The familiar telephone network we use today is built upon gradual enhancements to the Public Switched Telephone Network (PSTN). This infrastructure, composed of copper and fiber, switches circuits to connect analog, cellular, and digital calls between any two parties. Most business phone systems have relied on or replicated the PSTN’s architecture, even for internal calls. However, this is changing as new technologies emerge to connect phone calls.

This shift is not driven by wireless technology. Cellular phone systems were designed for close integration with the PSTN. Early cell phones were analog, later adopting TDM and other digital multiplexed protocols. However, the full transition to packet-switched voice on wired or wireless networks hasn’t happened yet.

Packet switching, particularly VoIP, has thrived in private telephone networks established by businesses for internal use and in connections to the PSTN via the internet to bypass local phone company loops.

VoIP’s significance lies in its increasing adoption by businesses for their internal phone systems. One reason is the cost-effectiveness of eliminating separate phone wiring by using the existing corporate LAN for both computers and phones. Another reason is to avoid long-distance charges by connecting business locations through a converged voice and data network. Additionally, IP phones offer more features, functioning like computers and integrating with business applications for functionalities like displaying customer information during incoming calls.

The transition from circuit to packet switching initially involved replacing the traditional PBX (Private Branch Exchange) with an IP PBX. The PBX acts as a smaller version of the PSTN switches that handle large-scale public traffic. Located on-site, it manages internal calls, eliminating per-call charges from the phone company. PBXs connect to the PSTN through external lines called trunks to enable calls to and from the outside world.

Trunk lines are essentially bundles of phone lines. Businesses often require multiple lines, starting with a single analog line and adding more as needed. Consolidating these lines into a single digital trunk capable of carrying multiple conversations becomes more efficient at a certain point.

Switching from analog to digital trunk lines doesn’t automatically mean using VoIP. While VoIP is digital, the protocols used by T1 and PRI digital trunks are time-division multiplexed circuit-switched, not packet-switched IP. An IP PBX allows for internal switching to IP phones and connection to the company LAN, eliminating the need for separate phone wiring. However, external connections still rely on the same analog or digital trunk lines to the PSTN.

The real shift occurs when replacing PSTN trunk lines with SIP Trunks. This private line connects your IP PBX to your telephone service provider, who replaces the local phone company and connects to the PSTN on their end. This setup allows for local and long-distance calls, often at significant cost savings.

An alternative to SIP Trunks is the internet, offering ubiquitous connectivity due to its massive public infrastructure and cost-effectiveness. Connecting residential users and many small businesses to service providers through the internet is common.

However, voice quality over the internet can be inconsistent, depending on connection capacity and overall internet traffic. Network congestion can lead to distortion, delays, and even dropped calls.

Many businesses require consistent call quality comparable to the PSTN while benefiting from VoIP’s advanced features and cost savings. The solution lies in using a private line connection between the company and the service provider. These SIP trunks handle multiple conversations, scaling to support hundreds or thousands of simultaneous calls.

The latest advancement is cloud-hosted PBX systems. Cloud computing eliminates capital investments and maintenance costs, allowing businesses to pay per user monthly for cloud-based infrastructure. This extends to phone services through cloud-hosted VoIP or PBX systems. All internal switching and external calls are handled through the cloud. IP phones on-site connect to the cloud service provider via a gateway device through a private line.

While ideal for single-site businesses, multi-location setups require some adjustments. IP phones and a gateway are still necessary at each branch office. However, routing calls through the same cloud-hosted PBX is possible. Connecting all locations to the cloud service provider through an MPLS (Multi-Protocol Label Switching) network becomes more cost-effective than separate private lines for each site.

MPLS networks, unlike the public internet, are privately operated and maintain sufficient resources to support all their customers simultaneously. They employ class of service tagging to prioritize voice calls for consistent quality. Each location only needs a last-mile connection, such as T1 or Ethernet over Copper, to the extensive MPLS network. The network manages traffic routing between your locations and the cloud service provider where the switching happens.

One prime example is the XO Hosted PBX service by XO Communications. As a network operator, XO provides both the cloud PBX and the MPLS network, creating a unified system. This single-vendor approach simplifies troubleshooting and support.

This approach resembles the old Bell System, with one provider managing connections and switching. However, unlike the phone monopoly of the past, today’s options offer vendor choices and a richer feature set. Modern cloud-hosted PBX systems can integrate wireless and desk phones, providing a single number accessibility.

MPLS is poised to become the new telephone network, supporting numerous customers without service degradation. While interconnecting customers on different networks currently relies on routing through the PSTN, Network to Network Interfaces (NNI) may eventually allow large cloud PBX providers to peer traffic. This would keep most calls on-net, avoiding toll charges. Even the PSTN might evolve into a vast MPLS network based on VoIP, leaving behind its analog and TDM legacy.

Businesses seeking advanced phone services with potential cost savings can explore the pricing and features of enterprise-grade VoIP and cloud services available.