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What Is Microsoft Phone System?

What Is Microsoft Phone System?


9 min read

Blog Articles

Quick Summary

We explain what Microsoft Phone System is and how it makes it possible to get Microsoft Teams making calls to the outside world from anywhere.


In part one, we aimed to demystify Microsoft’s licensing. In this article, our aim is to cover the various necessary licensing configurations for Microsoft Teams and Microsoft Phone System so that, if you want to use Microsoft Teams as a unified communications platform that can handle your business calls in the way your business requires, you’re equipped with the knowledge you need to get that done.  In part three, we'll talk more about the disadvantages of Microsoft Phone System and how Teams Direct Routing could be a better solution for your business.

Let’s get started.

Microsoft Phone System

So you’ve purchased a license for Microsoft 365 and you’ve deployed Microsoft Teams to your staff. They’re happily making calls internally and collaborating with the various video calling, business instant messaging and file sharing features that Microsoft Teams provides.

But your teams are working remotely and you want to make business calls. Your first solution was to simply have your staff apologise to associates for using their personal mobile phones and their personal phone numbers. Now, a year on, it’s clear that you need a permanent solution and you’re wondering whether Microsoft Teams can serve as a business phone system for you.


Microsoft Phone System connects Teams with the rest of the world, opening the doors to global communication.

Microsoft Phone System for Business License Holders

If you're looking for that permanent solution, you're in luck.  Microsoft Teams can be used for your external business calls when you purchase an additional three licenses. Luckily, for Microsoft 365 Business license holders at least, all three licenses are bundled together into a single add-on license named Microsoft Business Voice. For an additional £12.00/user/month on top of your existing Microsoft 365 Business license, your staff will be able to use their Microsoft Teams virtual users to make and receive calls to/from phone numbers outside of your business while presenting as one of your business phone numbers.

Remember that Microsoft 365 Business licenses are, for the most part, best for companies with fewer than 300 employees. For more detail on which license is right for you, review part one: Microsoft Licensing Demystified. The total cost for Teams with Microsoft Business Voice functionality, broken down per business license type, comes to:

  • Microsoft Business Basic: £15.80/user/month
  • Microsoft Business Standard: £21.40/user/month
  • Microsoft Business Premium: £27.10/user/month

In case you’re wondering, the three licenses bundled into Microsoft Business Voice are: Microsoft Phone System; Audio Conferencing; a calling plan. Phone System enables all of your basic one-to-one business phone system features like a simple IVR menu, call route creation and voicemail. The Audio Conferencing license adds functionality for two people having a one-to-one conversation to add a third party to the existing call for an ad-hoc conference call. The calling plan handles your included minutes.

The calling plan included with Microsoft Business Voice includes 1200 domestic (non-international) minutes per month. If you want international minutes, you’ll have to pay extra for that. During our research, we found that Microsoft does not currently offer any calling plan with unlimited minutes. The maximum is 1200 domestic minutes or 600 international minutes, whichever is reached first over the course of a calendar month. Even though minutes are pooled between users, this may be too much of a restriction for big businesses.

Therefore, if you’re a business with calling requirements in excess of 1200 domestic minutes per user per month, or 600 international minutes if you make calls to international partners, you’ll find it more cost-effective to bring your own calling plan and use a third-party to route your calls. What’s more, the third party’s phone system offering is likely to offer a richer set of features (see the ‘Direct Routing’ section for more on this). Holders of Microsoft 365 business licenses who want to connect to a third party have the option of purchasing Microsoft Business Voice without an included calling plan. You’ll have to speak to Microsoft directly to get at this option.


With Teams connected to the PSTN, small businesses have a 'single pane of glass' solution for their business communications.

Microsoft Phone System for Enterprise License Holders

While the Business Voice bundle is available for holders of a Microsoft 365 Business license, this option is not available for holders of an Enterprise license, be it of the Office 365 or Microsoft 365 variety. Businesses with E3 licenses (under either Office 365 or Microsoft 365) will instead need to purchase their Phone System, Audio Conferencing and calling plan licenses separately. Holders of an E5 license (again, under either umbrella) have Audio Conferencing and Phone System included, so will only need to pay for a calling plan separately.

