Basic Telephony Concepts
Portions of the network outside of your business
A. The Public Switched Telephone Network (PSTN)
The public switched telephone network (PSTN) is the network of the world’s public circuit-switched telephone networks. It consists of telephone lines, fiberoptic cables, microwave transmission links, cellular networks, communications satellites, and undersea telephone cables all inter-connected by switching centers which allows any telephone in the world to communicate with any other. Originally a network of fixed-line analog telephone systems, the PSTN is now almost entirely digital in its core and includes mobile as well as fixed telephones.
B. The Telephone Company Central Office (CO)
The Central Office (CO) refers to your telephone service provider’s physical building that houses telephone switches used to connect calls in your area.
C. The Local Loop
The Local Loop refers to the wired connection from your demarcation point to the telephone service provider’s network. This connection usually runs from your building to the service provider’s Central Office.

What is an analog telephone line?
A simple analog telephone line is a voice circuit historically made from copper wire that runs from your local phone company’s Central Office (C.O.) building to your business location. The central office houses telephone switching equipment that connects you to the Public Switched Telephone Network (PSTN). This is sometimes referred to as the local loop. Once the analog telephone line is installed, someone can call the phone number that you have subscribed to, and the phone company can connect the call to you.
Good points to remember about analog telephone lines are that:
- One phone number is associated with one line
- One line can handle one conversation at a time; when the line is in use, a busy signal is heard
How do analog telephone lines work?
Analog telephone lines transmit voice as electrical signals. When you speak into the handset of your phone, the microphone converts the sound waves into analog electrical waves. These waves propagate over the telephone line to their destination. The receiving phone then converts the the electrical signals back into sound waves through the speaker of the handset.
Other names for analog telephone lines
Analog telephone lines are referred to in a variety of ways. Here are some of the terms you may hear from an installation professional or a service provider:
- C.O. Line – Refers to the fact that the line connects you to the Central Office
- Copper Line – Refers to the historical medium that carries analog signals, namely copper
- POTS Line – Plain Old Telephone Service
- Analog Line – Refers to the analog electrical signal used to transmit voice
The Trunking Concept 
Sometimes people incorrectly refer to a single analog telephone line as an analog trunk. Trunking refers to the concept that many users can access the telephone network through sharing a set of lines instead of each receiving one individually. Think of a tree trunk: all of the branches share one trunk and through this connection are all granted access to the nutrients in the soil. Similarly, every phone extension in your office has access to the public switched telephone network through a smaller set of analog telephone lines.
If you have a small office (1 – 3 phones), each telephone can be connected to the local loop and then receive its’ own phone line. However, if your office is growing and you need to connect many phone extensions to the PSTN, it just doesn’t make financial sense to pay for separate lines to each phone. In most circumstances every employee does not need to be on the phone at the same time. Instead, by using the trunking concept you can reduce the amount of telephone lines you pay for while servicing every phone in your business. In fact typical business phone systems are configured in ratios of 3-4 telephone lines for every 8 phone extensions.
When should I choose analog telephone lines for my business?
Analog telephone lines should be considered for small and medium sized businesses that require up to 15 incoming lines. When more than 15 are required, a digital line (e.g. T1/PRI) is usually a better choice in terms of both cost and features.
What is a digital telephone line? 
A digital telephone line or digital trunk is a type of telephone line that carries voice and/or data by using digital sampling. By converting analog signals to digital, these types of trunks allow for more information to be transferred over a single connection. For instance the maximum speed of an analog modem is 56 Kilobits per second (Kbps) while the maximum speed of a digital T1 line is 1.544 Megabits per second (Mbps) – almost 30 times more.
How does a digital telephone line work? 
Digital telephone lines use Time Division Multiplexing (TDM), a method of transmitting multiple digital signals over one communication media, to accommodate up to 24 voice conversations over one circuit. The most common digital telephone lines are T1 and Primary Rate Interface (PRI). They are the typical method in which larger offices with considerable call volumes receive telecommunication services.
T 1 vs. PRI
PRI is also known as ISDN PRI. ISDN stands for Integrated Services Digital Network. There are two speeds of service offered: BRI or Basic Rate Interface and PRI or Primary Rate Interface. BRI is a low capacity service intended for residential and small business applications. PRI is the high capacity service carried on T1 trunk lines between telco central offices and your location.
PRI divides a T1 digital signal into 24 channels of 64 Kbps capacity per channel. 23 of these channels can be assigned as one telephone call each, the equivalent of having 23 separate telephone lines. The 24th channel is used for signaling information and special features such as caller ID. It is a popular service for call centers which need the ANI automatic number identification or caller ID data.
T1 service can be provided as channelized or unchannelized. In the channelized T1 version, there are 24 channels. Each channel can be a telephone call. T1 gives you 24 phone lines in place of the 23 that can be accommodated with PRI. However, since there is no separate signaling channel, the signaling information that tells when a phone is on hook or off hook is carried within each channel by using or “robbing” the least significant bit. Unfortunately, channelized T1 doesn’t provide any capability for ANI or caller ID data. You need PRI service for that.
