What is Microsoft Teams Phone?

Teams Phone is Microsoft's cloud phone system, delivered from the same Microsoft 365 platform that runs Teams chat, meetings, and files.[1] It gives an organization the call-control and private branch exchange (PBX) features a business normally buys from a separate phone vendor, so calls can be placed, answered, transferred, and routed inside the Teams desktop, web, and mobile apps, or on a certified desk phone.[1][3] By default, calls between people in the same organization run natively over the internet and never reach the public phone network, which removes carrier toll charges for internal calls.[1]

The license and the phone line are two separate things

To reach a landline or mobile number, Teams Phone needs two pieces that Microsoft keeps deliberately distinct. The first is a Teams Phone license assigned to the user, which turns on the enhanced calling features. The second is a connection to the public switched telephone network, or PSTN, which supplies the actual phone numbers and the route to domestic, international, and emergency calling.[1][2]

Where the product came from

Teams Phone carries some history that still shows up in documentation and license names. It was previously called Phone System, and it is the successor to the voice features once delivered through Skype for Business Online, which Microsoft retired on July 31, 2021 and pointed customers toward Teams.[9] In practice, it is Microsoft's current option for replacing a legacy PBX, packaged as an add-on to a subscription many organizations already hold.[1][10]

A Teams Phone license adds the enterprise calling features that a traditional PBX provides, layered on the basic person-to-person calling that a Teams Enterprise license already includes.[3] Microsoft draws a clear line between the two: native Teams calling covers basics like voicemail and video calls, while the Teams Phone license enables dialing PSTN numbers, call park, call delegation, external caller ID, and the automated call-handling services below.[3]

Auto attendants and call queues

Auto attendants and call queues are the two features most businesses picture when they think of a phone system. An auto attendant is a menu that greets external and internal callers and routes them to the right person, department, or operator, and a call queue holds incoming calls with a greeting and music on hold until the next available agent can answer.[3] Both run on resource accounts rather than on a person's license, and a single service number can handle many calls at once, which is why a main business line and a support line are usually built this way.[3][5]

Cloud voicemail and everyday call handling

Cloud voicemail delivers each message to the user's Exchange mailbox as an email with the recording attached, so it is reachable from a desk phone or any Teams app.[3] The license also turns on the day-to-day controls people expect at work, including call forwarding and simultaneous ring, shared-line delegation so an assistant can answer for an executive, call park so a call can be resumed on another device, and external caller ID drawn from the company directory.[3]

AI features and paid add-ons

For teams that want AI in their calls, Microsoft layers Copilot and Teams Premium on top of Teams Phone. Microsoft 365 Copilot in Teams calls captures conversation points and can suggest follow-up tasks during a live call, while Teams Premium adds call captions and transcripts in a preferred language plus deeper queue analytics.[6] These sit alongside the calling license rather than replacing it, and businesses often adopt Teams Phone first for the convenience of dialing straight from an Outlook contact, then add the AI layers later.[6][11]

Three pieces have to line up: a base Teams or Microsoft 365 subscription, a Teams Phone license on top of it, and a PSTN connectivity option for external calls.[4] Teams Phone Standard is the add-on that provides the hosted phone service and its PBX capabilities such as cloud voicemail, call forwarding, call transfer, auto attendants, call queues, and caller ID.[4] It does not include any minutes to the outside world by itself, so a calling plan or another PSTN option is a separate decision.[4]

Where Teams Phone is already included

Some subscriptions bundle the Teams Phone license, so a buyer may already own it. Microsoft 365 E5 and Office 365 E5 include Teams Phone, which is why organizations on those plans often only need to add a PSTN connection rather than the phone license itself.[4] On lower tiers such as E3 or a Business plan, Teams Phone is bought as a standalone add-on.[4]

What the licenses cost

Microsoft lists Teams Phone Standard at $10.00 per user per month on an annual commitment, and independent pricing guides current to April 2026 quote the same $10 figure.[6][8] A bundle that combines Teams Phone with a Microsoft Calling Plan runs higher, around $17 per user per month for the license plus a block of outbound minutes.[8] Prices vary by region and change over time, so treat these as planning numbers rather than a quote.[6][8]

Turning it on for a user

Buying the license is only the first step. Each user also has to be voice enabled and assigned a phone number in the Teams admin center before they can make and receive PSTN calls.[5][3]

A Microsoft Calling Plan makes Microsoft your phone carrier, so the phone numbers, the calling minutes, emergency screening in the US, and the support all come from Microsoft under a 99.999% reliability service level agreement.[2] You buy a Calling Plan license per user, choose a domestic, international, or pay-as-you-go option depending on how much your users call out, and manage everything in the Teams admin center with no hardware to run.[2][4] This tends to fit organizations where a Calling Plan is sold in their country and they are content to have a single vendor for both the software and the dial tone.[2] The first thing to check is availability, because Calling Plans are sold in a limited set of countries, so a company outside that list has to use one of the other three options.[2]

