Do I Need a Modem or Router for My Business

You've signed up for an NBN service and a hosted PBX phone system. The installer has mentioned a router, the internet provider has supplied an NBN box, and there may be another device in the office cupboard labelled “modem”. Your staff are waiting for their Yealink handsets to work, but you're still asking the practical question: do I need a modem or router for my business?

The answer depends on your NBN access technology. Choosing the wrong device can leave the internet offline, make hosted voice harder to configure, or waste money on hardware your premises doesn't use. The right setup gives your team a stable connection for calls, computers, printers and remote work without adding unnecessary complexity.

Why This Question Matters for Your Business

A small business owner might start the morning with three boxes on a desk: an NBN connection device, a modem-router purchased years ago, and a new router recommended by a phone provider. Each box has Ethernet ports, lights and unfamiliar labels. The obvious temptation is to connect everything and see what happens.

That approach can create avoidable problems. If the premises uses an NBN Network Termination Device, a DSL modem function may be unnecessary. If the premises uses FTTN or FTTB, removing the modem function means the service may not establish a connection over the copper line. The hardware decision changes depending on what reaches the building.

Hosted PBX makes the choice more important than it might appear on a home network. A business call needs a consistent path between the handset or softphone and the hosted phone system. Congested Wi-Fi, poorly managed uploads or unsuitable router settings can lead to clipped audio, delays, dropped calls or handsets that fail to register.

Practical rule: Identify the NBN technology first. Buy or configure equipment second.

Getting this right also protects business continuity. Staff may need to answer calls while working from home, hot desking in the office or operating from another site. A properly planned hosted PBX can save time and money and give staff flexible working locations, but the service still depends on the local network at each location.

Australian guidance differs from generic overseas modem advice because the NBN has several access technologies. The distinction between fibre, hybrid fibre coaxial, fixed wireless and copper-based services determines whether the NBN equipment already performs the line-termination role. That's why an Australian small business shouldn't rely on a general rule that every internet connection needs a modem.

What a Modem Does and What a Router Does

Start with the simplest analogy. Think of the modem as the front door of your office. It translates the signal arriving from the access network into a form your business network can use. The router acts like the internal hallway and traffic manager, directing that connection to the right room, desk or device.

A modem and a router perform different jobs:

• Modem: Connects the premises to the service delivered by the provider. On copper-based NBN services, it handles the VDSL connection.

• Router: Creates and manages the local office network. It sends data to computers, handsets, printers, access points and other connected equipment through Ethernet or Wi-Fi.

• Modem-router: Combines both functions in one box. This is also called a combo unit or gateway in some product documentation.

The distinction matters because the router controls what happens inside the office after the connection arrives. It assigns devices a place on the local network, manages wired and wireless traffic, applies security rules and may prioritise voice packets. A modem, by contrast, is primarily concerned with the connection between the premises and the access network.

For example, a Yealink desk phone connected by Ethernet still needs a router or network switch to reach the hosted PBX. A laptop using Wi-Fi also relies on the router to receive the connection. A printer may not need internet access at all, but it still depends on the local network to communicate with staff devices.

Some products contain both functions, which makes the labels confusing. A box supplied by an internet provider might be called a modem even though it also provides routing and Wi-Fi. Check the product specifications and the NBN technology rather than relying on the name printed on the packaging.

The connection path usually looks like this:

1. The NBN access network reaches the premises.

2. The supplied NBN equipment, or a compatible modem on a copper service, establishes the WAN connection.

3. The router manages the office network.

4. Handsets, computers and other devices connect through Ethernet or Wi-Fi.

The modem translates the outside connection. The router organises the inside traffic. For a hosted PBX deployment, you need to know which device performs each job before changing settings or replacing equipment.

The video below provides another visual explanation of the two roles.

https://www.youtube.com/embed/PWctt_ewjCI

Which Devices Your NBN Connection Actually Requires

Your NBN technology determines whether you need a modem function. ACMA's modem performance testing report explains the Australian distinction between premises using supplied Network Termination Devices and premises where the service arrives over copper.

