Business Phone Systems Explained: How to Choose

Types of Business Phone Systems Available in Australia

Hosted PBX: The Standard Choice for Australian SMBs

If you are trying to figure out what type of business phone system your company needs, this guide breaks down the options in plain English. We cover the four main types of business phone systems available in Australia (hosted PBX, on-premise PBX, Microsoft Teams Phone, and SIP trunking), what each one costs, and which type fits different business sizes and needs. This is an explainer, not a product comparison. If you already know you want a VoIP phone system and want specific provider recommendations, see our best business phone system guide. Hosted PBX services in Australia typically include: auto attendant (press 1 for sales), ring groups (ring multiple phones simultaneously), voicemail to email, call recording, call queuing, and support for 1300/1800 inbound numbers. For most businesses, the feature set of a hosted PBX exceeds what they actually need. See our VoIP phone system guide for specific provider comparisons.

What About Microsoft Teams Phone?

Microsoft Teams Phone (formerly Teams Calling) is worth serious consideration for businesses that are already embedded in the Microsoft 365 ecosystem. It integrates phone calls directly into the Teams application - the same interface used for internal messaging and video calls. This eliminates the need for separate SIP phones for many users (calls can be handled on a headset or through the Teams desktop app).The limitations are: it requires a Microsoft 365 subscription, call quality is dependent on Microsoft's network routing which can be less predictable than a dedicated VoIP provider, and complex call routing scenarios (multi-site ring groups, sophisticated IVR) require additional configuration expertise. For a business that already pays for Microsoft 365 and values simplicity over telephony features, Teams Phone is a compelling option.

What to Look for in an Australian Business Phone System

When evaluating any business phone system for an Australian deployment, these criteria matter most:Australian number support: can the system provision and manage Australian geographic numbers, 1300, and 1800 numbers? Number porting: can the provider port your existing numbers from Australian carriers including Telstra and Optus? NBN compatibility: has the provider tested their system on Australian NBN connection types including FTTN? Local support: is there an Australian support team available during business hours? Contract flexibility: are you locked into a minimum term, and what are the exit conditions?

The NBN Factor

All modern Australian business phone systems route calls over the NBN or other internet connections. The PSTN copper network is being decommissioned progressively as NBN connectivity reaches each area. This means the quality of your NBN connection directly affects the quality of your phone system, regardless of which provider you choose.For detailed guidance on optimising your NBN connection for voice, see our NBN VoIP setup guide. If you are on an FTTN connection and experiencing quality issues, our call quality guide covers the specific diagnostics.

What Most Businesses Get Wrong

Avoid new installs of legacy analogue PABX hardware. In NBN-served areas (which covers most Australian businesses), analogue PABX systems require an ATA (Analogue Telephone Adapter) to connect to a VoIP service, introducing an additional failure point. Existing PABX hardware can often be retained temporarily using an ATA, but replacing it with a hosted PBX or IP-PBX system gives you a more maintainable long-term solution.Avoid setting up a new phone service via the ATA port on your ISP modem. The green phone port on your modem connects your analog phone to your ISP's VOIP system. It is convenient, but it locks you into the ISP's system entirely. You cannot add a second line without upgrading your broadband plan. You cannot configure auto-attendant, hold music, or after-hours routing. You do not own your number configuration, which makes porting to a specialist provider harder later. If you are setting up a business phone system from scratch, start with a specialist VOIP provider, not the green port.Avoid providers with long lock-in contracts for hosted PBX services. Cloud PBX is a competitive market; month-to-month or short-term contracts protect you if the service quality does not meet expectations. Avoid providers who cannot demonstrate local Australian number porting capability before you sign up - number porting failures are one of the most common sources of business disruption during a phone system migration.

How Much Does a Business Phone System Cost in Australia?

Budget planning for a business phone system is easier when you break the cost into its components: service fees, hardware, and setup. The total varies significantly depending on the number of users, the features required, and whether you choose hosted or on-premise infrastructure.

Hosted PBX service fees in Australia range from approximately $20 to $50 per seat per month, with most small business plans sitting in the $25 to $40 range for a plan that includes unlimited local and national calls. A four-seat business on a $35 per seat plan pays $140 per month for the service. Hardware costs vary: entry-level SIP desk phones are $100 to $150 per handset, mid-range models with colour screens are $250 to $400, and executive models with expansion modules run higher. A four-seat deployment with entry-level phones adds approximately $500 to $600 in one-off hardware cost. Setup and porting fees are typically $100 to $300.

