Teams Phone for Small Business: Calling Plans, Direct Routing and Cost

To make and receive outside phone calls in Microsoft Teams, each user needs a Teams Phone licence and a connection to the phone network (the PSTN). For a small business the simplest connection is a Microsoft Calling Plan, where Microsoft is your carrier and supplies the numbers and call minutes. Direct Routing is the alternative when you must keep an existing carrier or phone system, and it requires a certified Session Border Controller.

Who this is for and what you will have at the end

This guide is for owners and IT administrators of small organizations on a Microsoft 365 Business plan who want to replace a desk phone system with Teams, or add phone numbers to Teams.

At the end you will have:

• A clear view of the four ways to connect Teams to the phone network.
• The list of licences to buy for a Calling Plan or Direct Routing.
• An understanding of how minutes are pooled and billed, so you can estimate cost.
• Setup steps for Calling Plans and a requirements checklist for Direct Routing.

This article does not quote prices. Prices differ by region, currency, billing account type and agreement, and they change. Use Microsoft's pricing page for Calling Plans and Teams Phone, linked in the references, for current figures before you decide.

The four ways to connect Teams to the phone network

Microsoft describes four PSTN connectivity models. You can use more than one in the same tenant.

Microsoft Calling Plan, Operator Connect and Direct Routing support user phone numbers, Audio Conferencing numbers and voice application numbers such as auto attendants and call queues. Teams Phone Mobile supports user numbers only.

For most small businesses the decision is simple: use Calling Plans if they are available in your country or region and the numbers you need are offered, and look at Operator Connect or Direct Routing if they are not, or if you have an existing PBX, carrier contract or analog devices to keep. Check availability in Microsoft's country and region availability page for Audio Conferencing and Calling Plans.

Licences you need

Teams Phone

Teams Phone is a separate add-on licence. Teams Phone Standard provides a hosted telephone service with PBX capabilities such as cloud voicemail, call forwarding, call transfer, auto attendants, call queues and caller ID. For users to call outside your organization, you also need a PSTN connectivity option.

Teams Phone with Microsoft Calling Plans is available as either:

• A Teams Phone with Calling Plan bundle, or
• A Teams Phone Standard licence with a separate Calling Plan licence.

Microsoft's licensing page lists Teams Essentials with Microsoft Entra ID and Microsoft 365 Business Basic, Standard or Premium as eligible Business subscriptions for both the bundle and for Teams Phone with a separate PSTN connectivity option. Business suites are for up to 300 users and come in versions with and without Teams. If your suite does not include Teams, check Microsoft 365 suites without Teams licensing before you buy.

Note that Audio Conferencing, which lets people dial into Teams meetings from a phone, is a different licence that does not require Teams Phone.

Calling Plan types

All plans include unlimited incoming minutes. For the International plan, international calls can go to 196 countries. Microsoft offers Domestic Calling Plan versions for customers in the US, UK and Canada and for customers in a listed set of other countries, and the minutes users get depend on the user's location. The amounts for each country are in Microsoft's country and region availability page. The country is based on the location of the user's licence, not the billing address.

How minutes and billing work

All users in the same country with the same Calling Plan share a pool of minutes. Microsoft's example: 100 users in the United States on a Domestic Calling Plan are each allocated 3,000 minutes, and together they share a pool of 300,000 minutes. Calls beyond the pool are billed per minute. Pooling is available only on identical Calling Plans.

Pay-As-You-Go funding

A Pay-As-You-Go Calling Plan has no included outgoing minutes. Until it is funded, users cannot make outgoing calls. There are two funding methods:

• Microsoft Customer Agreement (MCA): you pay after use for the previous month's minutes, which is post-usage billing.
• Communication Credits: for customers who purchased with a Microsoft Online Subscription Agreement (MOSA), Communication Credits provide a monthly pool of minutes you buy in advance.

Pay-As-You-Go suits users who make few or unpredictable outgoing calls. Communication Credits are also used if all Calling Plan minutes are used before the month ends, or if you want toll-free numbers for Audio Conferencing, auto attendants or call queues.

What drives total cost

When you build an estimate, count each of these:

1. A Teams Phone licence for every user who will call, either as a bundle or Teams Phone Standard.
2. A Calling Plan licence per user if you do not buy the bundle.
3. Extra minutes beyond the pool, or Pay-As-You-Go usage.
4. Phone numbers, and any porting or acquisition charges your agreement includes.
5. For Direct Routing, the SBC (hardware, software or hosted service), the certificate, and the carrier's trunk and call charges.
6. For Audio Conferencing dial-in, its own licence if you need it.

