Types of business phone systems: analogue, digital, IP and cloud

In short: there are four types of business phone systems: analogue, digital, IP and cloud. The first three are systems you buy and keep on your premises, while a cloud phone system is hosted by the provider, so there is no phone system unit to maintain in your office. If you already have a phone system, you do not necessarily have to replace it.

What phone systems are and which types exist

A phone system (PBX) connects a company's phones to each other and to the public telephone network. Calls come in from the provider on the external lines, and the system distributes them to extensions, meaning your colleagues' phones. It also handles transfers and the voice menu that tells callers which key to press.

The types differ in technology and in where the system sits:

1. Analogue: voice travels as an analogue signal over classic telephone cabling.
2. Digital: voice travels as a digital signal, usually to system handsets made for that specific unit.
3. IP (IP-PBX): voice travels as data over the computer network, and the system runs on a unit or a server inside the company.
4. Cloud: it also uses IP technology, but the system is hosted by the provider.

The term "electronic phone systems" dates from the period when they replaced electromechanical ones. Today almost every office system is electronic, so in practice you choose between the four types above.

The analogue phone system

The analogue system is the oldest type still found in offices. Every phone has its own cable running back to the unit, and the features are the basics: calls between extensions, transfers and, on some models, a welcome message.

• Where it sits: on your premises, on a wall or in a comms cabinet.
• Capacity: as many external lines and extensions as the unit has ports. When they run out, you add cards if the model allows it, or you replace the system.
• Maintenance: a technician comes on site for every fault or change.
• Access outside the office: close to none, apart from forwarding calls to a mobile.
• When it makes sense: for a small team in a single office that only answers and transfers calls.

The digital phone system

A digital system carries voice as a digital signal between the system and the phones, which brings extra features: a phone display, programmable keys and voicemail. Many models only work with handsets from the same manufacturer.

• Where it sits: on your premises, as a dedicated unit.
• Capacity: set by the cards and ports installed. You can add expansion cards up to the model's maximum capacity; beyond that, you need a different system.
• Maintenance: on site, through the company that installed it or the manufacturer's service network.
• Access outside the office: limited, usually through call forwarding or extra configuration.
• When it makes sense: for a company that already has the cabling and the phones and works from a single office.

Old phone systems: what to do with the one you have

If your company already has a phone system, you have three options:

• Keep the system and connect it to the cloud: if your system supports SIP, you can connect it to CapitalPBX with the external IP-PBX connector option, 20 EUR per month on top of the plan you choose. Your extensions stay on your system, and the calls that pass through CapitalPBX get the cloud features. See how connecting your existing system over a SIP trunk works.
• Move to the cloud and keep your phones: IP (SIP) phones can be configured on the new system, and older analogue phones connect through a VoIP gateway. The setup steps are in the desk phones guide in our Knowledge Base. For digital phones, which usually only work with their own system, ask a consultant.
• Replace the whole system: drop the old system and phones and move fully to the cloud, with migration support included. There is no activation fee, and it takes a few days from contract to first call. For your company's landline numbers, we handle the porting request, in line with nationally regulated timeframes, subject to availability and regulatory requirements.

When it is time to replace it: parts and service for the system are getting harder to find, sound or connection problems persist after you have checked your network and your operator's line, or you need features the old system lacks: colleagues answering from home, call recording or CRM integration. How to decide and what to ask for in a quote are in our guide to replacing a business phone system, and the steps from the old system to the cloud in our guide to installing a business phone system.

Tell us which system and which phones you have, and a consultant will tell you what can be kept, so you do not buy equipment you do not need.

Frequently asked questions about phone systems

What is the difference between an analogue and a digital phone system?

An analogue system carries voice as an analogue signal and has the basic features: calls between extensions and transfers. A digital system carries voice as a digital signal, has extra features such as a phone display and voicemail, and often uses its own handsets. Both are units on your premises, with capacity limited by their ports.

What do external lines and extensions mean?

External lines connect the system to the provider, and their number limits how many external calls can be active at the same time. Extensions are the phones inside the company, each with a short number that colleagues dial to call each other.

Are there digital phone systems with 50 extensions?

Yes, there are models that can be expanded to 50 extensions or more, depending on the cards installed. Also check how many external lines the model accepts and how much room it has for new cards, because beyond its maximum capacity you need a different system. In a cloud phone system, users are added directly from the platform.

What is a hybrid phone system?

It is usually a digital system that accepts IP phones as well as analogue and digital ones, through extra cards or licences. Companies choose one when they want to keep their existing cabling and move to IP gradually. Capacity and maintenance stay tied to the unit on your premises.

How much does a digital or IP phone system cost?

There is no standard price. The cost depends on the equipment, the number of lines and extensions, the phones and the installation, plus maintenance, technician visits and, once the equipment is outdated, replacing it. With an IP system, licences and the server also count. A cloud phone system is paid as a subscription, and the prices are on the CapitalPBX pricing page.

Is an analogue phone system still worth it?

For a small office that only answers and transfers calls, a working analogue system can stay in use. Problems start when the team grows and the ports run out, when colleagues also work away from the office or when you can no longer find parts and service. Analogue phones can also connect to an IP or cloud phone system through a VoIP gateway.