How to know if you are overpaying for phone service.

Why is my phone bill so expensive?

It’s a common question among businesses. Some business spends as much as 50% of their monthly IT budget on phones.   Your phone is the business’ first line of communication to the world. It’s also a necessary expense.

So how does this happen?

When you started your business and needed a phone number, you likely did. what most others have done.  You called the phone company. When called them, the person talked to asked questions to understand your business needs and budget. Then the likely offered you a solution that met your needs at that time.  At that point, you were all set. You went about growing your business and never thought to call back in to discuss any special offers.  Just like you, the phone company went about growing their business, and never reached back out to you.   

The trouble is, that just like any technology the cost of phone services has changed dramatically. If you haven’t looked at your phone services in more than a year, you are likely overpaying.

How did we get here?

In the beginning (100+ years ago) it was very expensive for phone companies to put in the infrastructure to connect all of their subscribers.  They had to purchase telecommunications switches. In addition, they had to place miles and miles of lines that would allow t hem to offer the service to subscribers. At that time, there was no government regulation. Carriers were allowed to charge whatever they deemed was fair to recover the cost of installing the subscription. This quickly got out of hand. Phone services were very expensive at that time. People began to realize that phone services were not a luxury but a necessity. In the 1920’s the government stepped in to regulate things.

The original stance of the government was that since it was so expensive to start up, phone companies could have a natural monopoly in specific areas.  Because of their approved monopoly, phone companies were required to provide a phone line to everyone within their service area.  In an attempt to keep things fair, telcos were also told by the FCC how much they could charge for phone lines.   These style regulations continued until the 1990’s.

Introducing the VoIP phone

Congress passed the Telecommunications Act of 1996 that allowed competitive telecommunications companies to move into areas that were previously monopolized.  The competition pushed providers to invest in new equipment and find ways to become more innovative and competitively priced.   

One of the technologies that came from deregulation was the use of “soft switches”. These switches provided dial tone similar to the regulated switches that the old phone companies used. They were the beginning of voice over IP protocol or VoIP phone systems.  

At the start of VoIP, the Internet was still maturing, and bandwidth wasn’t readily available. Because of this VoIP telephony quality and stability suffered.  The result was frequent choppy or dropped calls was high.  The customer satisfaction was low. It was generally accepted that if you went with a VOIP phone system you were going to have issues.   People and businesses were willing to pay for the more expensive regulated lines because they wanted stability. They wanted their phone lines to work.  

Very quickly, communications companies learned what caused the instability with VoIP. Industry standards were put in that help mitigate the problems.  The result is that VoIP today is much more stable and feature rich.  Features you had to pay extra to have on the old phone lines come included with VoIP technology.   In addition, VoIP offers features that plain old telephone lines could never have done.    

So where do we go?

The most unfortunate part about the progression in telephony is that many businesses haven’t kept up with it.  It’s not a priority. Their phones work so why look at changing them?  

The reason to change is simply complex. You can save money by switching to VOiP. However, since the dial tone is provided over the internet there are technical requirements that should be considered.

  • Do you have data cables in your building or are they phone cables?
  • Do you have a large enough internet connection to take on VOiP phones without affecting your network?
  • Is it better to pay per phone for someone else to manage your system or does your team have the skill set to manage it themselves?
  • Is there a solution in place that will allow you to make calls if you lose internet?

These questions don’t have to overwhelm you. If you want to learn more, contact us.  We’d love to talk to you find a solution that fits your business needs and budget.   

Want to hear more?

There are several great places to read through the history of phones and how they progressed.  Some of our favorites are at Thoughtco.com and History.com.  If you want to hear more from IT Enabled, be sure to follow us on Facebook, LinkedIn and Instagram.

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