What is a cloud phone system? How does it work?

March 24, 2022

What is a cloud phone system? Is it something new or old? How does it work?

As Canadians everywhere are getting faster internet speeds through fiber, satellite, and cellular networks, the terms ‘VoIP’ (voice over internet protocol) and ‘cloud phone systems’ are becoming much more common. This is the fastest selling system for business phone systems and communication frameworks. We work with and provide multiple types of systems, and even for ourselves, cloud is the most popular in 2022.

Harry Perry

Harry has a bachelor of science degree and is a cloud specialist with Do Tel Inc, certified as an advanced field engineer for cloud phone systems.

So what are cloud phone systems in a basic sense?

Cloud phone systems are a way of delivering voice services over the Internet instead of using local phone systems stored in each building or office. Normally, when using a landline, dialing a number from a business phone would lead to the phone box (what we call a PBX or Private Branch Exchange) somewhere in your communications room. From the phone box, your call navigates to the central office where your call is routed through various carriers and then reaches the person or company you are calling. This is considered a traditional, on-premises, phone system.

In a cloud phone system, the phone box is no longer located in your office or building. With cloud voice services, your call is routed from your desk phone, mobile app, or desktop app, through the internet to a data center that centrally manages your phone system. From the data center, your call is routed to the receiving party via the internet, the telephone network, or both. All of this happens in a fraction of a second, so you will barely notice any delay or lag whatsoever if your internet supports voice over the internet. As internet has improved over time in Canada, cloud phone systems have become available to many more businesses and individuals, leading to greater consumer choice.

Simple On-Premises PBX Illustration

Simple Cloud PBX Illustration

Why are cloud phone systems so popular?

When thinking about the basic functionality of an on-premises phone system, remember that these systems have a phone box in the communications room. The phone box, or PBX, is a type of complicated computer and it can be expensive to replace. With cloud, you do not need to purchase the PBX, which brings your upfront costs down significantly. Aside from costs, having a centrally managed phone system in the cloud means the only hardware you need on-premises are the phones if you choose to use them, making this a software-based system. New updates, features, bug fixes, and more are much easier to deliver to end users when using a data center rather than individually updating each business’s phone system within their office. Not only does this bring new features to users regularly, it makes maintenance and improvements much easier to stay on top of.

Other reasons cloud phone systems are popular

There is no need for a VPN

A great aspect of cloud phone systems is that because the system is in the cloud, you can make and receive phone calls from anywhere without any special settings or configurations to your router, saving you on IT labour. Without a VPN, you can take your desk phone home or use your apps and call from anywhere, anytime seamlessly.

Ongoing cost savings

With cloud phone systems, you no longer have the need to pay for individual land lines at $30 – $40 each per month. The user account and the desk phone alone will cost less than $30 per month with unlimited phone lines and long-distance calling. Even if you did not use the apps, the savings are significant.

Better features built-in

A reputable cloud phone system comes with desktop apps, cell phone apps, and an office phone for every user straight out of the box at no extra cost. With a on-premises system, these features are often more difficult and time consuming to set up and come at an extra cost for the license.

Things to look out for with cloud phone systems

There are many phone system providers for cloud-based phone systems. A good VoIP provider will showcase the advanced features available to you for a great price rather than focus on how low their price is compared to their competition. Remember, a genuinely great phone system leads to even better customer experiences.

Questions you should always ask your VoIP provider

Will my internet support cloud phones?

A good unified communications provider will always test your network connection with a VoIP scout tool either through software or a physical device. For reliable phone calls, the phone system provider will look to see if you have a consistent latency, otherwise known as delay or ping. Internet speed is not the main focus here because a fast speed with a delay that jumps from 40ms to 400ms all the time will be nauseating for voice communications.

What industries do you serve?

This might seem like a strange question, but many VoIP platforms are geared towards medical, contact centers, remote teams, or other industry. A good phone service provider will be capable of serving any industry because they have a lot of flexibility built into the system for various configurations. As an example, some businesses for their after hours will use a manual night mode button, others have an automatic schedule that switches at 5pm, some send calls to voicemail, others have an emergency contact process, and so on. There are tens if not hundreds of solutions to the same problem, which in this example is someone calling after regular working hours. A great cloud business phone system needs to accommodate for every scenario.

How much do cloud office phones cost and can I bring my own device?