Compare the bundle against buying separately only after you check the current prices for both.

Option 1: Set up Calling Plans

Microsoft's setup guidance assumes you already have Teams Phone licences, since they are a requirement for buying Calling Plans.

1. Check availability. Look up your country or region in Microsoft's availability page. If Calling Plans are not available, use another PSTN option.
2. Complete Know Your Customer (KYC) verification, if required. Some countries and regions require it before you can acquire or port numbers. An authorized representative must submit it using an individual company email address on the business domain being verified. Distribution lists, personal email addresses and the default onmicrosoft.com domain are not accepted. In the Teams admin center, go to Voice > Service configuration > Know Your Customer, select Add KYC information, and submit. Most reviews are done within three business days. Wait for Approved before you continue.
3. Buy and assign licences. In the Microsoft 365 admin center, buy the Teams Phone add-on first. Go to Billing > Your products > Add more products > Add-ons, select the Teams Phone add-on and buy it. Then buy the Calling Plan add-on, or the bundle instead. Assign the licences to users.
4. Get phone numbers. You can get numbers in the Teams admin center for some countries, port existing numbers from your current provider (Microsoft then becomes your provider and bills you for them), or request numbers through Voice > Phone numbers > Add > Get phone number support.
5. Add emergency addresses. An emergency address must be associated with a phone number. In the United States you associate it when you assign the number to the user. In the United Kingdom it is associated when you get or transfer the numbers.
6. Assign a number and an emergency address to each user. Newly added users may take several hours to appear on the Voice users page.
7. Tell users their numbers. Users can see their number in Teams under Calls, above the dial pad.

Microsoft's PSTN connectivity page notes that Calling Plan includes a 99.999% reliability service level agreement, and that emergency screening service in the US comes from Microsoft.

Option 2: Plan Direct Routing

Direct Routing lets you connect a supported, customer-provided Session Border Controller (SBC) to Teams Phone. It suits organizations that have a carrier relationship, need to integrate third-party PBXs or analog devices, or need advanced routing. Users need Microsoft Teams and Teams Phone licences, and more may be needed depending on the deployment. Direct Routing is not supported in Islands mode.

Requirements

If you create a new subdomain such as sip.contoso.com for the SBC, register it in Microsoft 365 before pairing the SBC. Microsoft recommends at least two media ports per concurrent call on the SBC.

Support boundaries

Microsoft supports Teams Phone with Direct Routing only when certified SBCs are used. If a problem occurs, you contact the SBC vendor first, who investigates and escalates to Microsoft if necessary. Microsoft may decline requests involving non-certified SBCs.

Using Direct Routing alongside Calling Plans

A common pattern is Calling Plans for general calling, and Direct Routing for a third-party PBX, analog devices or special routing. Microsoft notes that for common area phones, a Calling Plan licence is not required when Direct Routing is used.

Because the SBC, certificate, DNS and carrier are all your responsibility, Direct Routing is rarely cheaper or simpler for a very small business. It makes sense when the carrier contract, existing numbers or equipment justify it.

Checklist before you buy

• Confirm Calling Plans are available for the countries where your users are located.
• Check whether KYC applies, and start it before ordering numbers.
• Count the users who need a phone number, and the numbers needed for auto attendants and call queues.
• Decide on Domestic, International or Pay-As-You-Go per user group, and remember minutes pool only across identical plans.
• Decide how Pay-As-You-Go will be funded, by MCA post-usage billing or by Communication Credits.
• Confirm your Microsoft 365 plan includes Teams, and is among the eligible subscriptions.
• Gather current prices from Microsoft's pricing page for each licence in your estimate.
• Plan emergency addresses for every location before you assign numbers.
• If you consider Direct Routing, confirm the SBC is on Microsoft's certified list.

Troubleshooting

References

• Microsoft Teams Calling Plans (Microsoft Learn)
• Set up Microsoft Calling Plans (Microsoft Learn)
• PSTN connectivity options (Microsoft Learn)
• Plan Direct Routing (Microsoft Learn)
• Microsoft Teams add-on licenses (Microsoft Learn)
• Pricing for Calling Plans and Teams Phone (Microsoft)