Blog Post

How to Build a Free (or Almost Free) Phone System for Your Business

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

In today’s horrible economic environment, small businesses need to save wherever they can. But there are a handful of phone services out there that can help businesses easily eliminate $50-$100 per month, per employee. The recipe is simple: Cobble together services from several companies to create something that works a lot like a traditional business phone system — except without the upfront cost or monthly hosting fees.

Step One: Ditch Your Auto-Attendant

Business communication today is much different than just a few years ago. Customers may contact you via email, IM, video or a regular phone. If you’re a large company, you probably need a more structured phone system, but in most smaller companies, you can switched to a more decentralized, ad hoc collection of services, offer better customer service, and spend hardly any money.

So step one is to start with a clean slate. Look at what your employees do, how they interact with customers, and then make it easy for customers to find and contact the people they need to using the channels best suited to the task. Your web site is one great tool: Use it to publish a list of email/IM/phone contacts by name or department so people can contact them directly. Email signatures are another example: You can use them to publish primary contact points for every customer interaction. Whatever you do, just don’t force your customers dial into a recorded greeting.

Step Two: Use Skype, Grand Central, and Gizmo for Call Routing

Google’s (s goog) recent relaunch of Grand Central (aka Google Voice) is an especially good example of where voice services are headed. In addition to being free, it offers many features found in advanced phone systems, such as smart call routing, voice-to-email transcription (read your voice mail instead of listening to it), and VoIP. Encourage each employee to set up a number with it and to use that number as their primary contact point. Dial that number, and you can reach them wherever they happen to be, if they want to be reached.

Grand Central is, however, pretty U.S.-centric. Skype, on the other hand, is international, and offers dial-in numbers worldwide, dial-out service, and a robust voice/IM/video capability. Most of what you can do with Grand Central, you can also do with Skype, which is also free (although you do have to pay a nominal fee for dial-in numbers, and reasonable per-minute fees for outbound calls). I use Skype extensively, and find that it’s better than mobile service for call quality (although being in San Francisco, that’s not saying much, considering how bad cellular coverage is here). I also use it for video meetings.

Gizmo is a useful add-on to Grand Central, as well as other SIP-based phone systems like Asterisk. It’s essentially a more open version of Skype, and works well with standards-based VoIP phone systems, handsets and services. Grand Central can route calls to Gizmo users, so you can use that to further reduce costs. Gizmo is also a free service, but like Skype charges nominal fees for inbound phone numbers, and for outbound calls to regular phones (VoIP calls are always free).

Step Three: Call Your Mobile Operator for a Deal

The mobile operators are in a price war, and if you’re on top of it, you can get unlimited mobile voice for $50 per month or less. I recently got $50/month unlimited service from T-Mobile, and Metro PCS is trying to take customers from other carriers by matching their flat-rate deals. Make a few phone calls and threaten to walk; you should be able to get a great deal and never pay metered rates for mobile again. The bad economy is your friend, so use it to go bargain-hunting.

Step Four: Use Hunt Groups or Multiring to Create an Ad Hoc Call Center

If you have several people who work as a team (sales, support, etc), you can create a virtual call center. Simply configure a Grand Central number to simultaneously call each person. Customers call your support number, and the call is answered as soon as one of these people pick up the phone, often on the first or second ring.

Step Five: Unplug Metered Rate Services

Metered rate phone service is essentially dead. If you’re paying anything more than a penny or two a minute for calls, except for certain international routes, you’re getting ripped off. Many so-called “enhanced voice” service providers routinely charge 5-10 times this amount. The main offenders are conference calling services (some charge 10 cents per minute, per caller, or more) and hosted phone service providers, which charge a similar amount simply for routing calls through an 800 number. These charges add up, and offer little value. So get a Grand Central number — with no metered rates — and stop publishing the 800 number.

Chances are, you’ll be able to cobble together an ad hoc communication system that works better than what you have now, costs almost nothing to operate, and gives customers better and more rapid access to your people. It’s a win-win for everyone — except for the phone companies whose services you no longer need.

35 Responses to “How to Build a Free (or Almost Free) Phone System for Your Business”


    I’m a former Phone system Tech. I started my own small business in Communications in PA.

    STEP 1 – Has very good tips.
    Small digital system with 3 lines and 8 extensions cost a 1 time fee $300-500

    STEP 2 – Use a voice mail system Auto Attendant, can give call option to reach you at the office on your mobile phone. A small system with 10 Mailboxs and 4 voicemail ports cost about $400-$600

    STEP 3 – Great advice, my cell cost about $30 for 600 minutes.