Networking your companies phone systems 
T1 circuits can also be used to network remote phone systems within the same company. For instance an office in Michigan can be networked using a T1 tie trunk to another office in California. A user in Michigan can then connect to a user in California simply by dialing their extension number. This bypasses tolls and allows employees in the business to communicate seamlessly. Routing tables can also be set up to find the most cost effective ways to distribute calls through the Michigan and California offices.
Can my phone system handle a T1?
PBXs that service the SMB and enterprise class markets can accommodate both analog and digital telephone lines. This allows business to grow from a few incoming lines and handful of extensions to multiple T1/PRI lines and a hundreds of extensions. Most SMB PBXs allow up to 3 T1/PRI circuits while enterprise class systems can add many more. To make sure that your PBX is compatible with T1/PRI reference your system manuals, consult with your installation professional, or contact the manufacturer.
When should I consider ordering T1/PRI?
Analog telephone lines should be considered for small and medium sized businesses that require up to 15 incoming lines. When more than 15 are required, a T1/PRI is usually a better choice in terms of both cost and features.
Sending voice over the internet
Since the advent of internet telephony, many residential offerings have evolved to compete with traditional local and long distance telephone service providers. These services save households money by using the public internet to bypass traditional local loops and long distance lines. They send voice calls by converting analog signals into digital packets that travel over the internet. This type of transmission uses Voice over Internet Protocol or Voice over IP (VoIP). The packets are then re-combined at their destination back into voice so that you can converse with your called party.
Common VoIP services in use today
- Analog Telephone Adapter (ATA) – An analog telephone adapter (ATA) allows you to connect a standard
telephone to the Internet. It essentially converts analog signals from your traditional phone into digital data packets to transmit over the Internet. ATAs are simple to use, easy to set up, inexpensive, and are a great alternative to traditional home phone lines. Many major VoIP providers like Vonage supply ATAs for free when you sign up for their services.
- Computer-to-Computer – Using VoIP to make calls from computer to computer was the earliest form of
internet telephony. You just need the software, a headset with microphone or speakers with a microphone, a sound card, and a good internet connection. Typically there is no charge to make PC to PC calls, and the software can even be downloaded for free. Common services include Skype and Yahoo! Messenger.
- Hosted IP Phone Service – Hosted IP phone services use a central IP softswitch that IP telephones connect to over the internet. IP phones have the same appearance as normal telephones, but instead of having a traditional phone jack, they have an Ethernet connector. These phones connect directly to your Internet router and contain all of the necessary technology to directly handle the IP phone call; no conversion from analog to digital is necessary. The hosted provider provisions the IP phones to connect to their IP softswitch so that they can route your voice calls over the internet to your called party.
How do businesses take advantage of VoIP?
Some businesses subscribe to VoIP services through providers like Vonage or local cable companies. By connecting the analog line ports of their current phone system directly to the VoIP service providers ATA or analog gateways, businesses can convert their calls to VoIP and save on local and long distance charges. These services disconnect your phone system from the public switched telephone network (PSTN) and connect it to the provider’s IP network for call routing over the internet.
Another popular business VoIP service that is rapidly developing is SIP trunking. Session Initiation Protocol (SIP) is a
protocol used to for controlling multimedia communication sessions such as voice and video calls over the internet. SIP trunking is offered by Internet Telephony Service Providers (ITSP). By using a SIP trunk, you disconnect your IP PBX from the PSTN and connect it to the ITSP’s IP network. This network is connected to other private IP networks, the public internet, and the PSTN. The ITSP will determine if your call is being made to a PSTN number or to another SIP enabled phone system. It will then route your call through the Internet to wherever it is directed.
Because a single SIP trunk can handle many channels (voice conversations), it can process as many calls as traditional digital services. SIP trunks have the potential of being a cheaper alternative to both analog telephone lines and T1/PRI.
Voice quality considerations
Although quality of service is still a hot topic, the quality of today’s VoIP connections are quite good. If you’ve used a VoIP softphone like Skype or Yahoo! Messenger then you may have experienced issues like echo, latency (delayed speech), and diminished sound quality. These problems are much less apparent on private IP networks but can arise when the voice packets are traversing the public internet. The best providers have large private IP networks and usually provide better quality than providers that use the public internet for most voice travel.
Can my phone system handle VoIP lines?
Any PBX that can handle analog telephone lines can be equipped with VoIP services that use ATAs or analog gateways. The VoIP service is connected to the ATA, and the line is connected directly to your PBX. SIP trunks are compatible with IP PBXs that support SIP trunking. Most current IP PBX offerings support SIP trunks and typically require licensing to activate this feature.
When should I consider ordering VoIP lines?
VoIP lines can be a substitute for both analog telephone lines and digital T1/PRI services. The choice usually involves cost and features, but quality of service should never be ignored. If your lines go down even for a few hours, the savings of switching services may be lost. It is best to research your provider’s reviews on the internet and contact current users of the service.
What is the demarcation point?
The demarcation point, or demarc, is the point at which the telephone company’s wiring ends and the customer’s