Operator Connect lets you keep or choose a third-party carrier that has already built a certified connection into Microsoft Teams, so you get their numbers and dial tone without running any voice hardware yourself.[2] After you pick an operator from Microsoft's directory, you enable them in the Teams admin center and assign their numbers to your users, and that operator supplies the PSTN access, support, and service level agreement.[2] This suits a business whose preferred carrier participates in the program, or one that wants managed calling in a country where Microsoft's own Calling Plan is not sold.[2] Because the operator owns the underlying connection, the setup and much of the ongoing management shift to them, which is usually the point for a team that would rather not run its own telephony infrastructure.[2]

Teams Phone Mobile ties a user's SIM-enabled mobile number to their Teams identity, so a single number rings on the cell network and inside Teams.[2] It relies on certified mobile operators that have completed the integration with Microsoft, and the mobile SIM, which can be an eSIM, is the piece you administer.[2] This fits mobile-first staff who want one number for the desk, the app, and the handset rather than juggling separate work and mobile lines.[2] Availability depends on whether your mobile provider takes part in the Microsoft Teams Phone Mobile program, so it is worth confirming with the carrier before you plan around it.[2]

Direct Routing connects your own choice of carrier to Teams Phone through a certified session border controller, or SBC, that you, an integrator, or a Direct-Routing-as-a-Service provider procures and manages.[2] It is the most flexible option and the one that works in any country, which is why organizations pick it to keep an existing carrier contract, meet a local regulatory requirement, or connect legacy equipment such as analog devices, overhead paging, and third-party PBXs.[2] The cost of that flexibility is responsibility, since the SBC brings certificate management, DNS settings, call-routing policies in Teams, and last-mile circuit integration, so it asks more of the IT team or the partner running it than the other options do.[2] Direct Routing is also the only model that can keep local PSTN calls working through a Survivable Branch Appliance if the connection to the cloud is interrupted.[2]

Emergency calling on Teams Phone works by attaching a validated physical address, and optionally a place such as a floor or office, to each user, so that responders receive a usable location when someone dials for help.[7] Microsoft calls this an emergency location and recommends creating addresses with the map search feature in the Teams admin center, which validates them and attaches the geo codes that some countries use to route the call.[7]

Static addresses and dynamic location

A registered address is the static location assigned to a user, and it works well when people sit at a known desk.[7] Dynamic emergency calling goes further by detecting the Teams client's current network location and routing both the call and any security-desk notification accordingly, and it is supported across all four PSTN options, though Direct Routing needs extra configuration.[7] For staff working from home, Teams can use device location sharing so a remote worker's emergency call still carries a current address.[7]

Who handles the setup

How much of this you configure yourself depends on the PSTN option. With a Microsoft Calling Plan the emergency screening service and the registered address are included and managed by the Teams admin, whereas with Operator Connect, Teams Phone Mobile, and Direct Routing the carrier or your own team takes on more of it.[2][7] United States deployments also carry regulatory emergency-calling obligations, and because the setup differs by PSTN option, Microsoft documents the emergency-calling considerations for each one.[2][7]

Teams Phone runs on your internet connection and inside the Microsoft 365 service, and that shapes a few limits worth planning around.

The license is not the whole bill

A Teams Phone Standard license on its own cannot call the outside world, so the real cost includes a PSTN option on top of it, whether that is a Microsoft Calling Plan, an Operator Connect subscription, or the SBC and carrier contract behind Direct Routing.[4][8] Budgeting only for the phone license understates what a working deployment costs.

Calling Plan coverage is uneven

Microsoft's own Calling Plan is sold in a limited set of countries, so a company with offices outside that list often ends up combining connectivity types by region.[2]

It depends on internet and power

Because calls travel as data, a Teams Phone call needs a working internet connection and power at the user's location, unlike a legacy analog line that draws power from the phone company. Emergency location accuracy also depends on keeping each user's registered address current, which matters most for people who move between sites.[7]

Teams Phone is the calling layer of Microsoft 365, not a standalone app or a phone carrier, and a few common mix-ups are worth clearing up.

It is not the same as basic Teams calling

Every Teams user can already call another Teams user over the internet without Teams Phone.[1] The Teams Phone license is the separate piece that adds PBX features and, with a PSTN option, the ability to dial real phone numbers.[1][3]

It is not a phone carrier by itself

Teams Phone provides the phone system, but it does not supply the numbers or the connection to the outside network on its own. That comes from a PSTN option, and with three of the four options a third party rather than Microsoft is your actual carrier.[2]

It is not a Calling Plan

A Microsoft Calling Plan is one way to add PSTN service to Teams Phone, not another name for it. You can run Teams Phone with Operator Connect, Teams Phone Mobile, or Direct Routing and never buy a Microsoft Calling Plan at all.[2][4]

It is not Skype for Business

Teams Phone is the successor to the voice features once delivered through Skype for Business Online, which Microsoft retired on July 31, 2021.[9] The older name Phone System refers to the same product, so some documentation and license lists still use it.[4][10]