The Phone System license will cost you £6.00/user/month on top of any E3 license. Audio Conferencing is another £6.00/user/month. The most inclusive calling plan available with 1200 domestic minutes or 600 international minutes is £18.00/user/month, making for a total of £30.00/user/month on top of your existing license.

Here’s a breakdown of pricing for full Teams Phone System functionality with an enterprise license*:

  • Office 365 E3 + Phone System + Audio Conferencing + Domestic/International Calling Plan = £17.60/user/month + £30.00 = £47.60/user/month
  • Office 365 E5 + International Calling Plan = £30.80/user/month + £18.00/user/month = £48.80/user/month
  • Microsoft 365 E3 + Phone System + Audio Conferencing + Domestic/International Calling Plan = £28.10 + £30.00 = £58.10/user/month
  • Microsoft 365 E5 + International Calling Plan = £48.10/user/month + £18.00/user/month = £66.10/user/month

*pricing confirmed as correct by a Microsoft support agent 2021-02-03

As you can see, once you look to get on board with full Phone System functionality for Teams, you might as well be using an E5 license if you’re on an Office 365 plan. At £8.00 a month, there’s a bit more of a gap between Microsoft 365 E3 and E5 plans.

If you want to use a Teams Direct Routing solution, you’ll only need the Phone System license at £6.00 per month on top of your existing plan, making Office 365 E3 far and away the cheapest option available as far as enterprise licenses go. For business licenses, the Microsoft Business Voice add-on sans a call plan (contact Microsoft directly) will still be cheaper at less than £12.00 per user per month (the standard price for Microsoft Business Voice including a call plan) on top of your cheaper standard plan.


Microsoft Phone System allows you and your employees to work from anywhere, making and taking business calls professionally.

The Advantages of Microsoft Teams as a Phone System

The primary advantage of using Microsoft Phone System functionality as your business phone system is that, since you’re already embedded in the Microsoft ecosystem, it is likely to be a fairly elegant and cost-effective solution. The Teams interface is pretty, reasonably quick and well laid out. With tight integration with the rest of Microsoft’s products and services, it will be easy for your staff to use the platform to do what it’s intended for: communicate and collaborate.

For smaller businesses especially, comprised more of ‘teams’ of individuals, rather than full-on departments, independently run and separated by space and way of working, then Microsoft Teams could suit your business phone system requirements just fine.

If yours is a smaller business, though, getting the system set up might be beyond the expertise of your staff - especially if you do not have a dedicated IT admin with experience configuring phone systems. When it comes to customer support too, Microsoft isn’t notoriously helpful, meaning you may have to lean on a third-party IT solutions company to help you with phone system configuration and maintenance. This will, of course, eat into how cost-effective a solution Teams is for you, which brings us onto its limitations.


No matter how large or small your business, Microsoft Teams represents an excellent platform for bringing all your business communication and collaboration tools together into one place. If you want to incorporate business phone system functionality, however, it’s going to cost you. The larger your business and the more complex its call routing needs, the less attractive an option Microsoft Phone System (plugged into Teams) becomes.

So what’s the solution for those businesses that are enjoying using Teams, but need more than it can offer as a phone system? In the next part, we’ll be discussing the shortcomings of Microsoft Phone System and how it compares with the alternative: Teams Direct Routing, a method of replacing Microsoft Phone System in the backend with a third party phone system to provide more powerful features and more inclusive call plans at better cost.

If you’re a business looking for a Teams Direct Routing solution or a unified communications service that can offer you HD quality calls, a leading business phone system, as well as proprietary solutions for business instant messaging and file sharing, Yay.com is here to help. Take a look at our own Teams Direct Routing service, starting at just £11.99 per user, or get in touch with our team today to discuss just how we can help you and your business. Sign up for a fourteen-day free trial to get yourself acquainted with our features and services at no cost or, to get started right away, you can compare our plans now.

Get started with Yay.com's Teams Direct Routing service from just £11.99 per user.

What Is Microsoft Phone System?

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Article By

Alex - Content Manager at Yay.com


Content Manager at Yay.com

ISO 27001 Business Continuity Accreditation ISO 22301 Business Continuity Accreditation Cyber Essentials Certificate of Assurance G-Cloud accredited by the Crown Commercial Service
ISO 27001 Business Continuity Accreditation ISO 22301 Business Continuity Accreditation Cyber Essentials Certificate of Assurance G-Cloud accredited by the Crown Commercial Service