On-premise systems have a different cost structure: higher upfront hardware and installation costs, lower ongoing service fees. A quality IP PBX capable of handling five to ten seats starts at $800 to $2,000 for the hardware, with installation costs of $500 to $1,500 depending on network complexity. Ongoing SIP trunk costs add $15 to $40 per trunk per month. Over a three-year period, on-premise and hosted PBX often reach a similar total cost for small businesses, but hosted PBX requires less upfront capital and eliminates the maintenance burden.

Your Rights Under Australian Consumer Law

The Telecommunications Consumer Protections (TCP) Code gives you specific rights when signing up with a phone system provider:Before you sign: The provider must give you a Critical Information Summary (CIS) showing total minimum cost, contract length, included and excluded features, and early termination fees.
Cooling-off period: You have a right to cancel within the cooling-off period if the service does not perform as described.
Contract exit: If your provider changes terms materially during the contract, you may have the right to exit without penalty.
Complaint resolution: If you cannot resolve a dispute with your provider, the Telecommunications Industry Ombudsman (TIO) can investigate at no cost to you.

Scaling Your Phone System as Your Business Grows

One of the most significant operational advantages of hosted PBX over traditional phone systems is the ease of scaling. Adding a new staff member to a hosted PBX system is typically an administrative task measured in minutes, not an IT project measured in days. Log into the provider's admin portal, create a new extension, provision a phone, and the new seat is live. No hardware changes to the PBX, no technician visit, no waiting for line capacity.

Adding a new location to a hosted PBX is similarly straightforward. Because the call switching happens in the cloud, a new office with an internet connection can be added to the same phone system as the existing location. Staff in the new office get extensions on the same PBX, can transfer calls to the main office, and share the same inbound number and call routing. This is a meaningful advantage for businesses that open a second location or add a warehouse, because the phone system grows with them without requiring a second infrastructure investment.

The practical scaling consideration is bandwidth. Each simultaneous VoIP call uses approximately 100kbps of upload bandwidth for standard quality (G.711 codec). A five-person office where three people might be on calls simultaneously needs at least 300kbps dedicated upload capacity for voice, separate from general internet traffic. Most business NBN plans comfortably exceed this, but it is worth confirming your upload speed before adding seats. Your provider can advise on the maximum simultaneous call capacity your connection supports.

Integration With Business Software and Tools

Modern hosted PBX systems can integrate with the business software your team already uses, which extends the value of the phone system beyond just making and receiving calls.

CRM integration is the most common and most valuable integration for sales and service businesses. When a customer calls your business number, a CRM-integrated phone system automatically pulls up the caller's record in your CRM before you answer. Staff see the customer's name, their history, and any open issues before the call begins. This is standard functionality in platforms like Salesforce, HubSpot, Zoho CRM, and many others, available through either native connectors built by the CRM vendor or through third-party integration tools. Discuss CRM integration requirements with your VOIP provider before committing to a platform, as connector availability varies.

Microsoft Teams integration is increasingly relevant for businesses that have invested in Microsoft 365. Teams Phone (formerly Teams Calling) allows you to make and receive business calls directly within the Teams app, using your business number. This works well for office-based teams who spend most of their working day in Teams. The limitations are that call quality is dependent on your Microsoft 365 tenant configuration and the quality of your internet connection, and the experience for high-volume inbound call scenarios (receptionists, contact centre functions) is less polished than a dedicated hosted PBX platform. It is worth considering if Teams is already central to how your team works, but not as a reason to adopt Teams if you are not already in that ecosystem.

What to Ask Before Signing With a Business Phone System Provider

The provider selection conversation is as important as the technology decision. A good provider asks questions before recommending a solution. A poor provider leads with a product. Here are the questions that matter most before you commit.

Ask about the support model: is support provided by a local Australian team? What are the support hours? Is there a support line you can call, or is it email-only? How does the provider handle outages that affect call delivery? What is the escalation path if your issue is not resolved within a reasonable timeframe? For a business-critical service, the support model matters as much as the feature set.

Ask about contract terms: is the agreement month-to-month or fixed-term? What are the exit provisions if you need to leave? Are there penalties for reducing seat count if your business contracts? What is the porting process if you want to move to a different provider in the future? A provider confident in their service quality will offer flexible terms. Long lock-in contracts with significant exit fees should prompt careful reading before signing.

