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What is the Public Switched Telephone Network (PSTN)?

Source: - Lic#14440355 ID#27446420

Here we will look at the public switched telephone network in detail. We will highlight important terminology, technology involved, costs, and alternatives to consider.

What is the Public Switched Telephone Network?

Public Switched Telephone Network or PSTN is a telephone service that connects various residents and businesses through underground copper wires. This type of phone service is also called plain old telephone service (POTS), a landline, and fixed-line telephones. Furthermore, this phone service has been widely used across the world for generations. However, advancements in telecommunication have resulted in a decline in demand for PSTN lines.

PSTN Terms Explained

To understand how PSTN works, you first need to familiarize yourself with important PSTN terminology. Here are terms to know:

1. Circuit switching
For voice to move from one point to the next, it needs to be converted into voice signals. These signals are transmitted through copper wires. However, to transmit to the destination successfully, they need a dedicated switch. Circuit switching is the act of operators plugging wires into a common panel so as to establish a connection between the two parties. They do so by plugging the caller and receiver’s wires into the same wire (also called a trunk).

In simpler words, when calls are made, the switches create a circuit between two phones and maintain the connection for the duration of the call.

2. Central office
A central office (CO), local exchange, or switching exchange consists of one or more exchanges. In fact, it may have as many as 10,000 lines. A central office hooks its subscribers to a PSTN line. All phones within an area connect to a local exchange located in the area.

When a local call is made, the call is sent to the local exchange and is then routed to the supplier. Since this is a local call, the call does not leave the local exchange.

Example: Calling a business located in the next building or block from your building.

3. Tandem office
A tandem office or junction network covers a larger geographical area and hosts multiple local exchanges. When you make a local call to someone in a nearby suburb or region of the same city, the call goes to your local exchange then to the tandem office which will then route it to the local exchange of the receiver’s location.

Example: Calling a business located in the next suburb but within the same city.

4. Toll office
A toll office is responsible for national long-distance switching. All tandem offices connect to a toll office. When you call an office or resident in another city, the call is switched via the toll office. This was common before the Bell System Divestiture.

Example: Calling a business located in another city or state within the same country.

5. International Gateway
The international gateway is responsible for international switching. This makes long-distance and international calling possible.

Example: Calling internationally.

what is PSTN
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How Does a PSTN Line Work?

A public switched telephone network combines phone networks across the world. These include:

  • Telephone lines
  • Cellular networks
  • Fiber optic cables
  • Switching centers
  • Cable systems

All these elements together make it possible for phones to communicate with each other. In other words, on dialing a contact, the call flows through a network and reaches the appropriate destination. This is the journey your call takes when using a PSTN line:

1. When you dial a number, your phone converts sound waves into electrical signals which are then transmitted to the terminal over a cable.

2. The terminal sends these signals to the CO.

3. The CO routes the call through a fiber optic cable to the final destination.

4. The call is routed to a CO or tandem office based on the type of call.

5. When the call reaches the appropriate destination, it is changed back to an electrical signal and routed to the terminal which then routes it to the appropriate number.

6. When the call reaches the receiver, the electrical signals are transformed back into sound waves.

Now while this journey seems complicated, it all occurs only within a few minutes.

PSTN Service for Business

When setting up a PSTN system for a business, you will be required to get a line for each employee. A small business with less than 10 employees might find this phone setup suitable. However, once your business size increases, you will need more lines leading to more costs. Generally, PSTN phone services charge about $20-$30 per month. This, however, does not factor in costs for set-up, maintenance, additional lines, handsets, and communication features.

Large corporations with more than 40 employees may find a private branch exchange (PBX) system more suitable. A PBX system converts your business into a central office. It also makes features like call transfer, conferencing, IVR, voicemail, etc., accessible. External calls are routed to your local exchange. And internal calls route through your PBX.

Most businesses prefer a PBX system to manage calls efficiently. However, an in-house system can lead to further expenses such as:

  • High set-up and installation fees
  • Software and hardware costs between $2000-$4000
  • Monthly in-house maintenance (hiring of an IT team, regular updates, etc)

All of this can lead to a heavy monthly bill.

