Traditionally, businesses required a 4-line landline-based phone system with expensive private branch exchange (PBX) hardware to receive advanced features like call routing, call transfers, and auto-attendants. However, voice over IP (VoIP) systems, which operate across the internet, offer the same features and are less expensive, easier to operate and manage, and more effective. Improvements in internet connections and bandwidth have brought VoIP call quality to the level of landlines as well.
In this guide, we’ll explain why you should upgrade your 4-line phone system to a VoIP provider like RingCentral. RingCentral offers unlimited calls to anywhere in the US and Canada and can be up to 70% cheaper than traditional phone services. You can even keep your existing phone numbers. Click here try RingCentral free for 15 days.
VoIP vs 4-Line Phone System: Affordability?
VoIP is generally more affordable across the board than landlines, with plans generally starting at around $25/month per user. This includes setup costs, hardware costs, and ongoing service and maintenance costs. The only additional cost outside of the phone service itself is your internet connection, which your business would have anyways.
Here is a summary of how you can expect your costs to compare, using rates from RingCentral and Verizon as examples for VoIP and landlines, respectively:
| Monthly Fee | $47.99 per user for 1 user $37.99 per user for 2-19 users $34.99 per user for 20-99 users $32.99/month per user for 100-999 users | $563.27 for five lines, including taxes (based on NY) and fees¹ |
| Setup Fee | None | $70¹ |
| Hardware Costs | Phones | Phones plus PBX hardware |
| Domestic Call Rates | Unlimited | Unlimited |
| International Call Rates | From $0.05/minute, depending on destination, but generally less expensive overall. | From $0.05/minute, depending on destination, but generally more expensive overall. |
¹Quote was obtained from a chat with an online Verizon customer service representative on March 1, 2017 and based on a service address in New York, NY.
VoIP phone service is also more flexible. Most providers, including RingCentral, offer month-to-month plans at a higher cost or plans with a contract term for a reduced cost. Because landline phone systems require more up-front investment to set up, month-to-month plans aren’t typically offered—or if they are, only at a much higher rate.
What is a 4-Line Phone System?
4-line phone systems run 4 analog (landline) phone lines into your office. Most 4-line phone systems include hardware that can connect additional phones in multiples of 4, giving each employee in a small office their own phone and unique extension.
These phone systems first became popular because they were more economical and efficient than giving each employee their own unique phone line. However, you are limited to only 4 phone calls at the same time; no additional calls can be made or received, even to voicemail.
How Much Does a 4-Line System Cost?
A 4-line phone system typically costs around $100-$200 for the base unit plus an additional cost for each handset. Along with service, setup, and maintenance costs, this makes 4-line phone systems roughly 68% more expensive than VoIP phone systems.
More importantly, however, is that 4-line phone systems are becoming increasingly hard to sign up for. Most phone providers are phasing out the older landline technology in favor of newer VoIP technology.
What is a PBX?
A PBX is a type of landline phone system that can support a large number of phone lines – typically eight to 32 lines or higher. This has traditionally been the choice for larger companies that need a professional phone system. A PBX box costs between $300 and several thousand dollars, depending on the number of lines it supports.
Like a 4-line phone system, each employee gets a unique extension and shares the available phone lines. If you reach your capacity, no additional calls can be made or received.
What is a VoIP System?
VoIP, which stands for Voice over Internet Protocol, is an internet-based phone system. Like a landline system, each employee receives their own handset and a unique phone number or extension. But rather than operating across the older landlines, calls are routed over your business’ internet connection.
VoIP Provider RingCentral includes both traditional handsets and online/web-based tools
A major advantage to VoIP is that it can support an unlimited number of phone lines. A landline system is physically limited to the number of phone lines you have connected — to add more, you need to install more phone lines as well as upgrade your hardware. With VoIP, you use one internet connection for everything. This significantly reduces the initial setup and ongoing maintenance costs and makes it easier to scale your system to accommodate increases in employees and/or call volume.
To learn more about VoIP service providers, visit our buyer’s guide.
For the purposes of this guide, we’ll compare VoIP to a 4-line phone system, using RingCentral and Verizon as examples, respectively.
Long Distance and International Calling
Long distance and international calls are usually less expensive with a VoIP service as well. Because your voice is transmitted as data over the internet, the cost to operate the service is less than over the copper lines of traditional landlines.
While it’s common for both landlines and VoIP to include unlimited domestic calling in their plans, international call rates are significantly cheaper with VoIP. In our comparison of RingCentral and Verizion above, for example, international calls on Verizon’s landlines were often almost 30% higher per minute for comparable destinations.
Another advantage of VoIP technology is that you can often get cheaper international rates by purchasing an international phone number. RingCentral, for example, offers international numbers for over 60 countries.