Residential Demarc
wiring begins. This point may vary depending on what country you are in, but in the U.S. the demarc is typically on the customers premise. For businesses, a large punch down block typically exists inside the building perimeter. while for residences, a junction box is located on the outside of the house.
The history behind the demarc
The American Telephone & Telegraph Company (AT&T Corporation) was founded in 1886. As AT&T expanded, it evolved into a natural monopoly for telephone service within the United States. Through numerous acquisitions and technological innovations, AT&T grew so large that it even owned the local loop, which included the customers’ wiring and telephone equipment.

Commercial or Business Demarc
The ‘natural monopoly’ status did not sit well with the United States, and in 1956 lawsuits ensued. Some felt that AT&T had become too powerful and that it should not be allowed to retain this status. In 1974 the United States Department of Justice filed an antitrust suit against AT&T. The United States v. AT&T suit continued until a settlement was reached on January 8, 1982. The settlement, known as the Modified Final Judgment (MFJ), forever changed the telecommunications industry.
Effective January 1, 1984, the MFJ required AT&T to dissociate from its local exchange service operating companies. These local operations were split into seven independent Regional Bell Operating Companies (RBOCs), which were required to provide equal access to AT&T competitors. Companies were also able to sell third-party equipment that would connect to the PSTN and American consumers now had the ability to purchase telephones without going through AT&T.
Because consumers could now own their phone systems (as opposed to leasing them from AT&T) there needed to be a way to delineate that portion of the network which was owned by the customer and the portion owned by the Telephone Company. The dividing line, or meeting point, is now known as the demarcation point.
Today, the Telephone company services the network up to and including the demarc. Any lines and equipment located beyond the demarc are the responsibility of the customer. This allows consumers to choose a phone system from a variety of third party manufacturers and connect to the PSTN.
What is a PBX?
PBX stands for Private Branch Exchange. It’s basically another way to say “business phone system.” Businesses and individuals can own or lease a PBX. Basic features of almost all PBXs include transfer, hold, conference, redial, caller ID, call forwarding, speed dial, calling groups, and various forms of call coverage. Advanced features can include call answer and voicemail service, automated attendant, call queues, unified messaging, call accounting, call center applications, and networking.
PBXs are connected to the outside world or PSTN (public switched telephone network) through your demarcation point to the local telephone company’s central office (CO). Wiring is also installed throughout your building so that telephone extensions can be connected to the PBX. In this way users can call other extensions connected to the phone system and can also take incoming and make outgoing telephone calls.
Most of today’s PBXs can accommodate analog, digital, and IP lines and stations. They also have robust voicemail, networking, and unified messaging features. While there are a large number of PBX makers and a competitive market exists, major manufacturers include Avaya, Cisco, and Nortel.
What kinds of phones can I add to a business phone system?
Digital phones
Although IP phones are catching up, the most common telephones used on PBXs are digital. Digital phone systems

