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Microsoft Phone licensing explained

Updated: Jun 23



Microsoft first got into the traditional phone market by offering a 'PSTN breakout' in Skype for Business. Since then, Microsoft has developed its Phone System offering and also moved it into Teams. Microsoft licensing can be quite confusing, so hopefully, this blog will help you understand how to license Teams for voice. 

For clarity, let's discuss what you need to get started. As this blog is about making and receiving calls in Microsoft Teams, then that's the base you need as a minimum. This can be one of the Microsoft business or enterprise plans as long as it has Teams included. From here, you need add-on licenses also referred to as 'bolt-on' licenses. 

Microsoft Calling Plans vs Direct Routing

The first thing to consider is: do you want Microsoft to provide your calling plan, or a third-party provider? Microsoft is not a true Telco, so you may wish to evaluate what provider gives you the most flexibility and value. If you wish Microsoft to provide the calling plans, then you purchase the bolt-on Microsoft Calling plan license or the Microsoft Business Voice license which has this as a bundle (though not available in every country). 

If you are in a country with no available calling plan or you want the flexibility of using a local or even current VoIP provider, you can choose the Direct Routing option. This is Microsoft feature which allows you to use an external provider for your calling plan. This is the option we provide. 

Phone system (no Microsoft calling plan)

This license unlocks the phone system or 'calls' section of Teams in order to make, receive and transfer calls. You will need to add a Microsoft calling plan or external calling plan through the direct routing function for this to work. This would be like purchasing a mobile phone without a SIM card. 

This is available as an add-on license to Microsoft Business 365 plans (limited to some countries) or Enterprise plans (as of today).

Audio Conferencing

This allows you to create a dial-in phone number (often referred to PSTN dial-in number) for your Teams meetings as not everyone has a great microphone or connectivity that allows them to connect to Teams via their computer. If you run live webinars, it also allows people to dial into this live meeting to listen to the content. 

This is available as an add-on license to Microsoft Business 365 plans or Enterprise plans and included in E5 as standard (as of today).

Microsoft 365 Business Voice

As mentioned above, this is a bundle of multiple licenses that includes:

  • Cloud-based phone system within Teams

  • Domestic calling plan (using Microsoft as the phone network breakout)

  • Dial-in audio-conferencing (allows people to dial into your meetings)


It's also worth reiterating that you need a current office 365 subscription that includes Microsoft Teams to use this bundle - it cannot be used standalone.




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