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This article is part of our Essential Guide: Unified communications technology basics

PSTN vs. VoIP: What's best for your business?

Companies are struggling with whether or not to ditch their PSTNs for VoIP. This chart offers a feature-by-feature comparative look at the services.

An increasing number of businesses are opting to replace their Public Switched Telephone Networks (PSTNs) for cheaper VoIP alternatives, but the PSTN vs. VoIP debate is still going strong. Internet telephony was associated with performance issues when VoIP first appeared on the scene and was notorious for dropped calls and poor call quality. Significant strides have been made in the world of VoIP, however, and there are plenty of reasons why making the change could be helpful. Areas where VoIP currently has a leg-up on PSTN include advantages in scalability, cost and special feature availability.

On the other hand, many enterprises want to stick with their plain old telephone service (POTS), (service that runs over the PSTN). The well-known technology has built-in reliability, security and emergency location services. Just because something is plain and old doesn't necessarily mean it's time to rip and replace.

Are you still on the fence about whether or not to make the switch? Our tech-comparison helps you weigh the pros and cons. It's not easy to give up your trusty legacy phone system, but our tech-comparison can help you decide one way or the other.

PSTN vs. VoIP: Feature-by-feature comparison

Feature VoIP PSTN
Connectivity type Internet connectivity Dedicated telephone lines
Required bandwidth Requires about 10 Kbps in each direction Typically requires 64 Kbps in each direction
Pricing Free VoIP-to-VoIP calling (local and international), but calls to mobile and landline phones have nominal subscription fees of around 1.2 cents to 2.6 cents a minute. No free calls can be made. Costly international calling. Monthly phone plans usually cost around $25 to $30 per month depending on service provider.
Scalability Upgrades usually require more bandwidth and simple software updates. Upgrades require purchasing more hardware and dedicated lines, which can be very complex and costly.
Remote extensions This feature is typically standard. This feature typically requires dedicated lines for each extension and is very pricey.
Business continuity/disaster recovery Service terminates when Internet connectivity (power) is lost. Organizations must have a VoIP disaster recovery plan. Service usually remains active during power outages because phone jacks do not require electricity. But cordless phones do and would be unusable.
Call waiting Most VoIP options offer free call waiting, such as Google Voice and Skype. Available at extra cost
Call forwarding Some VoIP options provide free call forwarding (Google Voice), while others offer it for an extra fee or through a subscription (Skype). Available at extra cost
Call transferring Some VoIP options provide free call transferring (Google Voice), while others do not support call transferring at all (Skype). Available at extra cost
Emergency calling Depends on the service, but emergency calling is usually not provided by VoIP or is very limited (Skype). 911 calls are also typically untraceable. Emergency calling is enabled, and services are traceable to location.

Did you decide VoIP is right for you? Check out our Skype vs. Google Voice tech-comparison.

This was last published in March 2013

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