Avaya 2420 Digital Phone - A multi-line digital phone with large programmable display and fixed feature buttons using DCP, a proprietary form of TDM
sample your voice using a method called Time Division Multiplexing or TDM. When you speak into a digital telephone, your voice is digitally sampled into time slots so that a conversation doesn’t have to use the entire bandwidth of a circuit. The system then uses a clock to synchronize the digital samples and turn them back in to voice. Whereas analog telephone stations can only handle one conversation at a time, digital phone stations can compress more than one conversation and other features onto a single pair of wire. This provides for more features, less wiring, and more efficient communication than a simple analog circuit.
Most manufacturers have acronyms to describe their digital protocols. These protocols are all some form of TDM.
- Avaya – DCP – Digital Communications Protocol, MLX – Multi Line Digital, TDL
- Norstar – TCM – Time Compression Multiplex
- Toshiba – DKT
Analog phones
Analog phones do not use digital sampling to compress your voice. When you use an analog telephone, the sound

2500 Series Analog Phone - a typical single line telephone used in common areas like lobbies, conference rooms, and brak rooms.
waves of your voice are converted into electrical waves by a microphone and conducted down copper wire. The telephone of the person you call then uses those electrical signals to vibrate a speaker in their phone’s handset. When you make a call with an analog phone over an analog phone line, you seize the entire circuit. No one else can use that circuit while you are conversing. The same is true for analog telephone stations connected to a business phone system. They can only handle one conversation at a time.
There aren’t any completely analog business telephone systems manufactured anymore. The AT&T Merlin phone systems were probably the most popular analog phone systems ever produced. The majority of these were installed in the 1980’s, and there are still many of them in service today. Merlin phone systems used an ATL (analog telephone line) standard of 4-pair (8 wires) copper wiring that connected the Merlin control unit to each telephone. Most digital phone systems only use a single pair wiring scheme that can handle both voice and signaling information.
Digital phone systems still accommodate analog phones and analog devices like fax machines. Single line analog phones are usually seen in common areas like a warehouse, lobby, or lunch room.
IP phones

Cisco 7940G IP Phone - a common IP phone station used on Cisco unified communication systems
Over the past decade Voice over IP (VoIP) has become very popular. IP phones are now the most common choice for new PBX installations. By converting voice into data packets, IP phones can send voice conversations over a business’ data (IP) network. Whereas digital and analog phones require dedicated wiring to each station, IP phones share the same wiring as the data network. There is less investment in wiring infrastructure and conceivably one person or department can manage both the phone system and computer network. The telephone system becomes just another application on the data network.
The use of VoIP has also bred new applications and enhanced current ones. One of the most important applications provided by today’s IP capable PBXs is telecommuting. An employee no longer needs to be in the office to use the phone system. IP phones can connect to the business phone system via VPN (virtual private network) over the the public Internet. The employee can make and receive calls just as if he were in the office.
What is Power over Ethernet (PoE)?
Traditional standards of telephone power
When using a residential telephone line, a phone still functions in the event of a power outage. The reason is that the phone company sends low voltage power over the phone line. This power is separate from the electric company’s network, so that even if the power goes out, the phone will still function.
Business telephone systems power analog and digital telephone extensions in the same way. Manufacturers of these systems provide standards for sending low voltage power through digital and analog extension ports. This allows the extensions to have features such as backlit displays, general functioning, and ringing. In some cases, consoles with large displays or telephones with adjuncts like speakerphones also require a separate power supply. However, the majority of extensions use direct line power.
IP phones and the history of PoE
IP telephones are connected to your data network and receive power differently. Because Ethernet wiring predates IP

IP Phone External Power Supplies - The Avaya 1151D1 and Cisco Power Cube are commonly used to power IP phones where PoE is not available
telephony, cabling standards never included requirements for directly powering devices like IP phones. The first IP telephones that were released came with external power supplies. Because businesses typically deploy more phones than data equipment, provisions for power outlets at each workstation were required. This proved to be more difficult than traditional digital and analog phone installations which simply involved plugging the phone into the jack.
In order to eliminate local power supply requirements for IP phones, Cisco introduced a proprietary standard in March 2000 (Cisco Inline Power) to send power over Ethernet wiring. This innovation received recognition industry-wide and began a movement to standardize power over Ethernet (PoE) for multi-vendor interoperability.
The Institute of Electrical and Electronics Engineers (IEEE), one of the world’s leading technical professional societies, ratified the 802.3af Power over Ethernet standard in June of 2003. It describes a system to pass electrical power safely, along with data, on Ethernet cabling. The 802.3af PoE standard allows manufacturers of network hardware and endpoint devices to produce switches, IP telephones, wireless access points, and IP cameras with standardized PoE support. Consequently, proprietary forms of power over Ethernet are now obsolete.
Today, most IP phones support both 802.3af PoE and external power supplies. If a company has yet to deploy switches supporting PoE, then they can still use power supplies for their IP phones.
The function of voicemail
Voicemail is the probably the most important and familiar service added to telephony systems in the last fifty years. Given the choice between call forwarding, caller ID, call waiting, paging services, remote telecommuting, and voicemail, the majority of users would choose voicemail. Caller ID would likely finish a close second. Without the invention of voicemail technology, we would be relegated to live answer, human answering services, and feature-poor answering machines.
Voicemail services on today’s PBXs are typically external computers or proprietary modules with the following components
- A processor to run the software that controls the entire voicemail system

