VoIP vs. Landline: Which Is Best for Your Business?

What is VoIP?

Voice over Internet Protocol (VoIP) is a type of communication technology comprising both hardware and software. It allows you to make phone calls using an internet connection rather than a traditional analog landline that uses wires or optical fibers. VoIP is also known as internet calling or IP telephony.

VoIP is transmitted through various methods, including traditional phones, smartphone apps, computer software and specific VoIP-enabled phones.

How does VoIP work?

VoIP works by breaking up your voice into digital packets, like electronic envelopes, and sending those packets as data to the recipient over the internet.

VoIP is available in a variety of systems, making it accessible to anyone with a reliable internet connection. You can use these methods to make VoIP calls:

• Phone and VoIP adapter: With an adapter, you can use a regular landline phone to make calls over the internet. The adapters plug into a phone outlet or your router.
• Computer (i.e., a “softphone“): There are many programs or applications that let you make voice calls over the internet, including Skype, Google Voice and FaceTime.
• Smartphone: With your smartphone, you can download apps, such as Google Voice or Skype, that allow you to make internet calls. Using a smartphone or a computer with a softphone app is especially appropriate for small businesses. You presumably already own a phone or computer, so you won’t need to spend your modest budget on pricey new equipment.
• Dedicated VoIP phone: VoIP phones look like traditional analog phones but connect directly to a computer network rather than to a phone line.

Popular features of VoIP

Here are some of the features that make VoIP business phone systems appealing:

Virtual receptionist

A virtual receptionist, often called a virtual assistant, can perform many of the traditional functions of a human receptionist through fully automated features. For example, it can answer phone calls, deliver recorded messages, direct calls and engage in a number of other useful services, all of which are included in VoIP packages.

Most likely, as a consumer, you’ve already encountered virtual receptionists when calling customer support lines. The automated directories, which include up-to-date information and changes to the system, can help resolve issues before a caller needs to be connected to a person.

Automatic call forwarding

Automatic call forwarding is one of the most helpful features for VoIP users. Essentially, this function automatically redirects calls to the VoIP line to another line of your choosing. For example, one common use is to redirect office calls to your cell phone while you’re traveling or working in the field. Similarly, for remote teams, calls can go directly from the VoIP line to an employee’s smartphone, eliminating the need for in-person desks and phones. Calls to an individual can also be forwarded to a receptionist during important meetings. In general, this feature gives you more direct control over your accessibility to others.

Three-digit dialing

When there is an emergency, you know the number to call. There are only three digits to press, and then you immediately get connected to help. Imagine if such easy and reliable access existed for more than just emergency dispatchers.

Well, it does, and it’s called three-digit dialing. With a VoIP system, you can program any numbers you deem important with a unique three-digit code. This easy-to-remember code makes it a breeze to contact staff members, vendors and others you communicate with frequently. Three-digit dialing gives you simplicity for any number that deserves it.

Voicemail to email

As the name implies, this VoIP service sends voicemails to your email. However, it’s essential to understand that this is not a voice-to-text feature; voicemail-to-email does not create a written version of the message. Rather, it makes an audio file of the voicemail and emails it to you. 

This can make it easier to access, save and share voicemail messages. With some versions of this service, you can even delete messages in your voicemail box from your email. It amplifies the convenience of managing your messages. 

What equipment do you need for a VoIP system?

The equipment you need for a VoIP system depends on which VoIP method you use. First and foremost, however, you will always need a strong, reliable and secure internet connection. Call quality and reliability depend on the strength of your internet connection. You must ensure that your system will not drop service or be susceptible to hacking. [Check out the top business internet service providers.]

Next, if you plan to use an adapter, you’ll need a compatible landline phone. If your adapter plugs into a wireless router rather than a phone outlet, you will need a router. To get VoIP over a computer, you’ll need a laptop or desktop computer with an internet connection, the proper software or program, speakers and a microphone. Many people opt for a headset that plugs into the computer for better sound quality and ease of use.

If you’re using a smartphone, you will need a Wi-Fi connection and a VoIP app. Most apps (Skype, FaceTime, WhatsApp and Facebook Messenger) offer free calls to other users with the same app. Others allow you to call a regular landline or mobile number, though this usually costs money. Some providers offer a hybrid option that lets you make VoIP calls using minutes included in your home phone plan.

Pros and cons of VoIP systems

VoIP systems are becoming more popular as the world continues to digitize. They offer significant perks, like lower costs, increased reliability and better sound quality. But VoIP systems aren’t right for everybody, especially those with unreliable internet connections or businesses that require significant telephony features.