Ask about number porting: has the provider ported your specific number type (geographic, 1300, 1800) before? What is the typical timeline? What happens if the port is delayed? Is there a support contact available on the day of the cutover? Number porting is the highest-risk part of a phone system migration, and your provider's track record and process discipline here is a meaningful quality signal.

Your Next Steps

1. Audit your current setup. What system do you have now? How many staff use it? What works and what does not?
2. List your requirements. Ring groups, after-hours routing, call recording, mobile integration, 1300 number?
3. Check your NBN connection. Use our NBN compatibility guide to understand what your connection can handle.
4. Get 2-3 quotes from specialist providers. Not your ISP. Ask for a per-user monthly price including all features.
5. Ask about number porting timelines. Plan for 2+ weeks of overlap.
6. Request a Critical Information Summary. This is your right under the TCP Code. Compare total costs, not just monthly fees.Need help? Get a free, independent recommendation based on your specific business requirements.

What is the difference between a PBX, a PABX, and a hosted PBX?

PBX (Private Branch Exchange) is the generic term for any phone switch that connects internal extensions to external phone lines. PABX (Private Automatic Branch Exchange) is the traditional term for the analogue hardware box that was standard in Australian offices for decades. Hosted PBX is a cloud-based version where the switching hardware runs at a provider's data centre rather than in your office. For Australian businesses today, hosted PBX has largely replaced traditional PABX hardware.

How many phone lines does a small business need?

For a hosted VoIP system, you do not need to pre-allocate a fixed number of lines. Hosted PBX services support multiple simultaneous calls on a single account based on the number of active seats. A business with 10 staff members who make occasional calls might need 3-5 simultaneous call capacity; a business with 10 staff who frequently make outbound calls simultaneously might need closer to 10. Your provider can advise based on your usage patterns.

Can I use my existing office phones with a new VoIP system?

If your existing phones are SIP-compatible (most IP phones manufactured after 2010 are), they can potentially be reprogrammed for a new hosted PBX provider. However, provisioning compatibility varies between providers and phone models. Old analogue phones require an ATA (Analogue Telephone Adapter) to connect to a VoIP system. In most cases, the simplest approach is to use the phones your new VoIP provider supports and pre-configures.

Does my business need a dedicated internet connection for phones?

No. Modern hosted VoIP systems share your existing internet connection with other business traffic. Properly configured QoS (Quality of Service) settings on your router ensure voice traffic is prioritised. For most businesses with standard NBN connections, the existing internet service is more than adequate. Separate voice-dedicated connections are only necessary for very high call volume businesses or those with consistently poor internet quality.

Do I need an IT person to manage a hosted business phone system?

No. The major advantage of hosted PBX for small businesses is that it requires no IT expertise to operate day-to-day. Adding extensions, changing call routing, updating the auto attendant greeting, setting up voicemail-to-email, and managing ring groups are all handled through a web-based admin portal designed for non-technical users. Initial setup assistance is typically provided by the VOIP provider as part of the onboarding process. The only IT-adjacent task that occasionally arises is router configuration (particularly QoS settings and disabling SIP ALG), which your provider can guide you through remotely.

Can staff use their mobile phones as part of the business phone system?

Yes. Most hosted PBX providers include a mobile softphone app that staff can install on their personal or company mobile phones. When a call comes in on the business number, the mobile app rings alongside desk phones. Staff can answer on their mobile and the caller sees the business number, not the personal mobile. Outbound calls made through the app also show the business number to the person being called. This is particularly useful for staff who work from home, are frequently out of the office, or who do not have a desk phone but still need to be reachable on the business number.

What is the difference between a business phone system and a contact centre?

A business phone system (hosted PBX) is designed for general business communication: inbound and outbound calls, call routing, voicemail, ring groups, and auto attendants. A contact centre platform is designed for high-volume inbound call handling with advanced features such as agent queuing with real-time dashboards, workforce management, call scripting, and detailed reporting on agent performance. Contact centre functionality is overkill and cost-prohibitive for most businesses with fewer than 15 to 20 staff taking calls. Hosted PBX covers all the requirements for a typical SMB. Contact centre platforms become relevant when you have dedicated call-handling staff and need to manage and report on their performance systematically.

Related reading:

• hosted vs on-premise PBX
• what a PBX is
• best VoIP systems for small business