    STEP 4 – This can be confusing and lead to unanswered calls. As long as your employees know the ring pattern and answers the call and doesn’t think the other person will answer.

    STEP 5 – Most all phone companies have free long distance, shop around. Just like you mobile, shop for a deal.

    Do what works for you!!! I have worked with thousand of different companies and install hundreds of systems from 2 phones to 5,000 phones. I have see some wierd stuff. But it works for them.

    Don’t forget this is your business. You have to call someone when is breaks. The worst people to get ahold of are folks in the telephone business. They know how to hide like the best of them. I have spent days on the phone. Keep names and number of the people you deal with.

    Don’t forget, all businesses plan on growing. Things change yearly. Pay a consultant or two, to evaluate your communications needs.

    It can be very confusing!

    Good luck and God bless!!!


    Seventy five a hour
    Jared Seven,one,seven,seven,three,three,five,two,two,five

  2. Ben Reese

    As a business telephone technician, I confront VOIP issues all the time. For internal use VOIP is fine, but when multiple users make outgoing calls, your Internet traffic gets congested and calls get dropped. A PRI — the line source of most businesses (essentially a T1) — dedicates 64Kbps per channel (I believe) and a total of 23 channels per circuit. You can get a PRI for just over $300 a month (most businesses should be able to afford that). That will get you WORKING 911 service, CID, and with most carriers renewable bandwidth (any channels not used by voice get used for data).

    Pair that together with an inexpensive PBX and you’ll have a professional setup. You can probably get a decent VOIP PBX that will handle the PRI for less than 2000 (I work on Panasonic systems, so I’d suggest the NCP1000) and each phone for just over 200 (you’d pay that for a decent SIP phone anyhow). Then you’re set! Obviously there would be some cost in install/setup, but most of the after programming you could do yourself.

    • Ben Reese

      I’ve thought about experimenting with the Asterisk PBX myself, but where I get stuck is in the faxing. While some fax over IP works, it takes some tweaking and most free VOIP services won’t give you the uncompressed bandwidth to make it work. While faxing is being phased out, it is still a prominent communication medium in today’s businesses… Just my opinion.

  3. What I’ve found is that the things small businesses find most important are:

    1. Quality and reliability of service
    2. Features that make them look bigger than they really are
    3. Absolute simplicity to set up and manage
    4. Access to customer support when they need help

    The problem with cobbling together free solutions is that you get none of this. For many small businesses, their phone system is their lifeline to customers and revenues. They prefer to pay someone for it because then the provider is on the hook to give them the reliability and support they need. The money they pay gives the provider the resources to do that. Despite all the free services out there, our growth at Toktumi is taking off. We don’t charge much ($14.95 a month), but its enough to make sure they get the four things I listed above plus all the features you mentioned in your article. And an auto-attendant! :-)

  4. Would you say that the mobile price-war also applies to iPhone users (AT&T)? Or is AT&T shielded from this war since they know that few iPhone users are going to walk, since there is no other carrier?

  5. I agree with Paul. Its not a really proposition to move to Google voice as of now. They may start playing ads for you when someone is actually waiting to speak with you.

    Om, I also do not agree with ditching the auto attendant. If you are calling up any small business, I often use its first phone system to determine the image of the company.

    Yes, Skype plus attendant etc. would make sense.

    I still believe in what businesses such as RC, 800pbx, GotVMail etc. are doing. They help SMEs to make the system more productive.

    Is your business really serious if you are actually using google voice etc for your business. I wouldn’t.

  6. Mark Plakias

    For many SME’s especially in this environment, distributed call routing is a must, which neither GoogVoice nor Skype will do. Back in the early zeroes we used to hook together multiple locations through a single speech-enabled automated attendent in the cloud. I think they’re still around. Attendent is the mother of all cloud-based business voice systems, IMHO. Agree with Francis that some diligence will find competitive carriers with the functionality SMBs need to run their voice systems in the cloud.
    The consolidation recently (Sylantro swallowed by Broadsoft) is a testament to how badly incumbents fumbled this opportunity — there’s a reason Comcast is the #3 Telco in the US now!

