Small Businesses Want VoIP for Better Functionality and Cost Savings

Lack of features, high cost of existing phone services pave the way for VoIP

A 2014 report released by VoIP software comparison site Software Advice revealed that small businesses are shifting to Voice over Internet Protocol (VoIP) solutions, but many continue to rely on mobile and landlines; in fact, 51 percent of survey respondents were investing in VoIP services for the first time, while 31 percent of the companies surveyed were using landlines (otherwise known as Plain Old Telephone Service, or POTS) and 13 percent used mobile phones as their primary communications vehicle. The reasons for switching varied, but the most common reasons were for better reliability, lower costs, enhanced functionality, and better call quality.

Respondents seemed frustrated by the lack of features that come with their existing telephone services. Unified communications and private branch exchange (PBX) functionality were big draws for VoIP subscribers: particularly attractive were extensions and directories, as well as auto attendant applications that allow smaller companies to present themselves as larger companies without investing in expensive on-site PBX infrastructure.

The rationale of switching to VoIP for lower cost services is consistent with the theme of our latest business article: The Evolution of Telecom and the Financial Impact on Business. More and more, companies of all sizes are realizing the benefits in terms of service quality and the tangible cost savings from transitioning telephone services to VoIP. A small company with just 5 business phone lines could realize annual cost savings in the neighborhood of $4,500 – a significant savings for a service that can actually improve communications outcomes. A larger company with 100 lines would save about $90,000 per year by making the switch to VoIP.

The financial and technical benefits of VoIP are really driving the transition from analog to digital voice communication solutions. The predominant viewpoint in the telecom industry is that VoIP is the future of voice communications; however, POTS could be a favorable option if broadband Internet access is not readily available. Such situations are rare: only 11 percent of all companies in the U.S. do not have broadband Internet access. For those that do, significant cost savings can be realized be switching to VoIP in 99 percent of all cases.

Want to learn more about the financial benefits of transitioning to VoIP? Download our report: The Evolution of Telecom and the Financial Impact on Business.

1 Small businesses are shifting toward VoIP solutions, report finds. (2014). TelecomsTech. Retrieved on July 28, 2015 from

2 These cost savings arise from the fact that VoIP costs about half as much as traditional telephone services. For more information, see: TIA. (2014). TIA’s 2014-2017 ICT Market Review & Forecast. Arlington, Virginia: Telecommunications Industry Association.

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