Microsoft Teams Phone System: Replacing Your PBX

Teams Phone (formerly known as Phone System) is a Microsoft 365 add-on that provides PBX-like capabilities within the Teams client. It enables PSTN calling — making and receiving calls to and from landlines and mobiles — along with auto attendants, call queues, voicemail, call transfer, call park, and other enterprise voice features. Teams Phone is included in the Microsoft 365 E5 licence and available as an add-on (Teams Phone Standard) for E1, E3, Business Basic, and Business Premium plans. The licence itself provides the PBX functionality, but PSTN connectivity — the actual connection to the telephone network — requires a separate decision between three options: Microsoft Calling Plans, Operator Connect, or Direct Routing.

Microsoft Calling Plans are the simplest option — Microsoft acts as both the PBX and the telco. You purchase calling plan licences from Microsoft, port or acquire phone numbers through the Teams admin centre, and PSTN connectivity is handled entirely within the Microsoft cloud. In Australia, Microsoft offers domestic calling plans with bundled minutes and pay-as-you-go options. The advantage is simplicity: there is no SBC hardware, no third-party carrier relationship to manage, and everything is configured in a single admin portal. The disadvantage is limited flexibility — you cannot bring your existing carrier or negotiate rates, number porting can be slow, and calling plan pricing may exceed what you pay through an Australian SIP trunk provider.

Operator Connect is a managed model where a Microsoft-certified telecommunications carrier provides PSTN connectivity that integrates directly into the Teams admin centre. Australian operators participating in the program include Telstra, TPG Telecom, and several smaller carriers. The carrier manages the SBC infrastructure and SIP trunking on your behalf — you simply enable the operator in the Teams admin centre, assign numbers to users, and the carrier handles the rest. Operator Connect offers a middle ground between the simplicity of Calling Plans and the flexibility of Direct Routing: you can use your preferred carrier and negotiate rates, but without the complexity of deploying and managing your own SBC hardware.

Direct Routing gives you maximum flexibility by connecting Teams Phone to any SIP trunk provider through a Session Border Controller (SBC) that you deploy and manage. This option suits organisations that have existing carrier contracts, need to connect to legacy PBX systems during a phased migration, require SIP trunks in countries where Calling Plans are not available, or want full control over call routing, failover, and least-cost routing. Direct Routing does require more technical expertise — you must configure the SBC, manage TLS certificates, set up voice routing policies in Teams, and maintain the infrastructure ongoing. For MSPs with the skills, however, Direct Routing is an excellent value-add service that generates recurring revenue from SBC management and SIP trunk margin.

If you choose Direct Routing, you need a certified SBC. Microsoft maintains a list of SBCs tested and certified for Direct Routing interoperability. The two most popular hardware vendors in the Australian market are AudioCodes and Ribbon Communications (formerly Sonus). AudioCodes models like the Mediant 500 and Mediant 800 are widely deployed for SMB and mid-market, while the Mediant 4000 serves enterprise scale. Ribbon's SBC Edge series covers similar sizing. Both vendors also offer virtualised SBCs that run on Hyper-V, VMware, or in Azure — the AudioCodes Virtual Edition (VE) and Ribbon SBC SWe Edge are popular choices for cloud-first deployments where physical hardware is not desirable.

When selecting an SBC, consider the number of concurrent calls it needs to support, whether you need analogue or ISDN gateway ports for legacy devices (fax machines, analogue phones, lift emergency phones), and whether the SBC will also handle survivability — the ability to maintain basic calling if the internet connection to Microsoft's cloud fails. AudioCodes' Survivable Branch Appliance (SBA) mode, for example, allows the SBC to provide local PSTN calling during an outage, which is a critical requirement for sites with unreliable connectivity or regulatory obligations for emergency calling.

Migrating from a legacy PBX to Teams Phone is rarely a big-bang cutover. Most successful migrations follow a phased approach. Start with a pilot group — typically an IT team or a small department willing to provide feedback. Configure Teams Phone for the pilot users, port or assign temporary numbers, and run the pilot for two to four weeks. During this phase, gather feedback on call quality, feature gaps compared to the old PBX, and any workflow issues. Once the pilot validates the solution, migrate departments in waves, coordinating number porting with the carrier to minimise downtime. The legacy PBX can remain in parallel during the transition if you use Direct Routing — the SBC can route calls between Teams and the old PBX during the overlap period.

Key items to address during migration planning include: auditing all existing phone numbers and mapping them to Teams users or auto attendants, identifying analogue devices that need ATA (Analogue Telephone Adapter) gateways, configuring auto attendants and call queues to replicate PBX hunt groups and IVR menus, setting up emergency calling (000 in Australia) with correct location information for each site, and training end users on the Teams calling interface. Do not underestimate the training requirement — users accustomed to physical desk phones need guidance on using headsets, Teams-certified desk phones, or softphone mode on their PC.

While many users will make calls from the Teams desktop or mobile app with a headset, some roles require dedicated desk phones — reception desks, common areas, manufacturing floors, or executive offices. Teams-certified IP phones from Yealink (T55A, MP56), Poly (CCX series), and AudioCodes (C470HD) run the Teams native client and provide a traditional handset experience with a touchscreen display showing Teams contacts, calendar, and voicemail. For common areas and hot desks, lower-cost devices like the Yealink T33G or AudioCodes C435HD offer basic calling functionality at a fraction of the price of full-featured executive phones.

Teams Phone creates multiple revenue streams for IT resellers beyond licence sales. Discovery and design workshops, SBC deployment and configuration, SIP trunk provisioning, number porting project management, auto attendant and call queue design, user training, and ongoing managed services around voice quality monitoring and SBC maintenance all represent billable work. Direct Routing in particular is a strong managed service play — clients rarely have in-house expertise to manage SBC firmware updates, TLS certificate renewals, and voice routing policy changes. Position Teams Phone as a managed voice service, not just a licence sale, and you will build a durable recurring revenue stream.