Your Guide to Using Microsoft Teams Phone System

As the world embraces remote working and globally distributed workforces, many enterprises want to modernize their communication systems so their workforce can still remain productive without face-to-face meetings and office interactions.

In this ‘new normal’, remote and flexible communication will no longer be optional. Messaging apps, document sharing tools and, of course, voice calls all have to fit this environment. Therefore, companies will need a business telephony solution that isn’t tied to an office or reliant on on-premises hardware. That’s why Microsoft Teams — and the entire Microsoft Office cloud suite — has become a leading platform for streamlining communication and collaboration.

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While many companies are already using Teams internally, it’s increasingly being used for external communication as well. In fact, with Microsoft’s Phone System, companies can now use Teams as an enterprise-grade telephony solution.

In this guide, we’ll explain the key features of Microsoft Phone System, as well as its pros and cons, so that you can understand if it’s right for your business.

Let’s dive in.

Table of Contents

What Is Microsoft Phone System?

Microsoft Phone System offers consistent user experience and the flexibility for employees to communicate while hot-desking, working remotely, or traveling.

It is a cloud-hosted Private Branch Exchange (PBX), which allows employees to communicate internally using the company’s own network. Phone System users can also make external calls when connected to the traditional PSTN (public switched telephone network).

Because it is deployed in the cloud, Phone System doesn’t require the business to install and manage complicated, expensive hardware. Furthermore, its direct integration with Microsoft 365 and Office 365 means employees can make and receive calls through Teams from a desktop phone, mobile phone, or PC, using an interface with which they are already familiar.

To use Phone System, the organization must already have a subscription to Microsoft 365 or Office 365 to which they can add the Calling Plan or Direct Routing. Organizations may also choose to add more advanced licenses like Audio Conferencing, Toll-free numbers, and Advanced Communications, which we will cover in more detail below.

Implementing Phone System for external calls is especially convenient for businesses that are already using Office365 and Teams internally. The consistent user experience that comes from a truly unified communications approach can improve employee productivity and satisfaction because more work can be done without switching apps. It’s also easier for employees to learn the system because it matches the experience they are already used to.

For external calls, Phone System must be connected to the PSTN, which requires Microsoft Calling Plans or Direct Routing with a third-party managed service provider. Here’s a quick breakdown of each option:

  • Microsoft Calling Plans: There are Domestic Calling Plans or Domestic and International Calling Plans to choose from, with Microsoft acting as the PSTN carrier. Calling plans are available only to users in certain countries and can be more expensive than many third-party service providers. However, smaller companies often choose Calling Plans because of their simplicity of implementation.
  • Direct Routing: The company connects Phone System to the PSTN themselves or through a third-party service provider. Some service providers can offer support during implementation, broad coverage with a global network of regional PSTN carriers, and competitive rates. Companies can benefit from greater simplicity by replacing multiple local carriers with a single managed service provider, which reduces the number of vendors and helps bring economies of scale. That’s why multinational enterprises often choose Direct Routing.

calling plans vs direct routing loopup diagram

If you want to learn more about connecting Phone System to the public network, see our detailed comparison: Direct Routing vs Calling Plans: Which is Best For Microsoft Teams?

Can Microsoft Teams Replace Your Phone System?

Microsoft Teams can fully replace your existing PBX if you have a Microsoft Calling Plan or a service provider or carrier that can provide PSTN connectivity. While internal calls — even those between different geographic regions — stay within the corporate network, external calls will need to use the public network as described above.

In the past, companies would have a separate, physical PBX at each office. These took up space in server rooms, their phone lines were tied to that specific office and changing them or adding new ones was cumbersome and required knowledgeable IT staff. In contrast, a cloud telephony solution like Phone System allows administrators to add or remove users in a matter of minutes, as well as to manage all communication and collaboration settings from within a single console.

Besides reducing complexity, replacing an on-premises telephony system with Microsoft Phone System can eliminate both upfront and ongoing costs. Cloud telephony is typically a subscription service that saves you the cost of installing and managing your own phone system. The ability to scale the service on a flexible basis means you won’t be paying for capacity you don’t use, or find yourself with an unexpected cost to expand your physical network.

The flexibility of cloud telephony is critical as companies continue to shift towards highly distributed global workforces. In the past, organizations would rely on call forwarding when employees were occasionally out of the office, but this isn’t practical with many employees now working from home or moving offices frequently. A cloud telephony solution isn’t tied to a specific office location for internal or external calling.