Inuity Audix voicemail PC with Pentium processor
- A hard disk drive to save recorded messages, greetings, and system files
- A telephone interface that communicates with the phone system to answer calls, forward calls, accept touch-tone selections, and playback messages and greetings
When a call connects to an extension and the party is not there, the voicemail system answers the call, plays your greeting, and records the voice message. It sounds simple, but the research, development, and perfection of this task occurred over decades.
Voicemail Features

iPhone with Visual Voicemail
Typical voicemail systems have a common feature set. These include call answer, greeting recording and playback, message playback, message forward, and save and delete. Users access their messages by logging into their mailbox directly over their phone. Messages retrieved in this manner can only be played back or skipped in the order that they were received. In addition playback is usually accompanied by a time and date, caller ID, and message length.
Newer voicemail systems have incorporated features that integrate with other forms of communication. These include forwarding to email, remote notification and message retrieval, and visual voicemail. Visual voicemail allows users to see all of their messages on a deskphone display, cell phone display, or PC. The messages are accompanied by time and date, message length and contact identification. Using this information, the user can select which message to playback and playback can occur in any order. In the age of iPhones, this feature is common place and often an expected service for any smart phone user.
Automated attendant service
Almost all voicemail systems also provide integrated automated attendants. An automated attendant is the familiar service that announces, “Thank you for calling XYZ company. If you know your party’s extension, please dial it now. Otherwise please choose from these options….” Auto-attendants use the same technology that voicemail services do. They answer calls and play back greetings, provide menu options, and accept touch tone selections. They also connect calls to the correct party.
Certainly, voicemail systems play a very important role in today’s PBX market. It is a service that is expected on any business phone system, cell phone service, or residential line.
Remote Telecommuting
The transparent home office
With the advent of VoIP and IP telephony, the home office has become a cost-saving endeavor for both the employee and employer. Many businesses have instituted flexible work hours and have determined that some employee’s responsibilities can be fulfilled from home. The employee benefits from a more flexible schedule, less time wasted on commute, and accommodating lifestyle. The employer benefits through decreased workstation costs, greater productivity time, and less brick and mortar overhead.
Remote voice and data connections
Remote use of centralized computer applications like accounting systems and order entry systems is common place. Most large corporations and even medium sized businesses allow some sort of secure remote access to their data networks. This is usually performed via a VPN software client or VPN hardware.
More recently, voice applications have migrated to the remote realm. Major manufacturers like Avaya, Cisco, and Nortel offer IP PBX systems that support remote voice applications. In particular, IP soft phones and IP desk phones combined with a VPN connection over the internet allow employees to connect to the company phone system from home.
Employees can remotely perform data entry, order fulfillment, or any server oriented computer task. They can also answer, transfer, and make phone calls and access company voice mail.
Telecommuting check list
For companies wanting to offer remote telecommuting to employees, here is a basic checklist of requirements:
- Broadband internet connection at business and remote employee site
- Company site – VPN security appliance (e.g. Router with firewall and VPN host support) and IP PBX system with support for remote IP soft phones or desk phones.
- Employee site (hardware based connection): Router with VPN client support. This hardware will allow both PC and IP soft phone or desk phone to connect directly to remote data and voice network.
Employee site (software based solution): VPN software client to connect PC to company’s VPN host. IP deskphone with VPN firmware to connect remotely to phone system or IP softphone installed on PC connected via VPN software client.
About MetrolineDirect
MetrolineDirect is a leading independent distributor of technology and telecommunications equipment and offers a low cost alternative by providing quality refurbished voice and data equipment from major manufacturers including Avaya, Nortel, Cisco, Polycom, Hewlett Packard, and Dell. MetrolineDirect does not represent any manufacturers or their affiliates in any way. For more information, please visit: http://www.metrolinedirect.com