Virtual Phone Systems
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Business VoIP

Our Recommendation

Visit RingCentral

Why do I need a phone system?

A phone system is what businesses use to manage and route both inbound and outbound calls. "Phone System" and "PBX" are synonymous. PBX is an acronym for Private Branch Exchange. The limitations of a standard phone line (like you would have in your home) are impractical for a typical business. First of all, most businesses want multiple people to be able to make outside calls at the same time. Second, they want to receive all their calls from one phone number and then route those calls to the appropriate person or voicemail. Third, most businesses want to be able to make interoffice calls and to transfer calls from one person to another. These basic features are all managed by a PBX system.

The first phone systems were designed as a cost effective way for large corporations to handle internal phone calls. As phone systems gained popularity, their functionality was expanded to include handling all calls regardless of whether they were internal or external to the company. As functionality grew so did the features. At first you were merely able to obtain call forwarding and extension dialing; however, with new technology you can do anything from setting call rules to establishing a virtual auto attendant to direct your calls.

Key concept to understand: Lines vs. Extensions

A line is what you have in your house. You pay your phone carrier a monthly fee for access to a line. Your phone line allows you to call other phone lines. If you want two people to be able to make calls to the outside world at the same time, then you need two lines. If you want two people to be able to make outside calls at the same time and still be able to receive calls, you need two lines for the two people making outbound calls and a third line to receive calls. Call waiting does not work with a traditional PBX system. Many businesses also have a dedicated fax line.

You don't have extensions in your house. Extensions are used to make interoffice calls and are handled within the PBX system. You could unplug the PBX system from the outside world and still call the conference room from your desk. The extension feature operates like an intercom system. Most businesses have an extension for every phone, (e.g. Receptionist, Jeff's office, Sally's office, conference room, etc).

Traditional PBX Business Phone System:

A traditional PBX system consists of a "Phone Box", which is in essence a computer that is formatted to manage your office telecommunications, several phones (each with its own extension), phone lines connecting the Phone Box to the outside world and interoffice cabling connecting the phones to the phone box. In addition, most PBX systems require licenses for certain features like voicemail so you will need to purchase a license for each voicemail account you want to set up. You will likely have more extensions than voicemail accounts if you have extensions in the conference room or kitchen and don't want voicemail for those extensions.

For the purpose of our comparison, the traditional phone system we use is the Nortel BCM-50. Our office inherited a Nortel BCM-50 from a business previously owned by our founders so most of our information is from first hand experience or quoted from our technicians. Furthermore, the system is made for small to medium sized businesses and utilizes IP technology, which makes it an ideal candidate for our comparison.

Business VoIP

This is a cost effective alternative to a traditional PBX system for most businesses. The only equipment you have to buy is the phones, which are significantly less expensive than phones for a traditional PBX system. Furthermore, VoIP lines are significantly cheaper than analog lines, and you don't have to pay exorbitant installation fees from the phone company. You configure your virtual phone box through an online interface and plug your phones into the internet.

Since the phones are communicating through the internet, the main requirements for these systems are:

  1. Internet connection, DSL quality or better (we tested RingCentral Office with AT&T's basic DSL and had good results)
  2. You have to maintain a separate line for every phone.

The cost of VoIP lines is roughly half what it costs to maintain an analog line, so this effect is relatively insignificant. However, it should be noted that some conventional phone systems (including the Nortel BCM50) are compatible with VoIP lines.

However, one downside to Business VoIP systems is that in order to use a VoIP phone with the service you must have a dedicated line going to that phone. This is different than traditional PBX, in which you can have many less actual phone lines than phones and still have them connected to the system as extensions. Since Business VoIP systems allow for more (sometimes unlimited) extensions per line, each of these extensions must have its own line serviced by another phone provider, if not the VoIP provider themselves. Businesses that would be negatively affected by this setup are ones that need only a few lines in their office but want calls received by many more employees on their desk (VoIP) phones. For example, if you're in an office that never receives more than three or four calls at a time, but each call could possibly go to 20 or 30 people in various departments, then the traditional "in-house" phone system setup might work best for you. While this aspect of Business VoIP only affects a small number of businesses, it is still something to consider when building out your office's infrastructure. 

We have worked with RingCentral for quite some time and have found them to be very responsive to our recommendations and focused on quality. For example, due to the complicated nature of Business VoIP (and phone systems in general), RingCentral set up a special, "tier 2" customer service line for RingCentral Office customers. Based on our relationship with RingCentral and the success of our test of RingCentral Office, we felt comfortable using RingCentral Office as the business VoIP alternative for this comparison. » Learn more about RingCentral Office