VoIP vs Landline: Call Features Comparison
With traditional landline phone service, call features can vary depending on the hardware that you buy. However, with VoIP phone services like RingCentral, you often get access to the same features regardless of the type of handset that you use.
| Call Transfers | ||
| Auto-Attendant | ||
| Voicemail | ||
| Advanced Call Routing | ||
| Mobile App | ||
| Voicemail to Email | ||
| Third-Party App Integrations | ||
Both phone systems provide you with basic essential business phone features, including call transfers, auto-attendant, and voicemail.
With a VoIP system, however, you get much more sophisticated call routing. For example, you can set up a recurring schedule in which calls are routed to your cell phone on evenings and weekends. Using RingCentral’s mobile app, you can even make outbound calls from your cell phone using your business number.
Voicemail is also much more sophisticated with VoIP. You can set up voicemail messages to be delivered to your email inbox. This can be in audio form or transcribed to text. Click here for more information on how to customize your voicemail with RingCentral.
Finally, your VoIP phone service can typically be integrated with other third-party business apps. RingCentral, for example, can integrate with popular CRMs like Salesforce and Zoho. Doing so allows you to make calls directly from your CRM using a RingCentral softphone tool on your computer. Also, when you receive a call, your CRM will automatically scan for the number and show you any relevant data you have associated with it.
Call Quality and Reliability
Traditional landline phone systems used to have a significant advantage over VoIP phone systems for call quality and reliability. However, because of improvements in internet speeds and technology innovation among VoIP service providers, this gap has closed.
The quality of VoIP calls is dependent upon the speed and stability of your internet connection. Because of this, one factor to consider is the amount of data you regularly use for other purposes, such as file transfers, audio or video streaming, etc. Most small businesses with a modern broadband internet connection will have ample bandwidth for multiple uses, but businesses in more remote areas or without a high-speed connection may still be better served by a landline phone system.
The VoIP phone system also depends on your electrical connection. Whereas a traditional landline phone system can often continue to operate during an internet or power outage, this is not the case with VoIP. However, many VoIP service providers can automatically route calls to a mobile phone or another backup number when they detect an internet or power outage.
Check out our VoIP speed test to see how your a VoIP phone service will likely perform with your business’ current internet connection. If your internet connection needs upgrading, click here to see who we recommend for your area.
The Bottom Line
VoIP technology has been around for well over a decade. In that time, improvements in broadband internet connections have made VoIP a more reliable and economical option for small business phone service. Although audio was tightly compressed in the early days, which lowered the quality, VoIP can now support high-definition voice streams.
Furthermore, businesses that once struggled to maintain the bandwidth for VoIP no longer face this challenge. A typical broadband connection of 10 Mbps can easily support over 20 VoIP phone lines – and that’s even with heavy internet browsing activity at the same time. To test your own connection, check out our VoIP speed test.
Try RingCentral VoIP
VoIP phone service providers like RingCentral have dramatically improved in quality and are comparable to landlines at a fraction of the cost. You can easily add as many lines as you need, and setup is easy. Click here to try RingCentral free for 15 days.
Chris
Hello, I do agree that the VOIP phone system can be easy to install. Although what if the customer does not have a data drop at every phone location. The customer may require additional office cabling. The customer might also require a POE switch if they want the phones powered by the jack. In the end I do believe the VOIP is a better solution. http://www.commshark.com
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Since most office phones tend to be setup near computers, setting up Ethernet shouldn’t be an issue. Although many offices are switching to WiFi only, most desktop computers still have ethernet ports that can be setup to provide service (and power) to VoIP phones.
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Matt
Jeremy, have you noticed a difference in call quality between Ring Central and Nextiva? Curious if anyone else has had any static issues on the lines recently compared to some of those other cheaper forwarding services…
Thanks,
Matt
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I noticed slightly better call quality via RingCentral, granted this was over a year ago and using each program’s mobile app (which lets you make calls over their VoIP network using a smartphone)
Nextiva still has good reliable phone service. We actually use Nextiva at our office here at Fit Small Business.
Some of the less-expensive providers like Phone.com and Grasshopper are a bit more error-prone. While we haven’t used them too extensively first-hand, this is a widely-shared opinion in customer reviews. Dropped calls, outages & poor sound quality are a bit more common, likely due to their smaller network and fewer data centers.
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John Pan
Hi Jeremy,
If we have a 4 lines system and have 16 extensions, we can have 4 concurrent users to call outside pickup incoming call from outside and the other 12 extensions still can call each others internally, how can we achieve this in hosted VOIP system, do we need to register 4 or to register 16 users?
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Hi John,
As far as I’m aware you would need to register 16 users. You would need 1 “user” for each handset you wish to setup under VoIP service. Alternatively, you could create virtual extensions, which are extensions that forward to an alternate phone (cell phone, landline, or Google Voice which is a completely free virtual phone). Most VoIP providers should support this. You can read about it more on Nextiva’s website here.
Best,
Jeremy
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