  7. Brian, I think it’s a great idea how to combine free services to build your own phone system.

    VoIP has a great potential that some people still can’t see, that’s sure, Some times we don’t stop to think how a couple of free internet tools can be combined for make life cheaper & easier.
    For example, Pete Anderson had an idea how to stop tele-marketing in Asterisk by blacklisting them in his house phone.(link)

    And also I agree with dmichels that this solution it’s more a creative exercise than a real solution for companies where telephone calls is really imporant, and you can’t waste money because of Google Voice last bug or whatever.

  8. I use Skype, Google Voice (after the upgrade from GrandCentral) and Ring Central regularly, both for domestic and international calling. Based on my experience I would recommend:

    RING CENTRAL for the total package of call attendant/routing, VM and fax, plus reasonably priced outbound calling. For inbound call routing RC is fantastic. You can set up call trees easily using a web interface, and then set rules for sequential or simultaneous forwarding, forwarding by schedule, answering rules by caller or by schedule, etc. Their digital line service was shaky at launch, but it has improved. Customer support has fallen off in the last year, but it is still miles ahead of Skype and Google. No, I have no interest in this company.

    SKYPE for outbound calling, and possibly for simple (solo) inbound calling and VM.

    Google Voice is for experimentation only. As others have suggested, it still has too many bugs, and VM is impossible to skip through quickly if you dial in for messages. Plus, it doesn’t do fax at all yet. It is irresponsible to recommend this for business use now, even if you can beg or buy a new number.

  9. Francis

    Why bother with cobbling VoIP solutions together or choosing cheap calling without support. After all, you’re running a business. Go with a proven VoIP carrier that caters to SMBs, such as SimpleSignal or Alteva, that provides support and can integrate your phone system with other apps you use, including or ACT!. A VoIP carrier will provide customer service if ever you have a problem, and keep you in business in case of a natural disaster.

  10. All these VoIP systems seems to be working great in US and Europe. Want to check if these systems work in neighboring Mexico since I keep traveling there and most of the times end up enormous amounts on the telephones. Sure we plan to set up an office there in the next 3 months and evaluating options on the systems available.

  11. Well it’s reassuring that FUD is still alive and well with PBX dealers and resellers. Voice is hard. Horrible horrible things might happen (but probably won’t) if you dare use one of these low cost (hint: low quality) alternatives.

    I use Skype routinely, and it works great most of the time, and the video calls are better than what I got when using $5,000 Polycom video units just a few years ago. That Skype et al have made demonstrable improvements in voice/video quality and ease of use is an objective fact. PBXs, on the other hand, really have not changed much except for the introduction of SIP support, which frankly isn’t all that important to small (< 25 person) businesses, and entirely irrelevant if most of the people are mobile, which is often the case in service oriented businesses.

    It’s true that what I am suggesting won’t work for everyone. If you have a larger business, or a call center operation, you’ll need a more sophisticated solution, but this was written for the millions of small businesses that just need a workable phone solution without wasting a ton of money. As the cost of trying this approach is basically nil (and when Google opens up registration on Grand Central to new users, it will be nil in the US), the risks are also small. Try this out for free, maybe with a subset of your employees, and if you like the results, do more of this, and if not, consider other options. On the other hand, if you buy a $20,000 PBX and decide it’s overkill, you’re stuck with a white elephant.

    PS – I didn’t mention Asterisk because while it’s interesting, and free, it has all of the complexity, jargon and weird crap found in other phone systems (i.e. totally confusing to the typical small business manager).

  12. This is not the comprehensive reliable post I expect on Giga Om. Way too many holes.

    Don’t screw around with voice.

    Google Voice is a nice idea, but not ready for prime time. Way too hard to initiate calls. Lots of bugs, and no SLA. I don’t think it is wise to recommend an experimental version 1 service to businesses as their primary published line. Plus, it doesn’t provide phone service. You stilll need a phone service to make it work.

    Then you go to Skype and Cell phones. What about 911, what about intercom? What about paging? What about the ability to transfer a call internally?

    You say get rid of auto attendants – small businesses can really benefit from an auto attendant.

    The fact is phone systems are complex. There are so many models out there because people have different requirements and assuming you can save them money with this article when in fact potentially endangering their business is dangerous.

    Two options you missed. One is Asterisk or Switchvox SOHO. Two reasonably inexpensive solutions with lots of flexibility. The downside of this solution is you need IP phones which are a bit pricey.

    The other solution, often overlooked in the webosphere these days is a simple digital pbx. NEC, Mitel, Toshiba, etc. make fairly simple and inexpensive systems that are surprisingly cheap. Even if you mixed and matched with Google Voice or Skype, you would come ahead with basic pbx features in-house. The risk of these systems is you tend to outgrow them. Anything not Voip is poo pooed these days, but the fact is Voip doesn’t get you much as far as the phone is concerned. It is important that the phone system have support for SIP trunks and other IP features, but the phones really don’t matter.

