The Microsoft 365 Phone System (sometimes called the Office 365 Phone System) is a product that enables private branch exchange (PBX) capabilities and automated call controls on the cloud.
It works with Microsoft Teams as your primary user client, as well as Skype for Business and Microsoft-certified hardware devices. With Phone System, you can replace any existing PBC capabilities through the Microsoft 365 cloud with Microsoft Teams.
Read on to learn exactly what is Microsoft 365 Phone System and how to use the product for better collaboration and contact centre productivity at your organisation.
What is Microsoft Teams Phone System?
“Phone System” by Microsoft is the technology available for companies to enable call control and PBX (Private Branch Exchange) capabilities in the Microsoft 365 cloud. The system works with Teams clients and certified devices, to bring telephony into Microsoft Teams.
With Phone System, calls between users in your organisations are handled internally, with no connection to the PSTN. For external calls, there are different options for connecting to the PSTN.
The prerequisites for using this phone system are as follows:
- Microsoft Business Voice licence – You can activate this from the 365 admin centre
- A calling plan – Available starting at $15 per user per month for the Microsoft Teams Phone with a calling plan package.
- PSTN connectivity – Instead of buying phone numbers from Microsoft under the Calling Plan, you can stay with your existing PSTN carrier
- Direct Routing – Microsoft 365 Phone System with PSTN requires direct routing to connect the public network and the cloud
Microsoft 365 Phone System Deployment Options
There are now three ways to connect your PSTN to your Microsoft 365 Phone System:
- Calling plan: A simple all-in-the-cloud solution that uses Microsoft as your carrier.
- Direct routing: A tool that allows you to use your own PSTN by connecting your SBCs to the Phone System.
- Operator Connect: Use one of the carriers in the Operator Connect program to manage your Session Border Controllers and PSTN requirements on your behalf.
Microsoft 365 Phone System with Calling Plan
Thanks to the number porting feature we mentioned earlier, you won’t lose your existing phone numbers when moving to a fully cloud-based phone system with Microsoft.
However, Microsoft 365 Phone System without Calling Plans makes more sense for more complex scenarios. You can retain your PSTN carrier, adopting Microsoft Direct routing so that your telecom provider can seamlessly connect with Teams. This is useful if Calling Plans are yet to be available in your country or considering a multi-national deployment with a layered number allocation and regulatory background.
As a third option, Microsoft also supports a combination of the two. I.e., you could opt for the end-to-end cloud in one location while going down the PSTN route in another – connecting back to the same Microsoft cloud tenant. Now, let’s look at the Calling Plan option in more detail.
You can check for your country availability – for example, calling plans are available in the UK, but phone numbers are automatically assigned only for the city of London. In the UK, you get tolled numbers for 19 cities, including all the major ones like Birmingham, Manchester, Plymouth, Coventry, etc.
You can choose from four different Calling Plans:
- 120 minutes of domestic calls
- 240 minutes of domestic calls
- 1,200 minutes of domestic calls
- 1,200 domestic minutes or 600 international minutes, whichever is reached first
You can add on Communication Credits, a sort of recharge system for cloud-based telephony, for additional services.
If you can’t use Calling Plans (or do not want to for whatever reason), Microsoft allows you to stay with a preferred, local PSTN carrier with direct routing.
Microsoft 365 Phone System with PSTN and Direct Routing
The Microsoft 365 Phone System supports virtually every telephony carrier globally, making Teams accessible to the broadest possible user base. And, you can choose to configure/manage the solution in-house or get it done by your partner carrier instead of leaving it to Microsoft.
You need the following to use Microsoft 365 Phone System with PSTN and Direct Routing:
- A powerful internet connection to support uninterrupted access to Microsoft 365 or Office 365
- Compatible Session Borders Controllers (SBC) that can work with Microsoft products
- A contract with a telephony carrier at your location
Interestingly, this second deployment model works well with third-party equipment such as pagers, legacy phones, etc.
Microsoft Phone System and Operator Connect
Operator Connect is one of the most recent solutions for companies hoping to use Microsoft Teams as their telephony solution. Like direct routing, it allows users to bring external carriers from outside of Microsoft into Teams.