Pros

• Low cost: The main benefit and draw of a VoIP system is its low cost. Because calls take place over the internet, you are charged only for internet access rather than for call minutes or extra phone service. With traditional phone setups, a system with multiple lines can be expensive, and additional features (like call transferring or queuing) can run up costs. VoIP offers a budget-friendly solution for long-distance calling, since international calls over a VoIP app are often free.
• Connection anywhere: VoIP systems offer better functionality than traditional phone lines do. The world of business is moving rapidly, and many professionals need to be reached anytime, anywhere. VoIP phone systems enable this by automatically routing phone calls to your VoIP-enabled phone. Wherever you can connect to the internet, you can make and receive phone calls. This functionality enables you to forgo an office (and its expensive rent) in favor of a remote team that’s just as reachable and communicative.
• Sound quality: Sound is usually clearer with VoIP than with analog phone lines, but this, too, depends on your internet connection. A slow connection can reduce call quality, but a strong connection typically results in clear, consistent sound quality.
• Better functionality: VoIP solutions tend to offer greater functionality than landlines by allowing users to do more than just talk on the phone. You can also host video calls and transmit multimedia messages. Plus, systems often include add-ons such as voicemail, call analytics, anonymous call rejection and voicemail-to-text transcription. That said, some of these features are nice-to-haves, not necessities. Consider only springing for those you actually need — costlier packages aren’t always smarter packages.
• Latest technology: Modern communication runs through digital lines, and VoIP digitizes voice communications, making it compatible with the latest technologies. VoIP can work with the newest headsets, smartphones, computer accessories and more. Any cutting-edge technology that uses your voice will work better with a VoIP system than with a landline.
• Reliability: The digital nature of VoIP makes for extremely reliable communication. IP information exchanges run through some of the most robust infrastructure on the planet. When this infrastructure is supporting voice calls, it adds considerable reliability to the process.

Cons

• Emergency calls: A major downside of VoIP systems is that they’re not guaranteed to support emergency call service, like a call to 911. This is largely due to VoIP’s flexibility; whereas traditional calls from landlines are easily traced to one geographic location, VoIP (and mobile phones) can be used anywhere without being tied to one place. Thus, VoIP providers must have Enhanced 911 (E911) enabled to receive emergency service. E911 customers set a physical address that shows up when they dial 911 on their phones. VoIP providers must cooperate with traditional phone companies that control access to the public telephone system and 911 operators, which can be complicated. (VoIP and the public telephone system are direct competitors.) The best way to find out if a VoIP provider offers 911 service automatically, after activation or at all is to call the provider and ask.
• Internet dependence: The second major drawback of a VoIP system is that, because it’s fully dependent on the internet, you must have a strong and reliable internet connection. This way, you can ensure decent sound quality and avoid dropped calls. But if your connection is poor or completely down, your phone system won’t work as it should.  As such, if you work from a rural area with limited internet options, you may prefer a landline, though rural internet access is expanding.

What is a landline?

The landline phone system was invented in 1876 and has remained largely unchanged since then, with the exception of some innovations, like caller ID. Landline telephones work by sending signals through a series of physical switch boxes via copper wire from one phone to another, making them reliable and fast. However, maintenance can be complicated and time-consuming.

How do landlines work?

Landlines transmit voice signals over wires or, now most commonly, fiber-optic cables. When you speak into the handset of a landline phone, the wires or cables transmit your voice as electric signals. On the receiving end of your phone call, your voice is converted back into sound waves for the other person to hear.

There are two types of landline phone systems:

• Corded: As the name suggests, corded landlines are connected to phone services through a wall jack. Both the base of the phone and the handset are wired together, and they are attached to the wall through a cord.
• Cordless: With these landlines, only the base of the phone is connected to the wall through a cord. The handset of the phone is wireless and can receive a signal from the base of the phone within a certain range.

Popular features of landlines

Over the years, landline phone systems have adopted several convenient features.

Caller ID

Caller ID displays both the name and number of an incoming caller on your phone’s screen. This way, you can preview calls before deciding to answer the phone. You can use this feature to screen unwanted or unknown calls.

Call waiting

Call waiting essentially allows you to put a caller on hold as you pick up an incoming call. When you’re already on a call, you’ll hear a tone signaling an incoming call. You can then decide to place the first caller on hold and answer the second call. 

Call forwarding

As with VoIP systems, landlines also support call forwarding. You can redirect calls from your landline to a mobile phone or another landline. 