    But don’t screw around with voice and go too cheap. It isn’t worth it and the ROI simply isn’t there.


  13. CloudRR

    @Alex , fans of Asterix etc-

    The article is focused towards the average Small Business( <10 or 20 employees who are primarly non-techies) that want a Phone system +service that is low cost and provides customer engagement ability…not get overwhelmed by the VoIP techspeak that you refer to ( CODECS?? ASTERIK??..who cares…they need a phone or two that plugs in.. PBX could be hosted)

    If the local IT expert/Geek Squad can get it for them, so be it.

  14. Great article. We use On-State Skype PBX and after a few glitches during set-up, it works great for us. They even went so far as to help us get multiple toll free numbers routed over to their network and configured our call tree routes for us.

    This set-up allows my entire workforce to be mobile: Skype, Net connection, and headset and we’re set.

    I worked for companies offering landline and other VoIP systems. They were nice systems, but not worth the cost for a company under approx. 50 people. I didn’t know it at the time since Cisco, Avaya, and others do such a good job marketing.

  15. I like this article – I would like to share my own story.
    Though not a business owner, I use skype at home as my primary “land” line.
    It costs about $2.5/month for unlimited calling in the US and Canada and about $2.5/month if you get a Dial In number. (They call it a skype out number). This number can be anything you want it to be – make it a NY number as you sit in SF etc.
    The phone unit that I bought was from GE – It is a skype phone – the phone is still not upto the mark – it certainly could get better (atleast the software) and the look and feel is not very slick considering that it cost me $100
    All in all, I am happy with the service, happy that I have a “land line” that is so cheap and happy that I get to test something so cheap.
    Next phase – hopefully a better quality phone unit.
    I am from India, so I am unable to use the famouse Reliance India Call Tie Line via skype. I hope that is enabled too pretty soon (net cost is only 4 cents if I use this tie line)

  16. Good Idea!, I like to hear creative solutions to know how far you can get with simply tools.. but I have to recognize that this is not best thing for a company with more than 5 people.

    The tools you are talking are meant for individual use, and some of them even in beta. This is not for companies.

    Specially step 4. It’s poor solution and not scalable.. If you recieve many calls, or you need IVR, etc… you will need to queue those calls, isn’t it?

    I agree with gp and I don’t know why you didn’t include Asterisk, free open source pbx that will give that extra features that any company will need.

  17. Hi.

    I read your blog quite a bit – plenty of good articles on here about a wide range of topics. However, this one I have to take issue with.

    I’m a VoIP engineer, it’s what I do for a living. So when people recommend doing voice on the cheap, I think great, because these are the kinds of applications that will really push VoIP over TDM. However, I have a couple of issues.

    Cobbling something together is not a good idea with voice. Voice is used for a variety of reasons. If your only voice communications medium is internet-based you MUST understand the limitations – VoIP is not simple, the myriad of ways it’s been broken by various people is evidence enough. It is used for critical communications (calling emergency services, for example) so you need to get things right – and that’s not just being able to make a call, but consistently getting good voice quality.

    Secondly, I have a problem with using Skype. Now I can’t speak for the US, but in the UK Skype has recently refused to follow the regulator’s requirements to implement emergency calls properly. WIth VoIP rapidly becoming a viable option for primary line replacement, the public’s perception of voice comms is that you can use a phone to call the emergency services. Ofcom held a consultation, Skype responded against the policy, but Ofcom brought in the ruling because it is in the public interest to ensure a coherent user experience across what users see as an identical product.

    Like I said, VoIP is not easy. Picking the right codecs, setting up guaranteed quality of service (which isn’t limited to technical methods) – these are all things that takes a lot of knowledge and experience to get right. Question is, do you really want to get it wrong? What kind of impression does it give if you can’t get your voice comms right first time? Doing it on a budget is possible and is actually fairly simple to arrange…but is also easy to get wrong.

    So, my recommendation? Go open source – there are some great open source VoIP applications out there. VoIP can save you a lot – but don’t skimp on the advice – get an expert in, or you risk damaging your reputation because your customers simply can’t talk to you.

    Note – I’m not advertising here, I don’t offer any consultancy services for voice and neither does the company I’m working for.

    Aled (VoIP advocate and evangelist in my spare time).