TL;DR: Traditional on-premise PBX phone systems are being replaced by cloud VoIP solutions - and for most Australian businesses with 10+ staff, Microsoft Teams Phone is the most cost-effective and integrated option available. This guide explains your options, the real costs, what questions to ask vendors, and how to run a migration without disrupting your team.
Why Businesses Are Moving Away From Traditional Phone Systems
The traditional office phone system - a physical PBX (Private Branch Exchange) box in the server room connected to PSTN copper lines - served Australian businesses for decades. It is now being replaced, and the replacement is happening faster than most businesses realise.
The reasons are straightforward:
Copper infrastructure is being retired. Telstra’s PSTN copper network is being progressively decommissioned across Australia. Businesses that have not yet migrated to a digital or cloud phone system will eventually be forced to.
Physical PBX systems are expensive to maintain. Licences, hardware maintenance, vendor support, and the requirement for a technician for every system change add up. Cloud phone systems eliminate most of these costs.
Your team is not in one place anymore. A PBX system assumes everyone is at a desk with a physical phone. With hybrid work, your team needs their phone extension to work on a laptop, mobile, or home phone - not just the device on their office desk.
Microsoft 365 already includes calling features. If your business uses Microsoft 365, you are already paying for Teams. Adding Teams Phone (direct routing for PSTN calling) is often cheaper than maintaining a separate phone system.
The Four Main Options for Business Phone Systems
Option 1: Traditional On-Premise PBX
A physical hardware system installed in your server room, connected to copper or digital PSTN lines.
Pros: Works independently of internet connection; familiar to staff; potentially appropriate for very specific environments with poor internet.
Cons: High upfront hardware cost; expensive to maintain and expand; hardware-dependent; does not support mobility without additional investment; limited integration with modern business tools.
Recommendation: Only appropriate for businesses with specific requirements that cloud systems cannot meet. Not recommended for new deployments.
Option 2: Hosted VoIP (3CX, RingCentral, 8x8, Zoom Phone)
A cloud-hosted VoIP system provided by a third-party. Calls are made over the internet using standard VoIP protocols. Physical IP phones, softphones on computers, and mobile apps are all supported.
Pros: No on-premise hardware; scales easily; geographic flexibility; lower ongoing cost than PBX; usually includes mobile app.
Cons: Additional monthly cost on top of Microsoft 365; separate system to manage; varying integration quality with Microsoft 365; quality dependent on internet connectivity.
Best for: Businesses that want a standalone cloud phone system with dedicated telephony features, or businesses not on Microsoft 365.
Option 3: Microsoft Teams Phone
Microsoft Teams Phone adds PSTN calling capability to Microsoft Teams. Staff make and receive calls from their Teams desktop app, mobile app, or a Teams-certified IP phone. Extensions, call queues, auto attendants, voicemail, and call recording are all managed in the Teams admin centre.
Pros: Unified with existing Teams environment; no additional application for staff to learn; calls, chat, meetings, and files in one place; often cheapest option if already on Microsoft 365 Business Premium; Microsoft 365 admin manages everything from one console.
Cons: Requires reliable internet (no internet = no calls); requires Microsoft 365 Business Voice add-on licence per user; migration from existing system requires number porting.
Best for: Businesses already using Microsoft 365 who want a unified communications platform. This is CX IT Services’ recommended approach for most Melbourne SMBs.
See Unified Communications: Phones, Chat, Video & Email for a detailed comparison of Teams Phone vs hosted VoIP.
Option 4: Microsoft Teams Phone with Direct Routing
An advanced Teams Phone configuration where your own SIP carrier (Session Border Controller) handles PSTN connectivity. Typically used by businesses with complex telephony requirements, multiple sites, or existing SIP trunk contracts.
Best for: Businesses with 50+ seats, complex call routing requirements, existing SIP infrastructure, or specific carrier pricing advantages.
Real Cost Comparison: PBX vs Teams Phone
The following comparison assumes a 20-person business currently on a traditional PBX system.
Traditional PBX (Ongoing)
- PBX maintenance/support contract: $200–400/month
- PSTN line rental (10 lines): $400–600/month
- Per-call charges (outbound): variable, typically $100–200/month
- PBX hardware replacement reserve (amortised): $150–300/month
- Total: approximately $850–1,500/month
Microsoft Teams Phone (20 users)
- Microsoft 365 Business Premium (already paying): $0 additional
- Teams Phone Standard licence per user: ~$14/user/month = $280/month
- Microsoft Calling Plans (Australia, per user): ~$16/user/month = $320/month (or use SIP carrier, often cheaper)
- Total: approximately $600/month
This is a rough comparison - actual costs depend on call volumes, number of lines, and existing Microsoft 365 licences. But the direction is consistent: cloud phone systems are cheaper to operate than PBX for most SMBs.