Three-way calling

This feature allows you to have a conversation with two people simultaneously on the same phone call. While on a call with one person, you can press a button and then enter the number of the other person you’d like to join. After picking up your call, the second person joins you and the first caller on the same line. This feature is also standard on smartphones and business phone system mobile apps.

What equipment do you need for a landline system?

Landline systems are quite easy to set up and require only a few pieces of equipment. You’ll first need a landline base, which is the central component of your landline system. You’ll also need a handset, which is the part of the system you hold to your ear when you’re on a call.

In cordless systems, the handset communicates wirelessly with the base station. In corded systems, the handset is physically connected to the base via a coiled cord. Finally, you’ll need a landline cord to connect your base station to the wall, which links your system to your phone service provider.

Pros and cons of landline systems

Landline systems may seem like a relic of decades past, but there are valid reasons to continue using them.

Pros

• Reliability: Traditional landline phones are extremely reliable. Because the connection uses wires, you can count on your service not to be spotty or spontaneously drop. This can be vital to small businesses, both for maintaining operations and for ensuring that customers can consistently reach you. Additionally, when a natural disaster or bad weather strikes, these phone lines tend to remain functional. They can be fixed more quickly than the internet can, thus reducing downtime for your company.
• Consistent quality: If you have unreliable internet service, a landline phone can mean significantly better sound and call quality and no dropped calls.

Cons

• Technology: The world is moving away from analog or traditional systems in many areas, and telephony is no exception. The ability to make a call from anywhere in the world at any time is becoming more of a small business necessity. Landline systems lack that flexibility, potentially restricting your business capabilities.
• Higher costs: Landlines are more expensive than VoIP systems, especially when you add features such as voicemail, call waiting or caller ID. Landlines are also subject to taxes and additional fees, which further raise costs.
• Spam calls: You may be more susceptible to spam calls on a landline than on a VoIP or mobile number. While it is technically illegal for telemarketers to call you on your cell phone, no such regulations exist for landlines. 

VoIP vs. landline: Things to consider

If you’re deciding between a VoIP setup and a landline system, these are some factors to consider:

• Equipment: You will need to determine which equipment you already have, if any, like multiple landline phones, and if you are willing to replace or get rid of that equipment if you switch systems.
• Costs: Examine which features you pay for under your current system (if you have one) and which features you would like to have with your new system. Would those desired features be included in your package, or would they be separate add-ons? VoIP services tend to be cheaper than landlines, but they may lack some key business phone features.
• Internet reliability: Landlines are known for their reliable call quality and resilience against outages. VoIP systems depend on an internet connection, so without strong bandwidth or a constant connection to internet service, you will be unable to use your phone. Is your business prone to internet disruptions? That could be a deciding factor.
• Scaling and maintenance: A VoIP system is easy to upgrade and maintain, whereas an analog system may be difficult to scale or upgrade, depending on how old it is. If you have eventual plans to seriously ramp up your company from its current small-scale operations, a VoIP system may make more sense for you.

VoIP vs. landline: How they compare

Here’s how VoIP and landline systems stack up against each other:

VoIP vs. landline: Which is best for your business?

For a quick way to determine which type of phone system is best for your small business, evaluate which of the following descriptions is a better fit for your company.

When VoIP is best

A VoIP system is a great choice for your business if flexibility, cost-efficiency or scalability are your top priorities (though scalability might not be something your business has to worry about yet). VoIP’s internet connectivity also makes this type of phone system ideal for businesses with remote or hybrid arrangements.

VoIP offers significant cost savings on long-distance calls, making it a budget-friendly option if your small business has a high international call volume. VoIP systems’ features also suit many key business needs, such as conference calls. These systems can also integrate with other business software and applications, allowing you to easily connect and streamline your workflows. However, integrations may not be as much of a deciding factor when your business is so small that it uses only a few software platforms.

When a landline is best

Landline systems are more suitable if your business prioritizes reliability, security and consistent call quality. Because calls are transmitted through a cable, landlines are fortified against hackers, giving these systems an established track record of data security and privacy.

Landlines are also dependable during internet outages. They ensure stable communication during emergencies, which is crucial if downtime can lead to significant losses for your business. If your company is located in an area with poor internet connectivity, you might find that a landline system is more dependable for maintaining communication.

Connecting with the future of your business

Customers want to inquire about their orders, clients want to discuss partnerships and shareholders want to talk about investments. Each of these parties needs a way to reach you, making a phone system an essential part of your business, especially as it grows. Both landlines and VoIP systems are excellent options for keeping you in contact with the people who help keep your company running and patronize your services. The right type is the one that best meets your needs.

Shayna Waltower contributed to this article. Source interviews were conducted for a previous version.