What is Telephony? (Definition, Types and Benefits)

In elementary terms, telephony is technology that enables interactive communication between two or more physically distant people. But today, telephony’s capabilities have advanced far beyond simple voice conversations. And people who used to rely on landline networks and hardwired telephones to communicate now turn to the Internet for next-generation tools like video, messaging, voicemail, call recording and faxing.

Yet even as telephony evolves, questions abound. You might be wondering, what’s the best type of telephony for my business? Do I need special equipment? And how does the choice I make affect how my organisation serves customers?

Here, we explain everything you need to know about telephony.

The latest in service, delivered straight to your inbox

Learn how to save on costs, increase efficiency and drive productivity in your service organisation.

Subscribe now

There are four different kinds of telephony: traditional, mobile, Internet and fax.

Traditional telephony, sometimes called “plain old telephone service” (POTS), enables conversation between physically distant people by way of the public switched telephone network (PSTN). The PSTN consists of fixed lines that connect telephones around the world via physical wiring. Imagine a call centre with agents using hardwired telephones connected to wall jacks (and ultimately to the vast network of buried copper cables beyond) and you get the idea.

PSTN set-up are known for their reliability but are limited in terms of flexibility. A traditional telephone line won’t accommodate video calling, for example. They’re also expensive to install and maintain.

Mobile telephony uses cellular technology, two-way radio waves and radio towers to transmit sound and data wirelessly to a device.

The ability to communicate and share data without needing a hardwired connection has changed how employees work, from mobile workers communicating to systems and people from the job site to sales reps sending inventory data from the field

Internet telephony is software that changes sound into data and transmits it over high-speed computer networks. Internet telephony eliminates the need to use PSTN or cellular technology. An important subset of Internet telephony is Voice over Internet Protocol (VoIP), which transmits sound, video and text messaging. VoIP is sometimes referred to as cloud telephony.

With VoIP telephony, you enable your employees to collaborate using voice, video, messaging and faxing from anywhere in the world, provided they have access to an Internet connection. You can also connect your VoIP system with your customer relationship management platform to deliver more efficient interactions.

Like traditional telephony, traditional fax telephony connects machines using the network of fixed cables and physical wiring. But with IP faxing — also called fax over IP — software turns the information on a document into data, then transmits it over the Internet. Modern businesses that use fax telephony don’t use hardwired machines; instead, the software converts the document into an attachment and sends it to an email address.

Traditional telephony transforms voice sounds into electronic signals and transmits them using cables, later changing the signals back into voice sounds when they arrive at their destination. In the past, the cables that transmitted the sounds were made from copper, but today, they’re increasingly fibre-optic. That’s because fibre-optic cable transmits electronic signals faster and stronger, nurturing a clearer connection.

Mobile telephony transforms voice sounds into electronic signals, transmitting them to cell towers using radio waves. Then, the cell tower transmits the radio waves using the cell tower network until they arrive at their destination, where the electronic signals are turned back into voice sounds.

Internet telephony changes voice sounds into digital signals and transmits them over broadband (high-speed) Internet. VoIP can also transmit other types of communications, such as video conferencing and text messaging.

Fax telephony encodes a document as a graphic, turns it into an electric signal (traditional faxing) or data (IP faxing) and transmits that to its destination over cables or the Internet. Once it arrives, the machine or the computer decodes the signal or data, creating a copy of the original document.

With VoIP, softphone applications installed on computers transmit data using local area networks and the Internet. Cloud telephony is a specialised type of hosted VoIP used by businesses. It’s a unified communications as a service (UCaaS) model that connects a company’s voice, video, messaging, customer relationship management and processes together. By elevating these functions to a single cloud-based platform, employees can boost productivity because they eliminate the need to toggle between systems.

VoIP systems enable people to talk, videoconference, message and send documents using existing networks. Because of this, VoIP is less expensive than traditional telephony, which needs dedicated lines that are costly to install and maintain. As a result, VoIP has changed the way people communicate in their personal and professional lives.

The pros of VoIP include cost savings and greater value — as long as you have Internet access, you can get free or low-cost calling, video conferencing, messaging and faxing, often eliminating the need for a traditional PSTN line. However, during an electrical outage, you might lose access to those services if backup power isn’t available. Also, some VoIP providers don’t connect directly to emergency services like 911.

With VoIP, you can talk to anyone with a phone number, including international and mobile numbers. In most cases, the person you’re calling does not need special equipment to talk to you if you’re using VoIP.

The equipment your system requires depends on whether you choose traditional, Internet or mobile telephony. Traditional telephony requires access to the global network of cables, plus physical wiring at the work or homesite, in addition to a telephone and a wall jack. Internet telephony, on the other hand, requires connection to a local area network or broadband Internet, plus an Internet-enabled device, such as a mobile phone or laptop. In general, the older your telephony system is, the more equipment you’ll need — and the more you’ll need to spend to maintain it. Mobile telephony requires only a mobile device and paid access to a cellular network.

Although cloud-based and on-premises telephony systems both control the flow of inbound and outbound calls, on-premises technology requires locating a device onsite to manage traffic. Cloud telephony does not require installation of a physical device onsite; instead, call data is received and sent over the Internet. In addition, cloud telephony enables more types of communication, including video conferencing, text messaging and IP faxing, without the need for physically wiring telephones to wall jacks.

The three types of call centre telephony solutions are on-premises private branch exchange (PBX), VoIP or IP PBX and hosted VoIP.

Traditional on-premises PBX systems offer features like hold music, call transferring, call queuing and private extensions for each employee. These systems are reliable, but also expensive — and becoming less common as they begin phasing out.

A VoIP phone system (sometimes called an IP PBX) transfers voice data between computer IP addresses. But instead of using the PSTN like a traditional PBX, VoIP systems use data networks and one or more IP PBX servers that function like a traditional switchboard.

With hosted VoIP, voice is converted into data packets, which are transmitted over the network. Instead of using servers onsite, the VoIP provider hosts the telephony in the cloud. That reduces hardware and maintenance expenses, increases the speed of installation and configuration, enables automated software updates and eliminates the need to install cabling and wiring.

VoIP is the best solution for service teams because it increases the productivity and efficiency of your agents while also costing less money than traditional telephony. And, if you integrate VoIP with your customer relationship management (CRM) platform and digital communications channels, you empower your agents to deliver connected and seamless customer experiences from anywhere.

Here’s why. Consider that with VoIP, you can quickly scale the size of your customer service team without having to make costly investments in cabling, wiring or desk phones — or spend money with communications providers on long-distance and overseas calls. Also, because VoIP digitises voice data, transcribing calls is easy, automated and instantaneous. Agents won’t have to waste time asking callers to repeat themselves, a top frustration among customers when it comes to service. When your agents have a complete view of the customer’s interactions with marketing and sales, they can give personalised answers to questions quickly. And that improves customer satisfaction.

An integrated VoIP-CRM system also gives management more insight into how service teams are performing, too, because dashboards surface important metrics like average hold time and call length. And by studying call transcripts, service organisations can find the communications most likely to satisfy customers, offering an opportunity to reskill agents as new best practices emerge.

Dr Alexander Graham Bell was undoubtedly proud of his world-changing invention. But even he would have to acknowledge that the capabilities of digital telephony have taken us far beyond where simple landlines can go. And by integrating modern telephony with the right digital service tools & software you can deliver the kinds of customer experiences that will propel your business into the future.