The world of telecommunications is filled with endless acronyms, but one of the most prominent is “PSTN.” Most people depend on the PSTN — otherwise known as the Public Switched Telephone Network— in their day-to-day lives. Perhaps you used it to make a phone call right before reading this article, even if you didn’t know it. But while PSTN is prominent, it isn’t irreplaceable. In fact, for businesses, replacing it may be the best move you make.
In this article, we’ll explain what PSTN is and dive into exactly how it works and how much types of phones cost. We’ll then explain why so many businesses are switching from PSTN systems to VoIP phones like OpenPhone. (Spoiler: We think you should, too.)
What is PSTN?
The Public Switched Telephone Network (PSTN) is the traditional infrastructure behind the world’s telecommunications. For over a century, the PSTN system has connected people and businesses over the phone using copper wires and telephone lines. This is why people often associate PSTN with the landline phones that made calls possible in the first place. ☎️
Modern-day PSTN isn’t completely last century. Since its humble beginnings, it’s grown to support devices like cell phones and wireless desk phones. PSTN phones can now help you connect with clients and team members using cellular networks, fiber optic cables, satellites, and more.
What makes PSTN an old school system is the fact that it always requires you to have a phone that’s connected to a dedicated voice network. This offers far less flexibility compared to newer alternatives (namely, VoIP).
How does PSTN work?
When you make a call on a PSTN phone system, you can get connected to the people you want to reach in a matter of seconds these days. Businesses no longer have to hire their own switchboard operators — the people you see manually routing calls by switching wires in historical movies or shows — to get calls where they need to go. Switching is largely an automated process now.
PSTN telephone systems still go through a somewhat complex process during the short time you spend waiting to get connected. Once you dial the right phone number — which essentially provides the system with the address that you want to reach — here’s an example of a process your PSTN system may go through to connect you to the right place:
- Sound waves turn into electric signals that reach your terminal. If you have a desk phone, your terminal is likely a piece of hardware located in your office.
- The terminal sends the electric signals to the Central Office (CO), which is a type of switching center that local business and residential lines are connected to.
- The CO may route calls to one of three destinations: a tandem office for calls in another part of the city, a toll office for calls in another city or state, or an international gateway for long-distance international calls. If your call is getting directed to a phone line in the same part of town, no routing to other offices is required — the CO (sometimes called a local exchange) will take care of the call.
- The office sends electric signals to the right terminal to reach the exact phone line you dialed.
- The person you’re reaching will receive the call. Once your call recipient picks up their phone, your voice call begins.
When either of you speak, your phone system goes through a similar process to send your voice message to the other side. It all happens pretty quickly thanks to current PSTN technology.
How switching works with PSTN
Modern-day PSTN isn’t an ancient process, but there’s a reason it’s also known as the Plain Old Telephone Service (POTS). It still uses an old-school process called circuit switching to connect you and your clients.
Each time you make a call (or someone calls you), the call may pass through different switching centers — for example, the tandem office or toll office. As calls pass through, the PSTN will open a number of wire circuits. These circuits must stay open throughout the entire duration of your calls.
So why is circuit switching not so great? Circuits aren’t unlimited. If your team members (or callers in your area) place a high volume of calls at once, it’s possible to max out the number of phone lines available to place outgoing calls, which can put your business in a tough position. Plus, circuits stay open even if you’re not actively chatting on the phone — for instance, if you’re putting a caller on hold to consult a team member.
Limited resources always means more expenses. Circuit switching is a large part of why international phone calls are so costly for landline and cell phone users.
How much does PSTN cost?
If you’re thinking about setting up a PSTN phone system, one thing you should know is the costs can quickly stack up. 💸
- $30-$100 for a new deskset
- $150-$300 for installation
- At least $10 per line per month to maintain
Most desk phones require additional hardware. That means more costs, not to mention extra space. Don’t forget about the even higher costs you’ll have to pay if your business makes any international calls.
Looking for the best features for your business? High-end private branch exchange (PBX) phones, which are able to route calls between phones in your company’s system and offer more advanced features, can cost thousands to set up and maintain even if you only have one phone.
Using other devices comes with similar charges. For instance, while modern smartphones generally don’t require large installation costs, an average iPhone costs $873 while Androids will still cost you hundreds if you’re purchasing mobile devices for your team. However, opening any PSTN line is bound to cost you hundreds to start and even more to maintain.
Want to upgrade a desk phone system to access better (or at least up-to-date) features? You’ll need to purchase new hardware for every single one of your team members and have an IT pro set them up.
Depending on the size of your team, taking your business to the next level may require enormous expenses, all incurred at once. For many companies — especially small businesses with tighter budgets — these costs can be prohibitive. Or, at least, it can delay company-wide tech upgrades.
What’s the difference between PSTN and VoIP?
If you’ve been doing your research on business phone systems, you might have come across the term Voice over Internet Protocol (VoIP). Also known as internet telephony, VoIP allows you to make calls using any internet connection. No need for a dedicated network or device. Your team can use any computer or mobile phone if your team decides to have a Bring Your Own Device (BYOD) policy.
For VoiP, all you need to do is connect to WiFi on your laptop, turn on data on your smartphone, or tap into a hotspot on your tablet — there are endless ways to make calls once you choose a VoIP service provider and download their app. 📱
So how do VoIP systems work? They use a process called packet switching, rather than using circuit switching like PSTN systems. When you make a call, VoIP systems turn your voice messages into digital data packets (instead of electric signals). These packets travel over the internet using whichever route is the fastest, then are reconstructed into your exact message. It’s a lightning-fast process — one that often happens more instantaneously than the PSTN call process. ⚡
Think of how easy it is to send an email online. That’s how easy it is for your voice to reach the other end of the metaphorical line. Voice over IP uses 100% digital technology to connect you to clients and team members.
