Is Microsoft Teams Calling VoIP? | How Teams Phone Works

Teams Calling Is VoIP — Here Is Why That Matters

Microsoft Teams Calling uses Voice over Internet Protocol technology to transmit calls. When a Teams user makes a call — whether internal to a colleague or external to a standard UK phone number — that call travels as digital data packets over the internet, not as an analogue signal over a copper phone line. That is VoIP by definition.

The distinction worth making is between internal Teams-to-Teams calls and external PSTN calls. Internal calls (Teams user to Teams user) use VoIP by default, at no additional licence cost. External calls — to mobile numbers, landlines, or non-Teams phones — require a Teams Phone licence and a PSTN connection method: either a Microsoft Calling Plan or Direct Routing via a third-party SIP carrier.

How Teams Phone Compares to a Traditional VoIP Phone System

Both Microsoft Teams Phone and a traditional hosted VoIP platform use VoIP technology. The differences are in how they are packaged and what they integrate with:

Microsoft Calling Plans vs Direct Routing

There are two ways to connect Microsoft Teams Phone to the public telephone network:

Microsoft Calling Plans

Microsoft provides PSTN connectivity directly. A calling plan is purchased per user from Microsoft, adding a UK phone number and inclusive call minutes. Plans start at approximately £5–£9/user/month for domestic calling. This is the simplest setup — everything is managed through Microsoft's admin portal, with no third-party SIP carrier required.

Direct Routing

A third-party certified SBC (Session Border Controller) connects Teams Phone to a SIP trunk from a carrier (such as Gamma or BT). This gives businesses more flexibility on call costs, number porting, and carrier choice. Direct Routing is typically more cost-effective for businesses with higher call volumes or those who want to maintain their existing carrier relationship.

Does Teams Phone Support All Standard VoIP Features?

Teams Phone supports most features businesses expect from a VoIP system:

• Auto-attendant: Configurable via Resource Accounts in Teams Admin Centre
• Call queues: Queue inbound calls with configurable routing and overflow
• Voicemail: Cloud voicemail with transcription
• Call transfer and hold: Standard in Teams client
• Conference calling: Integrated with Teams meeting functionality
• Call analytics: Available in Teams Admin Centre and Power BI

Call recording requires Teams Premium or a compliance recording partner — it is not included in the base Teams Phone licence, unlike some competing VoIP platforms where recording is included.

Is Teams Phone the Right VoIP Choice?

Teams Phone is the right VoIP choice for businesses that already rely heavily on Microsoft 365 and Teams for collaboration. The integration of calls, meetings, chat, and file sharing in one interface is a genuine advantage. For businesses that primarily need a standalone phone system with minimal Microsoft dependency, a dedicated hosted VoIP platform may provide more flexibility and better value.

AMVIA helps businesses evaluate whether Teams Phone or a dedicated VoIP platform better matches their requirements — and handles the full deployment if Teams Phone is the right fit.