PSTN Alternative: Hosted PBX and VoIP

However, there are alternatives such as hosted PBX and VoIP phone systems. Hosted PBX is a PBX service run by a third party business. You will not be responsible for regular maintenance or need to hire an IT team. Plus installation fees are much lower without the need to install heavy software and hardware on-site.

Additionally, you may also consider a voice over IP or VoIP phone system that routes calls through your internet or DSL connection. VoIP uses the internet instead of cable wire and therefore, you do not require a local exchange to make VoIP to VoIP calls. A call to a PSTN line, on the other hand, will require an exchange.

Additionally, instead of using circuit switching, business VoIP uses packet switching. When a number is dialed from the VoIP line, voice is converted into digital data or a packet which is then sent to the router. This router transmits the packet to the router closest to the recipient. This means that data is sent and received when needed and a dedicated line is not required. VoIP and packet-switching make business communication cost-effective and boosts productivity.

Related: How Does VoIP Connect to the PSTN?

Choosing a Business Phone Service

Deciding on a business phone service can be overwhelming. However, it is crucial to find the ideal system for your business needs. Call us to learn more about how our outbound calling service can improve business communications or whether PSTN is the service you need.

What is the Difference Between VoIP and PSTN?

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Choosing a business phone system for your communication needs is an important step in developing strong customer relationships. It can be hard to choose the right business phone system, unless you understand the difference between VoIP and PSTN. Here we will look at how these phone systems differ so you can make a better decision for your company.

Understanding the Difference Between VoIP and PSTN

Technology has advanced greatly over the past two decades, enabling exceptional options for businesses in regards to their communication systems. When researching business phone systems for your communication needs, you will come across voice over IP (VoIP) and public switched telephone network (PSTN) as two major options. But how do you decide which is better for your communication needs? Here we will look at the difference between VoIP and plain old telephone service.

How Does VoIP Work?

Voice over IP or VoIP, transmits voice messages via the internet. With VoIP, voice gets converted into digital signals and then get transferred from one end-point to the next using secure network protocols. Upon reaching the recipient, the signals get converted back to voice messages.

Since VoIP is not attached to a physical line, users with a VoIP phone system can make and receive calls from any location and any device. All they need is a stable internet connection. Additionally, VoIP numbers or virtual phone numbers also route calls over the internet, letting companies do business with target countries without increasing expenses. You also get access to a suite of cloud communication features.

VoIP system costs are considerably less, as well. Users can easily scale up or down, as needed, without buying new lines or paying for additional equipment. In fact, there are no set-up or installation fees. And you won’t even need new equipment. VoIP proves to be more cost-effective, especially considering the features available and international calling.

voip vs pstn

Is IP Better than PSTN?

PSTN connects callers through a circuit-switched telephone network. This type of phone system has been used for years. When used, calls are transmitted through a network from one end-point to the next. The call quality is generally excellent.

Businesses using PSTN will need a different physical phone for each employee. The costs for desk phones can skyrocket to $300 per phone! Plus, you must then deal with installation and clunky hardware.

On the other hand, the cost for one SIP trunk ranges from $20-$30. This can be used by many employees. Plus, there’s no any set-up/installation and maintenance costs.

Small businesses with 10 or fewer employees can benefit from a VoIP phone system. However, even when the business size grows, they would be better served with a cloud PBX.

VoIP Versus PSTN: Difference in the Systems

So, what is the difference between VoIP and PSTN? Let’s have a look:

Price More affordable than PSTN (even with international calling and virtual communication features) Expensive; especially for international communication
Connectivity Uses the internet; make calls from anywhere at any time Uses a landline; makes calls via the landline only
Flexibility Highly customizable; add/remove multiple phone numbers and extensions; use features as needed Structured with copper wires; has less customization
Mobility Can make and receive calls from any location and any device Can make and receive calls from one location
Features Loaded with advanced calling features PSTN offers: Make and receive calls

Related: How Does VoIP Connect to the PSTN?

Get VoIP for Business Today!

If you are looking for a business phone system that is cost-effective and has a global reach, then VoIP is the way to go.