Phone Service can often replace an existing PBX without the need for new phone handsets. Microsoft supports many SIP (session initiation protocol) handsets and headsets already and is expanding to support major manufacturers like Cisco, Polycom, and Yealink. As a result, companies will no longer need to use expensive Skype for Business (3PIP) or Microsoft-certified SIP phones anymore.

Key Features of Microsoft Phone System Explained

As we’ve seen, Microsoft Phone System can comfortably replace a company’s existing phone system. Here’s a breakdown of some of the more advanced features:

  • Cloud auto attendants: create automated menu systems to transfer incoming calls to specific employees or departments. Navigational prompts can accept keypad or voice responses. Callers can also reach employee extensions using Dial by Name with keypad or speech recognition.
  • Call queues: automatically put calls on hold and search for available employees or agents based on a list of employees capable of responding. Choose from different routing methods such as attendant routing, round robin, serial routing, or longest idle.
  • Call overflow and timeout: when the maximum calls in a queue is reached or the wait time has reached a limit, automatically disconnect or reroute calls to another queue. It’s also possible to request that callers leave a voicemail before disconnecting.
  • Cloud voicemail: deliver voicemail to users’ email inboxes as an audio attachment and text transcription. Users can securely access voice messages with the Teams and Skype apps and configure their greetings, call answering rules, out-of-office settings, and more.
  • Call parking and retrieval: place a call on hold and generate a unique code to retrieve it later. This allows users to switch devices or give the code to another employee to receive the call.
  • Call sharing: let employees share incoming calls with colleagues by creating user groups and choosing simultaneous ringing or forwarding options. Users can decide how they’re notified about incoming shared calls to ensure they’re not intrusive.
  • Common area phone: set up a phone in a lobby, conference room, or other space that allows many people to make calls. This requires a separate Common Area Phone (CAP) license and certified phone.
  • Caller ID: display information for internal callers based on a corporate directory with employee names, photos, job titles, and more. Incoming calls from outside the organization will display information obtained from the phone service provider.
  • Video calling: initiate or receive face-to-face video calls or conferences with any device that has a camera, speakers, and microphone.
  • Analytics: within the Teams platform, there are per-user call analytics and a call quality dashboard to monitor and improve communication performance across the organization.

For a full list of Phone System features, see Microsoft’s documentation here.

Advanced Communications

Microsoft recently announced the Advanced Communications add-on for Teams, which adds a range of new enterprise communications features including the following:

  • Live Events & Meetings: organizations can host view-only live events for up to 20,000 participants and interactive meetings with 1,000 participants. This allows companies to reach much larger audiences than the standard Microsoft 365 licenses.
  • Customization: companies can add custom branding to internal and external facing meeting lobbies, with branding options for the meeting experience itself to follow in a future update.
  • Analytics: IT teams can track and analyze data related to users and devices. This helps ensure companies make the most of Teams by optimizing the employee experience.
  • Application Programming Interfaces (APIs) access: companies can use APIs to integrate third-party applications with Microsoft Teams. This makes more complex telephony implementations with compliant call recording and content centers possible.

Main Benefits of Microsoft Phone System

As you can see, Microsoft Phone System is a feature-rich cloud PBX. Here’s a summary of the main benefits of Phone System for enterprise organizations.

Truly Unified Communications

  • Implementing Phone System for external calls is especially convenient for businesses that are already using Office365 and Teams internally. With Teams, anyone can make VoIP calls to each other within the organization from nearly any device. Connecting to the PSTN network, however, gives employees a phone line that integrates with Microsoft Teams. This is a truly unified communications approach that can improve employee productivity and satisfaction.
  • By adding cloud telephony to Teams you can provide consistent user experience for external and internal communications. That means external phone calls can be made from the same Teams interface used for chat, internal meetings, file-sharing and other cloud services, offering greater convenience and improved productivity for employees.

Improved Employee Productivity

  • Microsoft Teams is a comprehensive solution for instant messaging, video meetings, document sharing, and more. That means employees have most – if not all – of their communication and collaboration tools available without switching apps. Adding Phone System increases this functionality without giving employees another app to use.
  • If your employees are already using Microsoft Office 365 and Microsoft Teams for their internal collaboration, then adding telephony will be easy for them to pick up because it’s a very similar product experience to the one they already know.

Easier Administration

  • Cloud telephony is also more straightforward for administrators to manage. Within a centralized interface, IT admins can easily add, manage, and remove users in minutes. This frees up IT resources to focus on higher-level tasks rather than maintaining on-premises telephony equipment.
  • With Direct Routing, enterprises can also further simplify their communications infrastructure. That’s because companies can replace multiple local carriers with a single managed service provider, which limits the number of vendors to manage and helps achieve economies of scale.

