Microsoft Phone System Reviewed

Capabilities, Weaknesses, Improvements

Microsoft Phone System is the gateway to all true telephony capabilities with Microsoft Teams and Skype for Business. But on its own, it delivers very little. Realistically, Phone System is a prerequisite for Microsoft Calling Plan and third-party integration tools that will actually let you place a phone call.

However, Phone System is important to understand. If you stick with the Microsoft ecosystem, Phone System becomes the management tool that you will use to control calling made with Microsoft Calling Plan. Whether or not Phone System provides enough sophistication to replace your existing PBX (Private Branch Exchange) and SBC (Session Border Controller) is an important decision to get right. 

Here, we are going to review what Microsoft Phone System delivers, how to purchase a Phone System licence, and whether or not there are better ways to integrate PSTN (Public Switched Telephone Network) calling capabilities with Microsoft collaboration tools.  

How to get Microsoft Phone System (and how much does it cost?) 

Phone System can be purchased as an add-on licence for £6.00 per-user/per-month with the Microsoft/Office 365 E1 and E3 plans. Phone System comes included with the E5 plan. Beyond that, things get a little more complicated. 

Before you proceed, you need to confirm what package you’re on and whether you have a Phone System. The below diagram can help you.

Microsoft Teams Calling - License Diagram

For Microsoft 365 Business Basic, Standard and Premium users, you have to purchase Phone System as part of the Microsoft 365 Business Voice package. As standard, Business Voice bundles Phone System with Microsoft Domestic Calling Plan for £12.00 per-user/per-month. With this package you get: 

  • A domestic calling plan with 1,200 minutes per-user/per-month within the UK.
  • Dial-in audio conferencing for up to 250 users per meeting. 
  • 24/7 customer support. 

Business Voice can be purchased without Calling Plan from £7.50 per-user/per-month. However, this has to be done through a partner reseller. In both instances, Business Voice limits you to 300 users. However, Microsoft is slated to release an Enterprise version of this plan soon.

Pro tip: You should contact Microsoft to figure out the most straightforward way to add Phone System to your existing licences. There are significant regional variations to Microsoft licences, and there are legacy licences that make things even more complicated. However, you should know whether or not you want Calling Plan before you make that call. The rest of this article will help you figure that out.  

What are Phone System’s capabilities? 

To quote Microsoft: “Phone System enables call control and PBX capabilities in the cloud with Microsoft Teams and Skype for Business Online… [U]sers can use Teams or Skype for Business Online to place and receive calls, transfer calls, and mute or unmute calls.

When configured correctly, Phone System will let users place and receive these calls internally without any additional investment. However, Phone System does not allow you to place external calls over the PSTN. To do that, you need Microsoft Calling Plan or a third-party option. 

Microsoft compares Phone System to a PBX, and if you go down the Microsoft Calling Plan route, Phone System will become your “effective” cloud-based PBX for all calls placed through Calling Plan. In reality, Phone System is not a fully-functional PBX, and understanding these shortcomings is important to determine how Phone System should actually fit into your communication infrastructure. 

What Phone System can do: 

Phone System provides a number of basic calling features/control functions. These include: 

  • Cloud auto attendants: Create a menu system that enables callers to locate or transfer calls to company users.
  • Call queues: Configure call queues, set up hold music and pick from a select number of routing options.  
  • Call forwarding: Let users configure their own forwarding rules.
  • Transfer calls: Let users transfer calls to other users and different devices or voice mail during a call.  
  • Caller ID: Create detailed internal and external caller identification information.
  • Presence-based routing: Set status notifications and block incoming calls except for specifically indicated exceptions. 
  • Voicemail: Set up cloud-based voice mail and let users configure their settings, greetings and answering rules. 
  • Call blocking: Add PSTN numbers to block lists.  

What Phone System can’t do:

Although Phone System covers the basics, it also has some glaring weaknesses. These start to become more pronounced in high-volume environments. However, they can create problems for anyone, depending on your business and use case. There are three fundamental areas to consider:   

  • Call recording: Phone System does not come with any standard call recording capabilities. This creates significant challenges for quality control (for example in a call centre). It also creates compliance problems, for example, demonstrating evidence of a business transaction or compliance with industry standards or regulatory procedures.  
  • Call reporting and controls: Phone System does not provide standard individuated reporting functions. There is no way to look at per-user use rate, costs or overages. You can’t set individual cost controls, or otherwise manage how individual users place calls. 
  • High-volume call queues: Phone System will let you set up call queues. However, these are limited in functionality. For example, queue length is limited to 200 people, and wait times to 45 minutes. There are limited routing options, no customised skills-based routing, or the ability to connect customised information or link that to automated IVR (interactive voice response) menus.
  • End-point and handset flexibility: When using Phone System and Calling Plan, Microsoft limits you to a select number of compatible devices. This can lead to redundant hardware purchases and sub-par outcomes.  