Teams Phone Features: What You Get
A properly configured Microsoft Teams Phone deployment includes:
Basic telephony:
- Direct phone numbers per user (or shared numbers per department)
- Inbound and outbound PSTN calls from Teams desktop, mobile app, or IP phone
- Hold, transfer, conference calling
- Voicemail with transcription delivered to email
- Call history and call recording (subject to compliance settings)
Call management:
- Auto attendants: “Press 1 for sales, press 2 for support” - configured in Teams admin
- Call queues: distribute incoming calls across a team (e.g., helpdesk queue, reception queue)
- Call forwarding and delegation (executive/assistant relationships)
- After-hours routing: route calls to voicemail or a different number outside business hours
Mobility:
- Staff answer calls from their laptop or mobile from anywhere
- Same extension works at the office, at home, or in a client meeting
- Calls transfer seamlessly between devices
- No difference in functionality between office and remote work
Integration:
- Calls appear in Teams activity feed alongside chat messages
- Click-to-call from Outlook or Teams chat
- Call notes in Teams chat thread
- Integration with Microsoft 365 contacts directory
What to Ask Before Choosing a Provider
Questions for VoIP/Teams Phone Vendors
“What internet bandwidth do we need for X concurrent calls?” A good VoIP call requires approximately 100Kbps per concurrent call. For 10 simultaneous calls, you need at least 1Mbps of dedicated bandwidth, plus your normal internet traffic. Confirm your current internet service can support this with headroom.
“What happens to our calls if the internet goes down?” Cloud phone systems require internet. Understand the failover options: calls can divert to mobile numbers automatically, or a 4G failover device can maintain internet connectivity. Know your options before the outage happens.
“Do you support Australian number portability? How long does porting take?” Number porting in Australia takes 10–30 business days depending on carrier and number type. Mobile numbers port faster than fixed lines. Geographic numbers (03 xxxxx) port faster than 1300/1800 numbers in some cases. Confirm the specific timeline for your numbers.
“What SLA does your platform have, and what is the compensation if it is not met?” VoIP platforms should have 99.9% uptime SLAs. Understand what compensation or credits apply if SLA is not met.
“What does your support process look like for call quality issues?” Call quality issues (echoing, dropouts, one-way audio) are the most common VoIP complaints. Understand how your provider diagnoses and resolves these - they should be able to pull call quality reports from their platform.
Planning Your Migration
Phase 1: Current State Assessment
- Document all existing phone numbers (direct numbers, main numbers, 1300/1800 numbers)
- Document all current extensions and who uses them
- Document all call routing: how do incoming calls route today?
- Document any IVR/auto attendant menus
- Document fax numbers - fax over VoIP (FoIP) or virtual fax services required if retaining
- Identify any analogue devices: alarm systems, EFTPOS terminals, lift intercoms, entry intercoms - these may require analogue adaptors or alternative solutions
- Assess current internet bandwidth and reliability
Phase 2: Design
- Design new call flow: how will incoming calls route in the new system?
- Design auto attendant menus
- Design call queues: which teams share queues?
- Assign direct numbers vs. extension-only users
- Select Teams-certified IP phone models if physical phones are required
- Assess training requirements
Phase 3: Number Porting
- Submit porting requests minimum 15 business days before cutover
- Keep existing service active until porting is confirmed complete
- Never cancel existing service before numbers have been ported - you may lose your numbers permanently
- Test ported numbers before announcing cutover
Phase 4: Cutover
- Schedule cutover for a low-activity period (early morning, end of week)
- Run parallel for 24–48 hours if possible (both systems active during transition)
- Test all call flows: inbound, outbound, transfers, voicemail
- Brief all staff on new system before cutover
- Provide quick reference guide for day-one use
Phase 5: Post-Migration
- Decommission old system (do not pay for both systems indefinitely)
- Update all published phone numbers to confirm routing is correct
- Collect staff feedback in first week - address any usability issues
- Review call quality reports after two weeks
Common VoIP Migration Problems (And How to Avoid Them)
Number porting delays: Always submit porting requests earlier than you think necessary. One business day delays are common; 10-day delays happen. Build buffer time into your migration schedule.
Analogue device incompatibility: Alarm systems, EFTPOS terminals, and lift intercoms often use analogue telephone lines and do not work with standard VoIP. Each requires an individual solution - typically an Analogue Telephone Adapter (ATA) or a dedicated analogue line from a secondary carrier.
Staff resistance to softphones: Some staff - particularly those accustomed to physical desk phones - resist using a laptop or mobile for calls. Physical Teams-certified IP phones are available and often smooth the transition.
Insufficient internet bandwidth: Underestimating bandwidth requirements leads to call quality issues. Audit your internet connection before migration and upgrade if needed.
Call quality degradation over time: VoIP quality is sensitive to network conditions. QoS (Quality of Service) settings on your firewall and switches should prioritise voice traffic. This is a configuration step many providers skip.
If you would like help assessing your current phone system, planning a Teams Phone migration, or selecting the right VoIP platform for your business, build my plan with CX IT Services.
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