Plus, since the packet switching process doesn’t require you to open (or keep open) any dedicated phone line, you won’t ever hear the message “all circuits are busy” when trying to make calls again.
Why businesses use VoIP instead of PSTN
There are plenty of perks to going digital with VoIP instead of sticking with the largely analog PSTN. Here are five key reasons why many modern businesses are switching over to VoIP services like OpenPhone, beyond the perks of packet switching.
1. Enjoy a more cost-effective phone solution
Most VoIP phones cost a small fraction of the price of PSTN phones. All you need to pay is a monthly subscription fee, which is usually equal to or less than the cost of a landline service.
For example, you can set up your business phone system for as little as $13 per user per month on OpenPhone. Every user gets a free phone number, and there’s no need to pay any installation fees. We’ll even port your number for free if you have an existing business number you want to use!
Even if you want more telephone numbers on top of the ones you get for free, you won’t have to pay for another user to make it happen. You can get extra numbers for $5 each per month.
When you choose VoIP over PSTN, you don’t have to worry about the cost of devices either. If you don’t want to purchase any new hardware, your team members can easily make calls using their existing work laptop, personal smartphone, or any device that’s compatible with your provider’s app. OpenPhone, for instance, is available as a mobile, desktop, and web app. 💻
Want to upgrade your VoIP system? Software updates are free and as easy to download as any other app update. If you want extra features, simply upgrade your plan by adding on a small per-user cost each month.
International costs are also significantly lower than with PSTN phones thanks to the lack of circuit switching. You can make unlimited calls to the US or Canada for free with OpenPhone.🔥 Check out our affordable international calling (and texting) rates for other countries — you can pay as little as a few cents per minute.
2. Easily add teammates as your team grows
If growing your team is part of your business plan, VoIP can take a lot of weight off your shoulders. You don’t have to think about budgeting for new devices or making time for installation each time you onboard someone new. Adding a new team member is as simple as inviting them to your VoIP system via email and assigning a phone number (or letting them select a number).
VoIP is also the best solution for remote teams. Your team members can work from anywhere internet service is available — at home, in an office, on a beach, or a café in Paris — which means you can hire from anywhere. You’ll get to pick from the best talent in the world, and your team members will get the flexibility they want — win-win.
PSTN phones, on the other hand, typically don’t give you the flexibility to work abroad. If they do, you’ll likely have to pay the premium for international support. And if your business uses landlines, you can’t even hire outside of your area since team members must be at their desks to answer calls.
3. Access more collaborative features
Even when you’re paying less, you still need to make sure you’re getting a lot of bang for your buck. The great news is, VoIP phones usually offer far more advanced functionality than PSTN phones. (Landlines can’t even support texting, after all.)
Some of the most standout features VoIP systems have to offer are the ones that help your team members work together. For instance, OpenPhone lets you share phone numbers with an unlimited number of team members. This means you can help each other answer calls and texts, see when others are typing or on the phone, and share notes about specific contacts and conversations. With OpenPhone, you can even tag your co-workers on any conversation to get their feedback before you hit send to a contact.
Unlike PSTN, VoIP makes it possible to access real-time call analytics. You can see when you get the most incoming calls, so you always have enough team members working at the right times. VoIP allows your collaborative power to multiply.
4. Integrate your phone system with business tools
If you want efficiency, you want VoIP over PSTN. As a largely analog system, PSTN can’t support as many integrations as VoIP. The ability to connect your favorite business apps to your phone system empowers you to connect your business processes and get things done faster.
OpenPhone offers integrations with popular business tools like email, Slack, Zapier, and HubSpot CRM to help you get more from your team’s time (and your phone system). With these integrations, you can automate text messages, read your voicemails from your email, and access many more benefits that keep your team productive.
Have a suggestion for an integration? Let us know — we’re always listening to our subscribers’ ideas. When you’re connected to the internet, the possibilities are as endless as Wikipedia rabbit holes.
5. Implement a user-friendly system
VoIP allows your business phone system to be jam-packed with features, but that doesn’t mean your phone will be complex. For the average user, VoIP phones are far more intuitive than your average PSTN phone (even some cell phones).
Whether you’re signing up for a VoIP service for your business or your team member is accepting your app invite, the process to get started is as simple as signup processes for other apps or websites. Unlike traditional PSTN phones, VoIP phones allow you to easily search through saved contacts and tap to call, too.
Even a novice at tech can easily use advanced VoIP features. Whereas PSTN phones often require you to memorize and input codes — for instance, *72 on landlines and some smartphones to forward calls, VoIP systems typically require just a few taps or clicks. OpenPhone’s features are clearly labeled and organized exactly where you’d expect — and if you need extra help, you can easily and conveniently reach out to customer support via email or jump on our help pages.
Get the best for your business with VoIP
PSTN was the infrastructure that started it all, but VoIP is the alternative making business phone systems better than ever. By running on the internet and using voice data instead of wires, circuits, and electric signals, VoIP unlocks new possibilities (like real-time analytics) and ensures you won’t hit any efficiency snags just by jumping on too many calls. Plus, VoIP phones are easy to set up and use.
VoIP can be a game-changer for your budget, too. By switching from PSTN to VoIP, you can quickly lower your costs and eliminate the need for specialized hardware, so all your expenses are well-spent dollars. Try out VoIP at no charge when you sign up for a free OpenPhone trial.
Emily is a freelance business and marketing writer based in the desert, though her writing is anything but dry. Her passion is writing compelling, human-friendly content that helps growing businesses perform better.