For FTTP, FTTC and HFC, the NBN connection uses supplied termination equipment. Customers generally don't need to buy a modem, modem-router or NTD themselves. They typically need a router that connects to the NBN equipment by Ethernet and distributes the service to the office.

FTTN and FTTB work differently. These services use copper-based VDSL access into the premises, so the WAN device must include a compatible VDSL2 modem function. You can use a combined modem-router or a separate VDSL2 modem connected to a router.

Fixed wireless is also typically terminated through NBN equipment supplied for the service, so the customer-side network generally requires a router rather than a DSL modem. Confirm the exact handoff with the provider before purchasing, particularly if the office has an unusual installation or existing network equipment.

For a plain-language explanation of the broader connection categories, see this guide to Australian internet connection types.

NBN Connection Types and Required Hardware

NBN Type	Modem Needed	Router Needed	Notes
FTTP	Generally no	Yes	The supplied NBN termination equipment provides the handoff.
FTTC	Generally no	Yes	The NBN equipment connects to the customer router.
HFC	Generally no	Yes	The supplied NBN equipment provides the network handoff.
Fixed Wireless	Generally no	Yes	The NBN service is typically terminated by supplied equipment.
FTTN	Yes, VDSL2	Yes, unless using a modem-router	The service reaches the premises through copper telephone infrastructure.
FTTB	Yes, VDSL2	Yes, unless using a modem-router	The building's copper section requires the modem function.

The table gives you the purchasing answer, but the operational answer is just as important. On FTTP, FTTC, HFC or fixed wireless, spending money on a DSL modem-router may add no useful capability. A capable router with suitable Ethernet ports, Wi-Fi coverage and voice-management features is usually the more relevant investment.

On FTTN or FTTB, a standard router without VDSL2 support won't establish the copper-based WAN connection. That device may still be useful inside the network, but it needs a compatible modem in front of it.

If you're unsure which technology serves the premises, check the NBN service details, inspect the installed equipment and ask the internet provider before ordering hardware. Guessing from the suburb or from an old invoice isn't enough, because nearby premises can use different access arrangements.

Separate Devices Versus Combo Units for Small Offices

A separate modem and router give you two components with two distinct responsibilities. A combo unit places both responsibilities in one enclosure. Neither arrangement is automatically right for every small business, but hosted PBX gives the decision a sharper focus.

On FTTN and FTTB, a combo modem-router can be practical because it includes the VDSL2 function required to establish the service. It reduces cable clutter and gives a small office one device to configure. A business with modest networking needs may value that simplicity, especially if the provider supports the supplied unit.

Separate equipment offers more flexibility. You can keep the VDSL2 modem stable while replacing the router when the office needs stronger Wi-Fi, better security controls or more advanced traffic management. On FTTP, FTTC, HFC and fixed wireless, the supplied NBN termination equipment already handles the access handoff, so a standalone router is often the natural design.

What changes for hosted voice

Hosted PBX traffic competes with ordinary business activity. Staff may upload files, join video meetings, use cloud applications and browse the web while another employee is speaking with a customer. A router with Quality of Service, or QoS, can identify voice traffic and give it priority when the connection is busy.

VLAN support can also help. A VLAN is a logically separate network created within the same physical infrastructure. It can place desk phones on a voice network while computers and guest devices use another, making the environment easier to manage.

Combo units can include these features, but the available controls vary by model. Some provide only basic settings, while others offer business-grade options. Read the configuration guide before assuming a device supports the features your PBX provider recommends.

The Wi-Fi question

The ACMA NBN Wi-Fi modem study found that modem-routers generally performed strongly when directly connected to the NBN, while Wi-Fi performance varied much more than wired performance. That separates the access function from the internal networking function.

In practical terms, a fast NBN connection won't fix weak Wi-Fi in a meeting room. A desk phone connected over Ethernet may remain clear while a softphone on a distant wireless connection experiences interruptions. Place the router carefully, consider additional access points where coverage is poor and use wired connections for fixed desk handsets where possible.