Reduced Costs

  • Traditional on-premises telephony hardware was complicated and costly. Today’s cloud telephony solutions, however, are more straightforward to manage because they’re centralized and service-based. MS Phone System Calling Plan licenses are based on usage for external calls, companies won’t need to worry about under or over-provisioning infrastructure. Microsoft and third-party providers handle the implementation details, and organizations only pay for what they use.

Why Companies Should (Or Shouldn’t) Use MS Phone System

Microsoft Phone System is great for any company that wants to adopt a more agile telephony solution that’s flexible, cost-effective, and efficient. Combined with other Microsoft products, organizations can leverage a fully-integrated suite of business-critical applications.

Phone System is ideal for companies that work with a lot of customers and vendors outside the organization. Features like auto attendant, call queues, call parking and other advanced routing options can scale to handle a high volume of calls. There is a lot of flexibility when setting up call routing and queues, so companies can create a solution that fits their needs.

Enterprises in heavily regulated industries may also choose Phone System for its security capabilities. Microsoft invests in the security of its telephony solution to keep Teams tenants’ data safe. Microsoft’s products also have numerous built-in access control and authentication features to give IT administrators peace of mind.

Along with security, Microsoft puts a priority on reliability. Phone System’s cloud-native and on-demand infrastructure offers greater scalability and redundancy for enterprises. With Direct Routing, the managed service provider can also provide PSTN carrier redundancy and optimized call routing with a session border controller (SBC).

Things to consider

While Microsoft Teams and Phone System are great options for most companies, there are some things companies should be aware of before making the move.

For one, companies that aren’t currently using Microsoft products may not be ready for Phone System. They would have to take on Microsoft 365 licences for their users, which could be prohibitively expensive. They might also consider rolling out Teams internally before they begin using the platform as a complete telephony solution, which would give employees time to learn the new platform. Microsoft offers an in-depth guide for getting started with Microsoft Teams here.

Download our whitepaper “Adding Cloud Telephony to Microsoft Teams – the Definitive Guide”

Download now

In addition, using Microsoft’s Calling Plans – Domestic or Domestic and International – could be limiting for global enterprises. As we mentioned before, the coverage limitations of Calling Plans could be too cost-prohibitive or complex for multinationals operating outside Microsoft’s supported territories or that want to retain their existing PSTN carrier.

In some situations, companies may need to maintain interoperability with a third-party PBX or certain analogue devices like overhead pagers as well. Microsoft’s Calling Plans generally won’t be ideal for these complicated situations. That’s why we recommend Direct Routing for most companies interested in Microsoft Teams as a unified solution.

Many of the challenges and drawbacks of Phone System can be overcome by choosing a trusted third-party provider. They’ll be able to help with implementing Direct Routing tasks such as porting phone numbers, configuring an SBC, and more. Most providers also have the ability to effectively train and onboard employees to use Microsoft Teams.

Conclusion

With the incredible growth of Microsoft Teams during the global pandemic, Cavell Group estimated that by 2025 nearly 30 percent of cloud telephony users will be using Phone System as their full enterprise telephony solution. In the end, however, deciding whether to use Microsoft Phone System comes down to the individual business. Centralizing company-wide communication and collaboration can positively impact most businesses, but they’ll need to choose a solution that fits their needs.

While Microsoft’s Calling Plans may be simple to get started, they’re often too limiting for global companies and prohibitively expensive. That’s why Microsoft Teams Direct Routing is a great solution for multinational corporations. The key for most companies is finding a trusted third-party managed provider that has expertise in Microsoft Teams Direct Routing and can support global operations.

LoopUp is a certified Microsoft Gold Partner and managed service provider with expertise in implementing Microsoft Teams Direct Routing. We’ve also provided Microsoft voice solutions for Lync, OCS, and Skype for Business since 2010. With over 15 offices around the world and 24/7 support, we’ve become a trusted provider for cloud communications solutions.

Our global voice network uses 13 carefully-selected tier-1 carriers and regional carrier redundancy to ensure 99.995% uptime availability for our users. That’s why over 5,000 enterprises, including many of the top-100 law firms globally, have chosen our cloud communications services.

With LoopUp’s fully managed global cloud communications solution, enterprises can use Microsoft Teams telephony to offer employees a consistent experience while reducing the complexity and costs associated with managing your cloud telephony infrastructure.

Want to learn more about using Microsoft Phone System for your external communication solution? Reach out to LoopUp, and we’ll guide you along your cloud telephony journey.

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