Simply put, when you dial a phone number, your call moves through the network to reach its destination – and two phones connect. To fully understand how POTS actually works, consider what happens when you call a number from your own phone.

Step #1 – Your telephone device converts sound waves into electrical signals. These signals are then sent to the terminal via cables.

Step #2 – The terminal collects electrical signals and sends them to the central office (CO).

Step #3 – The central office routes calls in the form of electrical signals through fiber optic cables. Fiber optic channels then carry these signals in the form of light pulses to their final destination.

Step #4 – Your call is routed to a tandem office (regional hub responsible for transmitting calls to a remote head office) or central office (for local calls).

Step #5 – When your call reaches the correct office, the signal is converted back into an electrical signal and then routed to the terminal.

Step #6 – The terminal routes the call to the appropriate telephone number. After receiving a call, the telephone converts the electrical signal back into sound waves.

This may sound complicated, but the thing to remember is that it takes a few seconds for your call to reach its destination. This process is facilitated by using fiber optic cables and a global network of switching centers.

PSTN – Understanding the Art of Switching

You could say that PSTN is all about switching, which is the backbone of traditional telephone networks. When a call is made, the switch creates a wiring circuit between the two phones, with this particular connection lasting for the duration of the call.

Now, let's look at each of the four types of transitions that occur at different levels.

1. Local Exchange

The local exchange – which may consist of one or more exchanges – connects customers to the PSTN line. Also known as a central office or switching exchange, a telephone exchange can have as many as 10.000 lines.

All phones are connected to local exchanges in a specific area. Interestingly, if you call your supplier's number located in the building next to you, the call will not leave your local exchange and will be transferred to the supplier as soon as it reaches the exchange.

The exchange then identifies the dialed number so it can route the call to the correct final destination. This process works as follows:

The first three digits of a telephone number represent the exchange (local key), while the last four digits identify the individual customer within that exchange.

This means that when you call a number and it reaches your local exchange, your call is directly connected to the customer without the need for further routing.

2. Tandem Office

Also known as a junction network, a tandem office serves a large geographic area consisting of multiple local exchanges while managing the switches between the local exchanges.

Suppose you call the number of a client who lives in the same city but in another suburb. In this case, your call will be routed to the tandem office of your local exchange, and the tandem office will route the signal to the local exchange near your client's location.

3. Toll Office

This is where every national long-distance move occurs.

A toll office is connected to all tandem offices. For example, if you have an office in another city, you will find that, every time you call that branch number, your call will be routed through the toll office.

4. International Gateway

The international gateway manages international call switching, routing domestic calls to the appropriate country.

PSTN – How Much Does It Cost?

Exactly how much will it cost you if you are going to install and use a PSTN telephone system in your home or office?

Costs to Consumers

If you need a PSTN telephone connection in your home, you must have a telephone set and a PSTN provider.

PBX

Large organizations with 40 or more employees typically use a Private Branch Exchange (PBX). PBX turns your organization into a local exchange where all the phones in your organization are connected and you can enjoy various services such as call transfer, call conferencing, auto attendant, voicemail, call hold, and more.

The PBX connects to your local exchange. It routes external calls to the local exchange while all internal calls are routed by your PBX.

Here's the explanation, a PBX is a combination of software and hardware, so it will cost you some serious dollars. It comes with a hub, switch, phone adapter, router, and several phone sets. It's like creating your own little exchange where your PBX handles the switches internally.

Most businesses use PBX phone systems to manage calls because it is easier. However, installing and managing a PBX is expensive. Actual costs may vary depending on the number of features you want and the complexity of the PBX. A massive, complex, and feature-rich PBX will cost your business more than a simple PBX system with only a few basic capabilities.

This makes PSTN phones very expensive. That is the main reason why most businesses dislike it and are increasingly turning to alternative phone systems.

Alternative to PSTN?

Plain Old Telephone Service has many powerful features, but when it comes to business, POTS tends to be an unsuitable fit because choosing this option costs a lot in the long run (and don't forget that these services run on old technology).

After all, switching technology itself has not changed much since the last century. This, is a potential weakness of the PSTN telephone network as it does not allow you to transmit other types of data.

Moreover, these drawbacks have led to a new and modern telephony service known as VoIP, which is proving to be a game changer in the telephony industry.

Voice Over Internet Protocol (VoIP) is considered the most well-known alternative to PSTN systems because it is not only cost-effective but also has several other benefits that are preferred by businesses (and consumers).

VoIP is the transmission of voice and other data over an internet protocol network. Your VoIP phone device is connected to a DSL or cable modem that connects you to the Internet.

“Businesses record savings of up to 75% after switching to VoIP and they can enjoy several additional benefits such as increased productivity, growth, better employee communication, increased employee engagement, better control, superior customer service and more,” said one industry analyst.

Let's dig deeper and see what VoIP is and how it differs from PSTN.

What is VoIP?

VOIP stands for Voice over Internet Protocol (VoIP) also known as IP telephony, broadband telephony, or internet telephony — but it means the same thing: your voice is transmitted over the internet. The voice signal is converted into a digital signal and then transmitted over the internet and reaches the destination.

Unlike PSTN, VoIP uses the internet on where you don't have to rely on cable cables. There is no need for any exchanges if you make VoIP to VoIP calls. However, if you call a PSTN number from VoIP, your call will be sent through the exchange. It works for all types of calls, data transfers and more.

So, how do VoIP phone networks work, and how do they differ from traditional landlines?

The PSTN uses circuit switching (or switching) to connect calls (as discussed above). Business VoIP phone systems using packet switching. This type of switching is more efficient than circuit switching because data is sent and received as needed. Constant connection is not maintained for the duration of the call.

Plus, VoIP doesn't use dedicated lines. Instead, data packets use routers and the internet, and each data packet travels along the least congested and shortest path.