Operator Connect involves using one of the carriers defined as Microsoft Partners within the Operator Connect ecosystem to manage your phone connectivity for you. Unlike direct routing, where you’ll need to leverage PowerShell coding and other complex set-up requirements, Operator Connect offers a “managed service” experience.
Your carrier is responsible for the PSTN calling requirements on your behalf, and you can assign numbers and manage your connectivity through an administrator portal within Microsoft Teams. Operator Connect is generally considered a slightly simpler solution than Direct Routing, but it may not have the same flexibility or customisation if you have specific requirements.
Like Direct Routing, Operator Connect is usually recommended for people who might not have access to calling plans in their region. You can also continue to use your existing carrier with Operator Connect if you already have a good deal from a specific company or search for a new phone system provider capable of providing a managed service.
Phone System features
Phone System offers a range of tools built into Microsoft Teams, so you can use Teams as your central environment for placing and receiving calls. Phone System users can place calls by clicking a name in their address book, and there’s access to various tools you’d expect from a standard telephony carrier, like call forwarding and music on hold.
Some of the top features include:
- Auto-attendant – From the admin centre, you can set up a different auto-attendant for each number, specifying the conditions where an auto-attendant takes over the call. You can specify a greeting message, upload music, or even configure an IVR menu. The feature is hosted entirely on the cloud, which means you get automatic patch updates (but might face the rate downtime in case Teams goes through an outage)
- Voicemail transcription – The Microsoft 365 Phone System comes with voicemail on the cloud, and this goes beyond your typical audio recording. Voicemails are converted into a text transcription that you can access from your Microsoft Exchange mailbox
- Call escalation – Here’s where the Phone System’s cloud capabilities really kick in. if you’re using the product for collaboration, and not in a contact centre scenario, call escalation will let you morph 1-on-1 calls into a group conference. This means that you can directly jump from a telephonic conversation into a more expansive conference with screen sharing, video, etc., without missing a beat
- Secure telephony – This feature would come in handy for those in the public sector or dealing with sensitive data. Phone calls between different Microsoft Teams’ tenants are fully secure. You can conduct safe, compliant telephony sessions with partners and other companies also using the Microsoft Cloud
- Analytics dashboard – Key metrics from the Microsoft 365 Phone System feeds into a comprehensive dashboard on the admin centre. From this interface, admins can monitor the health of the telephony environment and do basic troubleshooting
- Number porting – This feature might sound simple on paper but is absolutely essential for established businesses looking to modernise their telephony capabilities. The Microsoft 365 Phone System lets you port your existing numbers into a Microsoft Calling Plan if you want to switch from your current PSTN provider. The advantage of this approach is that Microsoft manages end-to-end access to PSTN, reducing costs and upkeep at your end.
- Contact centre-facing features – Microsoft has packed in several features that would be useful in a contact centre setting. For example, the user can park a phone call if they are unable to solve a customer query, and someone else would be able to step in by entering the call park code. Further, full delegation support lets one user answer a call on behalf of others. Simultaneous ringing lets the same call arrive on multiple devices, so you can choose to respond from a device of your choice. And you can set up location-based routing to comply with the PSTN regulatory needs in a particular environment.
- Media bypass – This feature brings the benefits of minimal media distortion to a PSTN environment. Calls/media are routed directly to the SBC instead of passing through a Microsoft data centre, dramatically improving call quality while reducing network congestion
- Basic telephony – Microsoft has all your essential bases covered even when you opt for a cloud-based solution. There is dynamic emergency calling for events when you would need to dial electronic 911. Incoming calls can be rejected with a busy signal, and you can hold/forward, transfer a call based on your availability. Like an analogue phone, you can even configure the Teams client with a digital “speed dial”
- One-click telephony – Companies using a Microsoft-certified endpoint with the phone system can gain from one-click telephony. These endpoint devices come with a dedicated Teams call button that you can press to initiate a conversation or answer an incoming call
As you can see from this feature set, the product is a perfect replacement for legacy phone systems, while adding on the benefits you’d expect from a cloud environment.
