Different Types of Phone Systems for Businesses

Different Types of Phone Systems for Businesses

When it comes to figuring out the different types of phone systems for businesses, many choices exist. It’s no secret that we advocate a VoIP solution. Whether a business chooses hosted VoIP PBX or an on-premise VoIP PBX server, Astoundant Communications feels that VoIP offers the best combination of reliability, features, and cost savings.

We will talk about the different types of phone systems for businesses. We’ll talk about their features and their basic technical specifications. Remember, all phone systems provide the same functionality at the end of the day. It most often comes down to features and cost, which ultimately determines a business’ long-term return on investment (ROI).

Analog Service

For businesses that need a phone number and dial tone, an analog phone line will meet this need. The phone company, for an extra monthly fee, can add on services like call waiting, caller ID, voicemail, and three-way calling. The business just needs to plug in any analog phone.

If a business needs more than one phone, analog phone lines will quickly limit them. They can either get a cordless satellite system, or purchase an additional analog phone line for each additional phone. Each additional analog phone line, however, will have a separate phone number. Any incoming calls to the main business number will not ring the other analog phone lines. Also, a business has no way to put callers on hold. Using the mute button is the best way to accomplish this, assuming the phone has that functionality. Even if they mute the call to simulate call holding, they can’t transfer the call to another phone.

For a business that needs a single analog line, this setup will meet most of their needs. Most small businesses use a mobile phone anyway, so a single analog business line is rare nowadays.


Short for central exchange, centrex systems run on basic analog phone lines. The local telephone company most often provides this service. It consists of the main equipment housed at the phone company’s operations facility, with the phones plugged in at the business. Centrex provides basic additional features to dial tone service (ring multiple phones, three-way calling, hold, call transfer, caller ID, voicemail).

A business would still pay for multiple phone lines, typically one line per phone. Each phone would have a separate phone number; however, the phone company can program the centrex system to provide the business with the additional features. For example, multiple phones can ring for an incoming call on the main line. Employees can put callers on hold and transfer the call to another phone.

Phone companies typically tack on a surcharge per phone line for the centrex features. Businesses also need more expensive analog multi-line phones. This combination makes a centrex system one of the most expensive options among the different types of phone systems for businesses. Also, while centrex systems offer more features, businesses have few, if any, options to add on additional features. Most centrex phone systems limit the number of phones that a business can use.


Short for private branch exchange, a PBX provides businesses with more features in addition to the centrex-provided features. A typical PBX provides about a dozen or so features like music on hold. Businesses only need one phone number, and the phones connect to the on premise PBX with private extension numbers. Users transfer calls simply by dialing the private extension number, or pressing a button on a multi-line phone. Extensions can also be assigned to ring groups so only extensions ring on incoming calls. Some PBX systems also have automated call distribution (ACD) and call queues to provide call center abilities for a small group of phones.

A PBX system typically requires an IT support or private telecom company to install and manage it. With an analog PBX, a business would still have to lease multiple lines from the phone company. Combined with the need for multi-line phones and extra features, this makes the PBX the most expensive option Also, a power outage may temporarily disable some features or incoming and outgoing calls entirely. If a business needs to add additional phones, they may need to upgrade their PBX equipment.


Short for voice over IP, VoIP uses Internet bandwidth. As a software-based option, VoIP provides more than three dozen features that include all the PBX features. Businesses can use several different options for calls: Internet phones, analog phones connected to an analog telephone adapter (ATA), or a softphone (software installed on a computer, tablet, or smartphone). VoIP provides the greatest flexibility among the different types of phone systems for businesses. For example, businesses can install an on-premise VoIP PBX system (similar to a traditional PBX) or connected to a VoIP system hosted offsite (similar to centrex). Also, businesses can deploy conference calls for more than three users. a hosted PBX system has the distinct advantage of offsite service: if the business encounters an Internet or power outage, incoming callers will still hear a greeting and be able to leave a voicemail message.

VoIP services typically cost significantly less than other types of phone systems for businesses. Astoundant Communications saves businesses on average 50% compared to single analog lines, centrex, and PBX. High speed Internet, monthly VoIP service, and a business’ choice of endpoint devices (Internet phones, analog phones with ATAs, softphones, or a combination) represent the only expenses. Most VoIP providers don’t charge for initial setup, so depending on the tech-savviness of a business, they may or may not have to hire someone to configure endpoints. Adding additional phones is usually as easy as contacing the service provider and adding the device. VoIP can even handle those occasional faxes.

Internet reliability and power outages have — and always will — be the Achilles heel of VoIP. Poor bandwidth leads to poor call quality: static or crackling during calls, sound intermittently cutting out, or calls dropping. Internet outages prevent any incoming or outgoing calls. Since most businesses use the Internet to communicate with the outside world, an outage could totally disable business.


A business with access to highly reliable, high speed Internet shoud strongly consider VoIP. For the rest, the other types of phone systems for businesses should be considered. Since power outages typically don’t affect analog phone lines, analog phone systems do have that advantage. However, a battery backup system solves this problem.

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