Office 365 Licensing: Phone System

Office 365 Licensing PT. 3

Mar 4, 2020 by Michael Patrick

The final part of this blog series is the Microsoft phone system. Microsoft has been making and supporting a phone system for a while — over a decade, in fact. Office Communicator was released in 2007 and went through several versions. Over times it changed names from Lync to Skype for Business to the current iteration, Teams, which is a totally revised and enhanced product (it’s not just a phone system, you know?)One thing that hasn’t changed, though, is the complexity of the licensing model. 

A few key items to remember about Microsoft Teams: 

  • Teams is a hosted system. There is not an on-premise server available. This does simplify some of the licensing as it become a “payasyougo” or subscription model
  • The communication protocols for Teams are not the same as Skype for Business
  • Existing Skype phones do not work with native Teams. They operate in “Island mode” which is a hybrid configuration. 
  • Currently there is a very short list of Teamscertified phones, but that will grow over the next year. 

Using Teams as a phone system requires Enterprise licensing for each user who requires the ability to make a phone call using either a plastic phone or using a mobile client. For the budgetminded office there are some custom configurations to reduce the monthly spend. 

The minimum required licensing for Teams phone is an Enterprise license, with a phone system plan (in certain scenarios), and a domestic dialing add-on. Okay, that sounds confusing, so I will break it down further. 

Office 365 E5 + Domestic and/or International Dialing Add-On 

The easiest, but not the most inexpensive plan, is Microsoft office E5 and a domestic dialing plan.   

The price for this is $35 + the required domestic dialing add-on, which is $12. It includes a long list of features, but the most used are: 

  • Email hosting with 100 GB mailbox 
  • Desktop versions of Microsoft Office 
  • Unlimited personal cloud storage, i.e. OneDrive 
  • Host online meetings for up to 10,000 people 
  • Advanced eDiscovery 
  • Advanced analytics and Power BI 

One of the most powerful features for the administrator is the ability to perform call tracking, tracing and analytics to monitor how the service is working. This is only available with the E5 license. 

But what if you don’t need, or want all, of the features? What if you already have Microsoft Office products? The chart below shows how to start with the basic required features and grow from there. 

Enterprise License  Includes  Price  Add on  What’s missing 
E1  Email, No Installed products. Web mail only  $8  Phone plan + Domestic Dialing  Audio conferencing, Call analytics 
E3  Email, one drive, MS Office products 


$20  Phone plan + Domestic Dialing  Audio conferencing, Call analytics 
E5  Email, one drive, MS Office products, Skype Phone System, PSTN conferencing, advanced call tracking 


$35  This is the full package with all features  Nothing 
CAP*  Common Area Phone License 


$8  For Common areas; to make outbound calls  Email, Voice mail 
Phone System  Required for E1, E3 for phone service 


$8  This activates a phone plan for a user   
Dialing Plan  Required to make domestic phone calls  $12  This allows a user to make domestic calls   
Audio Conferencing  Audio conferencing 


$4  Can schedule conference calls with a dedicated inbound phone number   
International Dialing  Required to make international calls.  $12  Must have Domestic Dialing plan as will.  Will also have to set up communications credits and tie them to a credit card 

An 800 number is also available for the Teams phone system. It does require the communication credits as mentioned above. 

For a detailed breakdown on how to add dialing licenses to E1 and E3 plans, click here. 

Many offices are eliminating, or at lease reducing, the number of plastic phones. Certified phones can run from $175.00 to $500 on average, depending on the features. Offices can switch to using headsets (either wired or Bluetooth). There are a lot of available headsets ranging from $75 – $300 when including long range DECT headsets. 

In addition to the traditional office phone, Teams is available across multiple mobile platforms. 

The Teams mobile app allows you to answer your phone as if you are in the office. It does not require you to be connected to Wi-Fibut be aware it does use your mobile data plan. This makes the ultimate mobile office, as it includes not only the phone system, but instant messaging, file sharing and collaboration features. 

If you have questions about how to gain access to Teams dialing or get on Office 365, send us an email at or give us a call at 502-240-0404! 

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