Notably, some Phone System features are not available in DoD and GCC high clouds at the time of writing, such as Music on Hold, Call Phone number search bar, and transfer to voicemail mid-call. You can see which features are available for your deployment here.
A Note on Configuration
While most of the phone system features you can access through Microsoft are the same regardless of your choice of PSTN connectivity, you might notice some potential differences according to your configuration. Microsoft notes call unanswered, forwarding, call transfer, call park, and music on hold functionality are all available for all three voice connectivity options.
However, Direct Routing requires additional steps to configure call routing, and can provide location-based routing. Location-based routing, though only available from some direct routing providers, allows you to restrict toll bypass options in various geographic locations, which may be crucial for certain companies to remain compliant.
Here are some significant configuration differences between each PSTN option:
- Calling plans: With Calling Plans, Microsoft acts as your PSTN carrier, and there’s no need to manage SBCs, you also obtain numbers through Microsoft, and call routing is managed by Microsoft, along with emergency calling availability.
- Operator Connect: With Operator Connect, your carrier manages PTSN connectivity and SBCs, obtaining numbers through the airline. Your page handles your call routing, with administration options available for each company, and the carrier also enables emergency calls.
- Direct Routing: With Direct routing, you’ll need to purchase a certified SBC from a third-party vendor and connect it to your phone system. Phone numbers are obtained through your carrier, and call routing requires additional configuration through PowerShell. Emergency calling also requires further configuration from an administrator.
Trying Out Microsoft 365 Phone System for the First Time
If you’re still unsure about the Microsoft 365 Phone System and if it is the solution for you, the company offers a free trial to check out at least some of its features. And you don’t need an IT admin to intervene – here are the steps for trying out the Microsoft 365 Phone System, without going in for a more complex and finalised deployment:
- You are currently trialling/using the E1 or E3 version of Microsoft’s product suite. Open your admin centre, and on your left pane, you will find an option to “Purchase services” under the billing category. On this page, navigate to Microsoft 365 Business Voice Trial. This option is now added to your cart, offering a one-month trial for 25 users. Click on “Try now” to confirm
- The next step is to add a free Phone System Virtual User to route calls to the right person. You can also set up call menus with numeric navigation. Click on “Activate it now” to check out.
- Now you will be directed to a page where you can enter your usage location details. Enter your address, the city of use, and review your order. Since this is a free trial, payment value will be zero – but you will still have to enter your credit card details for Microsoft’s records (#ProTip: for purchases above a certain threshold, Microsoft offers payment through invoice, which you can use to avoid entering credit card details during the trial). Click on “Continue to setup”
- You’re all set to start configuring the Microsoft 365 Phone System and playing with its many features. You can create a few user accounts from the “Add a user” option on your Microsoft 365 admin centre home page. You will have to enter Display Name, User Licences, and User Name as the mandatory fields for every user. Under user licences, you’ll be to choose from the various products you have purchased or are trialling
- Turn on Microsoft 365 Business Voice which will include the Phone System, a domestic Calling Plan, and audio conferencing by default
- From the admin centre’s left pane, look for the voice category, from where you can assign phone numbers. You can enter your city, area code, and the quantity of numbers required to generate phone numbers on the Microsoft 365 Phone System. Note that this might take a few seconds. These numbers will come unassigned, so you can allocate them to one of the user’s you set up in step 4
A Quick Recap
You should now have a working knowledge of the Microsoft 365 Phone System and will be able to get started with a basic deployment. Remember a few key elements:
- It is available built into an E5 plan or as an add on for E3
- You don’t have to use PSTN numbers – but the option is there
- The more detailed features like outbound calling, credit pricing, etc., varies based on location
- It is partially/fully cloud-based, requiring uninterrupted connectivity
For companies already using Teams in a big way and starting with telephonic customer support, Microsoft 365 Phone System is an excellent investment. It can scale from a single location outfit to a global entity, adapting to your unique hardware environment as you grow.