No two cloud-based phone service providers are the same, especially for pricing IP phones. For example, we give a premium phone like the Yealink T54W for free with every user license, you just have to cover shipping and taxes, that’s it. Other providers will rent the desk phones for $6 – $20 per month each. So be very careful if a company’s licensing looks very affordable as they may have charges hidden elsewhere that you do not see until reading their formal quote to you.

You may also be interested in buying your own cordless IP phones or bringing your phones from a previous system over to the new system. It’s important to find out if your devices are compatible on the new system and if there is a charge for adding them. Some cloud phone providers may not allow you to bring your own device and you should check this before ordering their system.

What features are included in the cloud phones, and which cost extra?

Be sure to always obtain the full data sheet of features. Some providers charge one-time or recurring fees for business texting among other features. For example, we have business SMS texting included with multiple licenses, but not all. We also have a multi-channel contact center as part of a different licensing setup. Be sure to outline the features that are important to you as an organization and find out if they are included or come at an additional cost.

What are the cost differences between cloud phone systems and on-premises phones?

Let’s talk dollars. In our case, Canadian. Pricing up a new phone system can seem a little daunting at first. An important aspect to understand is that cloud systems work on a license subscription system, like your email, website hosting, and other services. An on-premises system may still have licenses, but they are typically one-time purchases, and the system has a higher upfront cost.

With an on-premises system, you are buying the PBX, the ‘brains’ or phone box, which is a type of server and can often be more expensive. In a cloud environment, your upfront cost is usually just a one-time setup fee, shipping if utilizing IP phones, and that’s normally about it – this makes the upfront setup very affordable. Some cloud phone providers will charge you monthly for the initial setup, but this almost always is more expensive. If you have 1 to 8 users, cloud is almost always the best option when it comes to price because, even if your monthly price increases, it will take years of accumulated costs to overtake the upfront cost of the phone system plus the phone lines. If you have 20 or more users, you may need to do some cost analysis if price is your main focus point. The pricing below may be able to help you, however.

How much do on-premises and cloud phone systems actually cost?

Cloud phone system cost:

$300+ for initial setup
$20.00+ per user license monthly
+ $ for shipping of IP phones if required

On-premises phone system cost:

$2,000 – $3,000 upfront for the PBX
+ $ for each phone
+ $ monthly for phone lines
+ $ for licenses
+ $ for labour

Aside from price, what are advantages of on-premises and cloud phone solutions?

Both systems are similar in basic functionality, boasting advanced calling features and high-quality call routing and business calls. So, what are the pros to both systems for features?

Benefits of on-premises phone systems

The systems are usually hybrid, allowing them to use internet, PRI, and copper phone lines. The advantage to this is that if your internet fails, you can have a backup analog phone line that allows you to contact 911 despite the outage.
Telecom technicians usually have more control to change any setting you want. With specialized, expensive, and highly complicated software, technicians have access to everything in the phone system. For example, completely cutting off voicemail access, configuring layers of call flows for complex customer service environments, and more.
It is considered an asset. That’s right, you own the on-premises phone system completely. This is great for businesses that maintain their system very well for 10+ years. For businesses that want to keep technology up to date and want newer systems, this would be a more expensive avenue.

Benefits of cloud phone systems

Collaboration tools are usually included. Features such as team chat, file sharing, video conferencing, and more are normally included with a cloud-based PBX. Many powerful features are immediately available to users at no additional cost.
Unlimited phone lines and unlimited calling. It may seem confusing to some but with call queues and routing included with our cloud phone system, you can have multiple people in-line through the main number after being greeted by the automated attendant. You can also not use the queue system if you would like everyone greeted by a person instead. With 6,000 minutes for every user across North America and Puerto Rico, there is also little risk of facing a per minute phone bill, which is great for audio conferencing.
It is an ongoing subscription. This is a major benefit because subscription services allow for better ongoing research and development than one-time purchases. This means new features regularly make their way to our cloud phone solution. Just recently, we added our Bridge platform that links cloud features with on-premises phone systems to allow businesses to have users on both cloud and on-premises, extending their original investment and lowering their subscriptions costs for cloud.

How we can help you with your next business phone system

Do Tel Inc serves all of Western Canada and beyond for phone systems. We pride ourselves on helping others achieve a reliable business phone service. Whether you need a traditional phone system, cloud solutions, or something in between, you can rely on us to provide you with something that works for you and your team both in price and feature-set. If you are looking for additional features not mentioned in this article, please let us know as we have much more up our sleeves.

To contact, please call us on +1 (844) 962-8484

Or email us at info@staging.dotel.ca

Thank you, and happy communicating!