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VoIP vs. Landlines: Which Phone System Is Right for Your Business?

Is VoIP better than landlines? What advantages does a traditional analog phone have over an IP phone? It's crucial to understand these differences when choosing the right phone system.

You're likely familiar with landlines installed by the phone company. As broadband internet connections are available to 95% of Americans, there are many alternatives to consider.

In this guide, we'll tell you about the types of phone systems, explain how they work, and provide a comprehensive comparison of them. Let's dig in!

Types of telephone systems

When considering a phone system for your business, you have many options. Besides handling phone calls, their functionality is much different.

There are three types of phone systems available today: Analog, VoIP, and SIP trunking.

1) Analog

Analog phone systems consist of traditional landlines installed by the local phone company. It's also known as Plain Old Telephone Service (POTS). For business functionality, you might need extra telecom hardware.

Analog phones function in the same way they did more than a century ago. Sound is transmitted using electrical pulses on a wire. These wires connect to the phone service provider.

A company would configure an on-premises Private Branch Exchange (PBX) with one or more phone lines. A PBX creates an internal phone network, placing employees onto a shared phone system.

Dubbed "copper wire," voice service can only travel wherever you trenched and laid wires. Traditional phone service is subject to bad weather, installation, and expensive long-distance charges.

2) VoIP

Voice over Internet Protocol (VoIP) uses your existing internet connection for phone calls. It also includes many advanced calling features built into the service.

A VoIP phone system is also known as digital phone service or hosted phone service. It works by converting sound into data packets and transmits them to a VoIP provider. VoIP providers then direct calls between the Public Switched Telephone Network (PSTN).

This happens in milliseconds thanks to blazing-fast cable or fiber broadband internet connections. VoIP lets small businesses get all the best telecommunication features for a fraction of the cost.

In terms of features, landlines are no match against VoIP. If you prefer having more control over your calling experience, VoIP telephones are your best bet.

VoIP Network Diagram
An example showing how Voice over Internet Protocol (VoIP) works.

With VoIP, companies can place and receive calls without any extra hardware. All they need is a computer, laptop, or cell phone to use their business phone system.

Keep in mind that employees are most comfortable with a desk phone. IP phones turn sound into digital signals and maintain connectivity with a VoIP provider.

Keep reading to find out if VoIP is a direct replacement for conventional landlines.

3) SIP trunking

SIP trunking provides an existing PBX voice connectivity from a VoIP service provider. Trunking requires steep technical skills to operate.

Trunking is a phone service without advanced features businesses might expect. You have to configure voicemail, call forwarding, call routing, auto attendants.

So, what's the advantage of SIP trunking? If you're already managing your PBX and want the cloud's proven scalability and reliability, trunking is for you.

If this sounds like your jam, you'll enjoy our deep-dive into SIP trunking. For the rest of this guide, we'll focus on VoIP vs. landlines.

Three benefits of an analog phone system

Analog phone systems aren't always the wrong choice. In some cases, they can be the best option for business communications.

1) Availability

Landline telephones have time on their side. Millions of miles of copper wires have been installed over the last 140 years. Telephone companies built the telecommunications infrastructure for reach, not necessarily speed. For strictly voice calls, it works.

2) No bandwidth requirements

The 5% who don't have access to broadband impacts more people than you might realize: 16 million people. For a small office, digital phone service requires 100 Kbps per line, which could be more bandwidth than available.

Broadband map of the United States - VoIP vs. Analog availability, visualized. (Microsoft/FCC)
Broadband reaches nearly 94% of the United States. (Microsoft)

3) Analog equipment

Some offices have devices that need landlines, such as alarms. These depend on a wired phone line to transmit information. An Analog Telephone Adapter (ATA) solves this in many circumstances. Some equipment exchanges data on the line (akin to days of dial-up), and VoIP codecs can interfere.

If you don't have broadband or must keep specific legacy equipment, then analog-based landline service is better for you. If you have a high-speed internet connection, a virtual phone system is best.

Simplify the way you work.
Traditional phone systems can't keep up.

Advantages to using VoIP

1) Superior reliability

Voice over Internet Protocol relies on trusted and proven internet technologies with proven reliability. Data packets reach their destinations reliably. Nextiva's business communications network uses several redundant data centers across North America for enterprise-grade reliability.

VoIP lets you handle calls without busy signals or static on the line. You can adjust your call flows instantly. Even if you experience an internet or power outage, you can direct calls to your cell phones. You got this.

2) Greater flexibility

VoIP technology lets you work from home without clients or coworkers noticing a difference. You might even boost productivity without the commute or interruptions. Your work number is secure and private and goes wherever you go — even on your mobile phone.

If you have a computer or smartphone, you can stay connected to the office. Need to take a vacation? You can direct calls to your team or direct them right to your voicemail and screen them via your email. VoIP provides your team with all the top calling features without any extra hardware. It just works.

3) Lower costs

The internet has brought down the costs of many products and services. Pricing for business phone service is no different. Companies can save up to 65% off their communication expenses with internet phone service.

