Microsoft Teams Phone System | What Is Included with 365?

Microsoft Teams Phone System: What It Is and What It Costs

Microsoft Teams Phone System — also called Teams Phone or Microsoft Phone System — is the PBX (Private Branch Exchange) software layer embedded in Microsoft Teams. It enables external PSTN calling, auto-attendant, call queues, voicemail, and all the call management features of a business phone system — delivered through the Teams application a business is already using for meetings and chat.

The important distinction: Teams Phone is not free. It is a paid add-on to a Microsoft 365 subscription, and most business-tier 365 plans do not include it by default. Understanding what is and is not included in your current Microsoft 365 licences is the starting point for evaluating Teams Phone.

Is Teams Phone Included in Microsoft 365?

Plans That Include Teams Phone System

The following Microsoft 365 plans include Phone System at no additional licence cost:

• Microsoft 365 E5 / Office 365 E5 — includes Teams Phone System
• Microsoft 365 Business Voice (legacy plan, now replaced by Teams Phone + Calling Plan bundles)

Plans That Require a Teams Phone Add-On

All other business and enterprise Microsoft 365 plans — including Business Basic, Business Standard, Business Premium, E1, and E3 — require a Teams Phone add-on licence at approximately £6–£12/user/month to enable phone system functionality.

What Does Teams Phone Add-On Include?

The Teams Phone licence enables:

• External PSTN calling capability (requires Calling Plan or Direct Routing to provide actual call connectivity)
• Auto-attendant configuration (unlimited, managed via Teams Admin Centre)
• Call queues (up to 200 agents per queue)
• Cloud voicemail with transcription
• Call forwarding, transfer, and park
• Call hold with custom music
• Caller ID management
• Call analytics via Teams Admin Centre
• Teams-certified IP phone support

What Is Not Included in the Teams Phone Licence?

These items cost extra and are commonly misunderstood:

• Phone numbers: Not included. Either acquired via Microsoft Calling Plans or ported via Direct Routing.
• Call minutes: Not included. Calling Plans or Direct Routing SIP trunks provide outbound minutes.
• Call recording: Not included in base Teams Phone. Requires Teams Premium (approximately £7/user/month) or a compliance recording partner.
• Contact centre functionality: Advanced contact centre features require a certified CCaaS solution on top of Teams Phone.

PSTN Connectivity: Calling Plans vs Direct Routing

Microsoft Calling Plans

Microsoft provides phone numbers and call minutes directly. Domestic calling plans cost approximately £5–£9/user/month and include a UK phone number and inclusive monthly minutes. This is the simplest option — everything managed through Microsoft's admin portal. Suitable for most SMEs.

Operator Connect

Microsoft-certified carriers connect their SIP network directly to Teams Phone via Microsoft's cloud. Businesses retain carrier choice without the complexity of managing their own SBC. Available from carriers including BT, Gamma, and others.

Direct Routing

A third-party certified SBC connects Teams Phone to an external SIP trunk. Provides maximum flexibility on carrier selection and call costs, but requires additional infrastructure (the SBC). Typically cost-effective for businesses with higher call volumes or existing SIP trunk contracts.

Total Cost of Microsoft Teams Phone

For a typical SME user on Microsoft 365 Business Premium with no existing Teams Phone:

• Microsoft 365 Business Premium: included (existing subscription)
• Teams Phone add-on: approximately £6–£12/user/month
• Microsoft Calling Plan (domestic): approximately £5–£9/user/month
• Total telephony cost: approximately £11–£21/user/month

This compares with dedicated hosted VoIP platforms at £8–£25/user/month — so Teams Phone is competitive, particularly for businesses already using Teams heavily. The integration benefit (calling, meetings, chat in one application) adds value that pure-cost comparison does not capture.

AMVIA provides Microsoft Teams Phone deployments as a fully managed service, covering licensing assessment, calling plan selection, number porting, and full system configuration.