pretty simple.  You probably have a dedicated phone line for sending and receiving faxes and it just works.  You put paper in and paper comes out at the other end.  Understand that this doesn’t work this way with VOIP phone systems.  We did not understand this at all when we did our conversion from a Panasonic PBX system and it made things pretty difficult.

If you have any fax traffic at all, the simplest solution is to simply retain a POTS phone line for the fax machine.  It will continue to “just work” that way.  If someone says you can plug your fax machine into a socket on your new VOIP/SIP PBX switch forget it!  It will not work that way at all.  Even if someone demonstrates to you that it works, it will be with some very special equipment at both ends.  Random people sending you faxes will not work and you will likely not be able to send anyone a fax this way either.  It has been tried, over and over.

It is important to understand the differences between a VOIP phone system and a SIP PBX switch.  It is possible to utilize older phones with VOIP adapter boxes (think Vonage) in an office.  You could take your old phone switch and simply connect it to one or more VOIP adapters and Voila! you are using VOIP.  This isn’t difficult and it isn’t really expensive to do, but the features are really limited.  And you still need phone wiring to do it.

We did our conversion when we moved.  It meant that instead of needing phone wiring to each location as well as computer network wiring the only thing that was needed was the network wiring.  This was a considerable savings and should be for anyone, since a huge part of setting up an office is getting the phone wiring in place.  A VOIP/SIP PBX eliminates all of that.

There is one important consideration, however.  Everyone will tell you that you only need one network wire for each computer/phone location.  This is somewhat true but it somewhat obsolete information.  Today, most computers can utilize a Gigabit Ethernet connection for higher speed networking.  However, the phones are still in 10/100 Ethernet mode.  If you plug your computer into the phone and the phone into the wall – the suggest configuration – you will only need one wire but this will disable Gigabit Ethernet for the computer.  There are two ways of dealing with this: two network wires, one for the computer and one for the phone, or a small Gigabit Ethernet switch at each location.  If most users do not need Gigabit Ethernet and the “power users” may need more than 1 network connection anyway (laptop, multiple computers, etc.) the local switch is probably the way to go.

You may have heard of SIP hosting.  This similar in concept to Centrex where instead of having to buy an expensive phone switch you simply lease it and someone else manages it.  There are two things to consider with this.  First, the management isn’t all that complicated or intense and is probably a lot simpler than an older PBX system.  Secondly, you will have all of the problems of someone else managing “your” phone system for you.  It won’t be all that cheap and things will not get done the way you might prefer them to.  Finally, a huge reason to not even consider this is VOIP/SIP PBX systems are really cheap.

In short, I don’t recommend SIP hosting.  There are companies that specialize in it, but it won’t be as helpful to getting started as you might think.

Depending on how you want to go, it is possible to have a full-feature phone system with the switch being less then $1000 and around $100 a phone.  You might be able to find phones still cheaper and a DIY phone switch using something like a Mac Mini running Asterisk – an open-source SIP PBX software distribution.  You can also spend $2000-$3000 on a phone system with phones designed for it.  If you want someone to come and set things up for you, this is probably the only way it will happen.  Phones will be more expensive, probably $150-$250 depending on things like the presence of s display and how big the display is.

What are we doing at InfinaDyne?  We bought a cheap ($650) dedicated phone switch rather than using Asterisk on a commodity PC.  The idea, at the time, was that we could use the built-in analog phone interface for a cordless phone and a fax machine.  The fax machine, as I mentioned above, didn’t work out.  The cordless phone is OK and helpful sometimes but I don’t think I would go the dedicated system route again.

We could have bought phones designed for the phone switch at 2-3 times the price of the commodity Cisco phones we did get.  Turns out that we didn’t do all that bad with the cheap phones – once I figured out how to set them up properly.  One feature that we did not have with our Panasonic PBX was conference calling (tying multiple extensions onto a single external call) and we do not have that with our new system either.  I believe we could have this with Asterisk and I would likely take the plunge with something like a Mac mini if we replace the PBX switch.

An important consideration that I was only lightly exposed to is that SIP PBX companies come and go.  Mostly, a lot of the software is based on Asterisk, where all the research was done on how to talk to SIP hosts and phones.  So it doesn’t take a huge investment in coding to get a SIP PBX company up and running.  However, with any small business, a lot of them die an early death.  Or, for their own business reasons, they want to sell you expensive support plans to keep getting software updates.  So check out these companies and try not to spend too much on a SIP PBX.

The last link in the chain is the SIP trunk.  This is how the SIP PBX connects to the outside world through the Internet.  You will find there are quite a few companies out there that offer this but it will come down to around $30 per “line”.  It works just like your old PBX – you have 20 phones in your business but only need three outside lines for simultaneous calls in progress.  Same with SIP trunking.  You will need to have the same number of “trunks” or appearances as you need to have simultaneous calls, and there may be a minimum of three to start with.

The big benefit that you will see immediately with such a system is that while the per-line costs are about the same as for a regular landline phone there are zero long-distance charges.  No minutes, either.


Two features that have been extremely valuable for us with our SIP PBX: call routing and outside calling.

Call routing allows someone calling into the office to be transferred to an “external extension” which can be anything.  Home. Cell phone.  Whatever.  You can set up our switch to do this automatically so if I do not answer my phone (on my desk) it is automatically routed to my cell phone.  I can even restrict this to happening only during the day.

Outside calling means that I can have a SIP phone application on my smartphone (Android or iPhone) and make calls as if I am in the office.  Transparently.  Caller ID at the recipient’s phone says I am in the office.  No phone charges on my phone, assuming I am using a Wi-Fi link to connect to the office.  This answers the question of calling people back from out in the field when you don’t really want them to have your cell phone number.

Most, if not all, SIP PBX systems will support these features.  SIP Hosting probably will not.


The last comment I have on this is E911 service.  Most people that investigate VOIP in some form will hear about this and might worry.  It does sound somewhat complicated.  Your SIP trunk provider will take care of this for you and as long as you understand the limitations and how it works, it will not be a problem.  After all, how often do you really call 911?  I have had an office of my own since 2001 and I have actually called 911 once.  Once in 15 years.  That should put the problem in perspective.

Oh.  Yeah.  Put that SIP PBX on its own UPS!  Do this day one.

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