Besides the lower monthly rate as low as $18.95, there are additional savings with no installation fees or bulky telecom equipment. To use VoIP, all you need is a computer or mobile device. Businesses stretch their budget further with built-in advanced calling features included, such as automatic call routing, auto attendants, text messaging, and video conferencing.

4) Advanced business features

Every company has distinct communication needs. Voice over IP delivers premium business features to stay in touch with your team and serve customers.

  • Auto attendants direct callers to the right person or department with an intuitive phone menu.
  • Call queuing lets multiple customers wait on hold until your team takes their call.
  • Call recording stores phone calls in the cloud so you can listen to them
  • Call forwarding routes calls to another number, team, or answering service when you’re unavailable.

These advanced calling features let you handle more customers and enhance your team’s productivity. Be sure to check out our guide to the top VoIP features for your business.

5) Better sound quality

Are you tired of dealing with low-quality phone calls? Customers are. They’re tired of repeating themselves. If there’s static on the line, you can’t do much to improve it other than replacing wiring.

HD voice increases the audio quality of your phone calls. Cloud phone systems leverage wideband audio codecs to improve the sound quality in every VoIP call. Compared to landlines, you’ll sound much better and hear every word with higher fidelity.

6) Fast installation

Unlike analog phone systems, set up and deploy a VoIP phone system in less than an hour. In a matter of minutes, most people can begin using their new VoIP service by downloading an app. Most businesses can migrate their phone service from landline to digital in less than three weeks.

It always helps to have a plan. Get our free VoIP installation checklist for VoIP phone systems. It's easy, detailed, and shows you the ropes for switching to a cloud-based phone system.

VoIP vs landline comparison

How do landline phones stack up against their modern successors? Here's a side-by-side comparison of VoIP vs. analog phone systems.

Functionality VoIP phones Analog phones
Phone calls (PSTN) Yes Yes
Nationwide long-distance Included Optional
User-to-user calls Yes PBX required
Caller ID Yes Yes
Call Waiting Yes Yes
Ease of setup ★★★★★ ★★★
Requires internet Yes, 100 Kbps per line No
Wireless Wi-Fi, DECT, and Bluetooth headsets available DECT and Bluetooth headsets available
Reliability during internet/ power outages Calls can be routed to another number or voicemail. Calls drop or are routed to voicemail.
Technology IP telephony (SIP, TLS, and SRTP) Analog voice signals
Call quality ★★★★★ ★★★★
Setup cost $0 $110 per jack
Monthly cost $2035 $35
Advanced features
Auto attendant Included PBX required
Phone number privacy Included Varies
Phone number changes Included $27
Phone extensions & hunt groups Included PBX required
Conferencing Included Three-Way Calling
Call routing Included $9.95/mo
Call queuing Add-on Add-on
Remote work capable Yes, softphone apps Call forwarding
Call encryption Yes (TLS & SRTP) No
International dialing
  • MX: $0.16/min
  • UK: $0.01/min
  • JP: $0.05/min
  • MX: $1.97/min
  • UK: $1.21/min
  • JP: $1.62/min
Business voicemail Included $13.95/mo
Integrations (CRM, text messaging, surveys) Yes No
Sources: VoIP information based on Nextiva’s business phone plans. Analog information is based on business rates published in ILEC tariffs for Arizona. Updated on January 20, 2021.

Related: Pros & Cons of Cloud-Based PBX Phone Systems

Breakdown of phone system costs

If you haven't examined the costs of your commercial phone system lately, you should. Some of your phone bill charges will shock you.

A business phone system's cost isn't just the monthly price, especially if you manage a PBX.

There are several additional costs you have to factor in as well:

  • Installation (wiring)
  • PBX equipment
  • Labor costs to configure
  • Advanced features
  • System updates
  • Training and support
  • Commercial real estate
  • International calls

Landline phone systems can easily cost several hundred dollars per user every year. Landlines aren't wise in the era of remote work and abundant broadband internet access.

A virtual phone system like Nextiva absorbs these costs into a straightforward monthly rate per user, starting at $18.95.

Which business phone system is best?

A business counts on its phone system to keep employees connected and to serve customers. Most workplaces now have an operational need to enable staff to work from home.

Landline phone service can't match VoIP's flexibility, features, and ease of use. If your existing phone system works and you have no plans to change how you use it, it might be acceptable to keep it.

VoIP phone service is a top choice among enterprises and small businesses. It provides organizations the most scalable and secure ways to communicate. With today's reliable internet service, uptime is never an issue. Plus, it can cut costs by more than half.

VoIP vs. analog? Nextiva's VoIP phone system is the best choice for today's businesses.

As an industry, Unified Communications market growth surged by 25% CAGR last year, while landlines declined by 10%.

Reviewers at U.S. News & World Report named Nextiva the best business phone system out of 20 providers. No other solution could top its value, advanced features, and friendly customer support.

See what your phone system is missing.
Nextiva has everything your team needs.

About the author

Joe Manna is a content marketing manager for Nextiva who obsesses over the Oxford comma, embraces the em dash, and thrives on authoring content that compels people to take action. He is savvy with networking technology, a staunch privacy advocate, and in tune with today's business needs. His expertise helps companies large and small serve more customers.