Phone Systems & Voice (Part 1)
Years ago if you needed phones you would start with how many simultaneous calls and what features you needed. This would determine the type and quantity of circuits and the equipment you purchased.
Small businesses would start with a single analog (POTS) line with one phone number and one call at a time (before the call waiting days). They would grow by adding lines with different numbers connected to different phones, or you could buy a hunt group (rollover) feature from the phone company. The phone company would designate a primary number that would try to ring the first line and if it was busy would ring the next line and on. Callers would have one number to dial and wouldn't know the difference. Pretty simple right?
As the business grew it would need more lines and more features. We added more lines by switching to one or more PRI (primary rate interface) circuits. In the US a PRI has 23 channels for voice and one channel for signaling. PRIs were awesome because you got 23 calls on one cable and now you could have DIDs and custom Caller ID.
People call phone numbers "DIDs" which gets confusing when you learn that DID means direct inward dial and is the feature, when phone numbers are "TNs" or telephone numbers.
When a call would come from the phone company the PRI signals your PBX the DNIS (number called) and ANI (number calling). You would program your PBX with what to do with each TN that you owned. This could mean that (xxx) xxx-xx00 was routed to a receptionist or auto attendant, and then subsequent numbers (01, 02, 03) would be mapped to an extension (xx01 -> ext 101) giving direct inward dial.
Need a receptionist, extensions, the ability to put someone on hold and pickup/transfer to a different phone, voicemail? Now you're buying a Key system or a PBX.
A Key system is a scaled down version of a PBX. Simplistic in features, the amount of lines it could support, the amount of stations (phones) that could be connected to it, amount of voicemail, etc... Key systems were connected to the phone company via multiple phone lines with a single main number configured with a hunt.
A PBX is where we start introducing interesting features. Auto attendants, DTMF (listen to key presses and do different things), internal hunt groups, caller id, voicemail, shared lines, busy lamps, etc... And as the PBX became more and more sophisticated integrations with modern computers and networks with voicemail to email integration, fax to email, click to call, etc... All things that we take for granted today.
PBXs are giant black boxes. You'd need special software and an RS232 serial cable to connect to them. If you weren't trained there was no chance you were going to be able to connect and program the PBX yourself. You needed specialized staff if you were big enough, or specialized consultants if you weren't. PBXs are expensive and somewhat limited. Voicemail was a common offender. It's common to this day that you would see a third party external voicemail system wired into the PBX to give more features, capacity, fax capability, etc... Voicemail systems loved to brand themselves. "Thank you for calling AUDIX" was a common prompt if you were dialing into a big corporation.
How much did this cost and how did you get billed?
You would purchase (or lease) the PBX equipment that you needed from a reseller, and pay that reseller to physically install and configure the system for you.
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You would contract with a phone company for the lines you needed, any services on the lines (like TNs), and then any made and received phone calls themselves based on the source/destination and the duration.
When money is involved there's an opportunity to sell specific services to niche out an optimization for that spend. For example, rating for phone calls used to be broken into zones (think larger and larger donuts from where you were located), intrastate, interstate, and international. If your business received a lot of inbound calls and didn't make a lot of outbound, or you called a lot in your local zones, or you had lots and lots of TNs, you could go out and contract for local PRI service that could receive phone calls and call numbers in your local zones, these PRIs were fixed cost and much cheaper than the lines that could call long distance or international. If you were savvy you could mix and match to get the lowest cost combination possible.
What's important is you were paying for the equipment, circuits, the features, and the calls themselves.
Circuits have fixed monthly costs and they are inflexible. Need more than 23 channels you need a new circuit. Need to add 46 channels before the weekend? Not going to happen. Thanks to modern networks SIP became viable in the mid 2000s. Instead of contracting for a physical circuit to be installed at your office you could connect to your phone company over the Internet. No more fixed circuit cost, and as much capacity for calls that your network supports. Without the legacy business and facilities new SIP Trunking providers started up with drastically lower costs.
SIP opened new options for billing. SIP providers offer:
It's common to see SIP Trunks (one channel) selling for $20-25/month (typical advertised cost for a single UCaaS seat). Per minute providers start at $0.012/minute (1.2 cents), which makes Twilio like a deal at $0.007/minute. It's easy to sign up for a "wholesale" SIP contract at $0.0035/minute without a volume commitment. If you have decent traffic we can get you a contract at $0.00125/minute. And if you're pushing large volume pricing gets even better. Twilio $0.007/minute with a cost of $0.001/minute - not a bad business to be in. Math on the flat rate trunk is even better with average utilization in the 2-3k minutes ea range.
Sure you could replace your circuits with SIP Trunks, but let's go another step. Buying and managing your own PBX sucks. It's expensive, it's complicated, it's specialized, it's hard to expand, it's physically in a single location, etc... again thanks to modern networks and VoIP, Hosted PBX and UCaaS became an option around the same time.
Hosted PBX started out as an IP enabled PBX located in the service provider's datacenter. IP phones connected to the PBX over the internet and you didn't have to deal with managing the phone company, call quality, configuration, maintenance, updates, upgrades, etc... anymore. Because "as a Service" became a huge market trend and everything has to be an acronym Unified Communications as a Service was born. Today for providers the terminology is interchangeable, in most cases the UC means that you get integrated chat, video conferencing, SMS, etc... these are the features that you care about the most and give your business the best possible collaboration internally. Today good UCaaS platforms are incredibly feature rich, integrate with external systems for enhanced features (integration with Salesforce and other CRMs for example), support mobile applications, have great desktop clients, massive reporting details, etc... Oh and that's not even touching the contact center (CCaaS) integrations that are becoming native with the UCaaS seat.
There's a massive range of pricing in UCaaS from $5 to $50 per seat based on features (and how savvy the buyer is). It's incredibly important to know what the features are you're buying, if you even need those features, if the provider owns their stack end to end or are licensing from another party (hard costs that they have to pass on), what integrations you need, legacy systems, physical equipment, etc... if that wasn't confusing enough, Microsoft has muddied the water with Microsoft Teams and Direct Routing.