Base Cost Traditional Phone System

(Nortel BCM-50)
$4,600 for hardware/setup

$316/mo for service
Virtual Phone System

(RingCentral Office)
$596 for hardware/setup

$119.96/mo for service
Call Management: With a traditional phone system you are required to buy a "Phone Box". Over $2,500 for the Phone Box alone. A virtual PBX system can be managed completely online with a web management interface. Using the web-based interface quick and easily view call logs and track total usage. Included.
Installation: A traditional phone system requires professional installation, which can be costly as well as time consuming. Up to $110/hr for an IT technician. Virtual PBX systems do not require professional installation. Simply set up the online interface, plug in the phones and you are ready to utilize the service. Included.
Phones: Nortel IP Phone 2002 $250/phone. Polycom IP335 Phone $149/phone.
Service Updates: Traditional phone systems require professional maintenance on equipment and a technician is required for service updates. Up to $110/hr for an IT technician. Since your phone system is hosted online there is no need for IT assistance and the service provider automatically updates the system on a regular basis. Included.
Business Expansion: To expand the capabilities of a standard phone system you have to physically add hardware or expansions to the hardware you currently own. "Phone Box" expansion hardware costs over $200 on average. When looking to expand your business you have the freedom to add/remove extensions through the online interface, allowing you to easily scale the system with your business. Included.
Feature Management: Some features (i.e. voicemail) can be accessed remotely by calling into the voicemail system. However, to access most features you must plug directly into the "phone box". Furthermore, most changes require professional assistance. Not Applicable. Virtual PBX services allow you to manage voicemail, voice prompts, extensions & call management wherever the internet is available. Included.
Phone Lines: Major phone providers charge a minimum of $200 per month to maintain 4 analog business lines. $200/mo for 4 business lines. 4 unlimited VOIP lines are included with the service package. 4 lines Included
Toll Free Number: In order to get a toll free number from a traditional phone company, you have to have an account with local phone service. In addition to any fees associated with said local phone service, the phone company will charge you a monthly service fee for your toll free number plus a minimum usage fee and a per minute toll when you exceed your minimum usage. Monthly fee: $10
Min. Usage fee: $15
Per Minute Toll: 5.9¢
A RingCentral Office plan comes with a free Toll Free number as well as 1,000 free minutes to use. Toll Free numbers through RingCentral Office include all of the features of a local number as well as faxing capabilities. Free + 1,000 Free minutes. Each additional minute costs 3.9¢

VoIP Business Phone System Recommendation:

We have thoroughly tested RingCentral Office and can confidently endorse this product. RingCentral has always been responsive to us and they strive to continuously improve their products. They have set up an advanced customer service line for RingCentral Office and are subsidizing the equipment costs to encourage people to try RingCentral Office. There are three primary reasons for choosing RingCentral Office over a traditional phone system.

1) Cost of Equipment: The equipment required to set up the system is significantly less expensive than that required to set up a traditional phone system. We got a quote for a Nortel BCM 50 phone system with 4 phones and all the required licenses and it came to over $4,000. If you luck out and find a used system at a 75% discount you're still spending over $1,000. All you have to buy to set up RingCentral Office are four IP phones at $149 per phone, totaling about $596. There is really no comparison.

2) Set Up and Maintenance: A traditional phone system requires professional installation. We procured two quotes for such installation; $89 per hour and $110 per hour. Some things, like changing voicemail greetings, forwarding calls, etc. are set up to be easy for an average user to configure and change, but most advanced changes, like adding an extension, configuring a new phone, etc, will likely require professional assistance. RingCentral Office has set up their entire system to be user friendly. They configure the equipment before they send it to you so you can plug it in and start using it. They have also made it as easy as possible to make changes to the system through the online interface and set up an advanced customer support line specifically for RingCentral Office customers. Furthermore, as the system is hosted online, RingCentral automatically updates the software without any action required by their subscribers. Updating the software on a traditional phone system will require professional assistance.

3) Ongoing Service Fees: You will need to subscribe to analog lines through the phone company to operate a traditional phone system. Four lines with unlimited long distance typically costs about $320.00 per month. If you stripped down the services, you might be able to get down to around $200 per month, plus long distance charges. RingCentral Office costs $119.96 per month for four lines with unlimited usage. Need we say more?

RingCentral Office Business VoIP Features:

-Toll Free Number
-Local Numbers for each line
-Voicemail (w/ Email Delivery)
-Professional Recordings
-Message Alerts
  -Music On-Hold
-Internet Fax
-Dial-by-Name Directory
-Real-Time Call Control
  -Call Forwarding
-Time-of-Day Routing
-Call Screening
-Click-to-Call Out
-Click-to-Call Me
  -Call Logs
-Call Transfer
-Outlook Integration
-Call Blocking
-24 Hour Support

RingCentral Office Business VoIP Pricing:

$34.99 for 1 unlimited line

    • Includes 1 unlimited phone line with a local number and unlimited inbound & outbound calling and faxing to the US and Canada

  • Free toll free number with 1,000 toll free minutes & internet fax
  • $149 for customized pre-configured Polycom IP335 phones
$119.96 for 4 unlimited lines

    • Includes 4 unlimited phone lines with local numbers and unlimited inbound & outbound calling and faxing to the US and Canada

  • Free toll free number with 1,000 toll free minutes
  • $149 for customized pre-configured Polycom IP335 phones
$499.80 for 20 unlimited lines

    • Includes 20 unlimited phone lines with local number and unlimited inbound & outbound calling and faxing to the US and Canada

  • Free toll free number with 1,000 toll free minutes
  • $149 for customized pre-configured Polycom IP335 phones

Our goal is to provide useful information to consumers to allow them to make informed buying decisions. We do not charge consumers for the information we provide. However, we are paid referral fees by many of the service providers we review, including RingCentral.


Nortel BCM50 Package: ($1,027)
8 Voicemails ($120 ea.)
12 port power Ethernet switch ($700)
Wall mount($15 each)
4 1230 Nortel Phones ($250 x 4)
Installation ($110/hr)
Misc. Cables

$4,673.06 (This is a packaged price; if each individual product and license was bought separately the cost would be higher)

Recurring Phone Line Expense

1 yr agreement required
Main line is $55.95, each line thereafter is $48.00 (plus taxes and surcharges)
Connection Fee

approx. $200/mo