If you need sophisticated call queues, routing options, reporting and cost control features, or the ability to record calls, Phone System isn’t the answer for you. If you just need to place and receive phone calls from Microsoft Teams or Skype, Phone System plus Calling Plan can get the job done. However, it still might not be the best way to deliver those basics.      

Alternatives to Phone System and Calling Plan 

There are two alternative options to the prescribed Microsoft route for placing real phone calls with Teams. Neither of these options apply to Skype for Business. However, with Skype for Business Online set to be retired in 2021, Teams has become the central hub for business collaboration development for Microsoft users. 

Note: One of these options doesn’t require Phone System at all, and the other relegates it to a licencing pre-requisite — functionally replacing it with a real PBX system. Neither alternative includes Calling Plan.  

Alternative 1: In-app software overlays 

For Teams users, there are a number of calling applications that provide in-app cross-launch overlays. For example, RingCentral, Cisco Jabber, and Zoom all have PSTN calling options (or similar), and can be used with Teams in this way. 

You don’t need Phone System or Calling Plan. When it comes to the Microsoft requirements, you just need the Teams app. However, you will need to look into the specific costs and licences for that third-party app. 

What’s good about this: The specifics will vary depending on the application. However, in each instance you get an easier way to access this other calling app from Teams, making it easier to place external calls. 

What’s bad about this: This option isn’t actually an integrated solution. You are just using another application to place the call. This creates disjointed workflows, and potentially complex cost and call management controls. It’s simply not a good long-term solution. You will also need to look into the specifics of the application in question to figure what kind of PBX capabilities you will be able to access. 

Pro tip: Although this can seem like a good idea, it’s a short-cut option that doesn’t deliver truly unified communication.

Alternative 2: Direct Routing with Phone System  

If you want to integrate Teams with a fully functional telephony system, you need to look into Direct Routing. Direct Routing requires Phone System for Microsoft to let you set it up, making Direct Routing more of a replacement for Calling Plan than Phone System. However, with a Direct Routing solution, you don’t actually end up using Phone System as a PBX — it’s simply a prerequisite licence. 

Suggested reading: What is Direct Routing?

Again, the specifics of a Direct Routing solution will depend on the specific provider. You will be using a third-party — costs, capabilities and setup procedures will vary. However, in general, you get: 

  • Full PBX control: Direct Routing integrates Teams with an actual PBX and SBC. Different options in the market mean that you will be able to find a solution that can deliver the exact functionality that you need. You don’t have to compromise on queue management, reporting or control features. 
  • Endpoint and handset compatibility: Using a third-party means that you will not be subject to the compatibility limitations placed on you by Microsoft. 
  • Real integration: This solution is fully integrated. That means you get federate presence, the ability to place calls directly from Teams, and a completely seamless experience for uses. 
  • Unified communication: Your ability to introduce fully functional PBX capabilities to Teams calls lets you centralise call communication through that platform. This creates a number of beneficial knock-on effects such as centralising information, access and collaboration.  
  • Lower costs: Each third-party option will be different, but some are cheaper than Microsoft — offering more competitive per-user offers. Where you will make significant savings is by identifying a provider with per-channel pricing, so you pay for capacity rather than every user. Your ability to truly unify communications also reduces overall infrastructure and scaling costs long-term.   

The only downside to this solution is the need to research the right option. Leaving the Microsoft ecosystem creates more choices, but it also creates more opportunities. Fundamentally, if you are willing to put in the effort, this is the smarter and more affordable answer. 

At Callroute, we supply a Direct Routing solution for Microsoft Teams. Our per-channel pricing means you only pay for the phone lines your business needs rather than all users who may, or may not, be placing calls. We offer affordable global calling plans and access to numbers from over 10 million areas, and can port your existing phone numbers (including international numbers). If you think Direct Routing is the right answer for you, we offer a free channel for life, no commitments and no card required. We have auto-configured our integration process, so you can sign up and start placing calls from Teams in a matter of minutes, rather than up to 7 days like most other providers.

Improving your business collaboration 

Business collaboration tools have changed the way we work. But they’ve also complicated our lives. Having to switch from one application or device to the next slows down workflows and prevents the centralisation of information and access that business collaboration tools always promised to deliver. 

The simple ability to place a phone call is a central area that modern business collaboration still struggles to incorporate. Phone System is part of the puzzle for delivering real calling capabilities to Microsoft Teams. However, it’s only the first step. If you want to place external calls you will need to invest in either Microsoft Calling Plan or a third-party Direct Routing option. Remember to look into both domestic calling and international calls. 

Direct Routing offers the ability to go beyond simply placing calls with Teams to transform it into a complete business collaboration platform — able to replace your entire business phone system and centralise internal and external communication and collaboration. With 70% of large organisations already using Teams, there is a real possibility that Teams is the collaboration tool of the future. But overcoming these hurdles is critical to actually improving workflows. Callroute can help you get that done. 

Suggested further reading: Direct Routing vs Microsoft Calling Plan