Choose a combo unit when simplicity and space matter most, provided it supports the required NBN technology and voice settings. Choose separate hardware when you need upgrade flexibility, clearer fault isolation or stronger control over voice and guest traffic.

Network Settings That Keep Your VoIP Calls Clear

Hardware alone doesn't guarantee a clean call. The router needs to handle voice traffic sensibly, especially when staff share the connection with cloud software, uploads and video services.

Give voice traffic priority

Quality of Service, or QoS, tells the router that voice packets need prompt handling. Packets are small pieces of network data. If a large upload fills the available connection, voice packets can wait behind it, producing delay, robotic audio or interruptions.

Look for QoS in the router's traffic-management settings. Some models let you prioritise a device, application or voice VLAN. If your provider has a preferred method, follow that rather than creating several competing rules.

The VoIP bandwidth guidance from Hosted Telecommunications can help you assess the connection alongside your provider's recommended configuration.

Review SIP ALG carefully

SIP ALG is a router feature intended to help Session Initiation Protocol traffic, the signalling used to set up and manage many VoIP calls. In practice, different routers handle it differently. It can rewrite or interfere with signalling that the hosted PBX expects to receive, causing registration failures, one-way audio or calls that disconnect unexpectedly.

If your provider identifies SIP ALG as the cause, disable it and retest. Don't change several voice settings at once, because you'll lose track of which adjustment fixed the problem.

Understand NAT and VLANs

NAT, or Network Address Translation, lets multiple office devices share the provider-facing connection. It's normal in many small networks, but complicated arrangements involving multiple routers can make call paths harder to diagnose. Avoid plugging a second router into the first without understanding whether both devices are routing.

A voice VLAN separates handset traffic from general office traffic. It doesn't replace QoS, and it won't compensate for a poor connection, but it can make policies, troubleshooting and device management more orderly.

The Australian ISP guidance from Aussie Broadband on NBN-compatible hardware reinforces the central choice. On premises with an NBN termination device, a router with QoS and VLAN-capable settings is generally more useful than buying a DSL modem-router. On FTTN or FTTB, VDSL2 modem capability remains necessary.

How the Right Setup Saves Your Business Money

A well-configured network helps hosted PBX deliver value beyond replacing a desk phone. Staff can use a unified business number and phone system from the office, a home workspace or another site, provided each location has a suitable internet connection and compatible device.

Hosted PBX can reduce Australian business telecommunications expenses by 30–50% compared with traditional landline and mobile business calling, according to the Australian hosted telecommunications summary cited here: hosted PBX savings for home workers. The same source cites SME annual telecommunications spending at about AUD 15,000, giving business owners a concrete reference point when reviewing their current phone costs.

Remote work can also reduce travel overhead. The cited Australian summary reports hybrid work savings of AUD 4,000–6,000 per employee per year in travel costs. That saving isn't created by the router itself, but a stable network helps staff use the hosted PBX reliably from flexible working locations rather than returning to the office to access the phone system.

Match the cost to the way you operate

Australian hosted PBX pricing examples commonly sit around AUD 25–60 per user per month, with one Australian analysis identifying AUD 25–40 per user per month for standard features. Those figures are documented in Australian internet telephony pricing analysis. The suitable plan depends on call volumes, users, numbers, features and support requirements.

A small office might begin with a few handsets and softphone users, then add staff without installing a new physical PBX. A multi-site business can use features such as call queues, hot desking, voicemail to email and time-based routing to keep calls organised across locations.

The network purchase should support that operating model. On FTTP or HFC, a quality router may be a better use of the budget than a modem-router with an unnecessary DSL function. On FTTN or FTTB, selecting a compatible VDSL2 modem-router avoids buying equipment that cannot bring the service online.

The financial case is therefore broader than the device price. Avoiding the wrong purchase, reducing call disruption and supporting flexible staff locations all contribute to a more useful communications system.

Your Practical Setup Checklist

Work through the network before moving every handset onto it. A short, documented check can save repeated troubleshooting later.

1. Confirm the NBN technology. Record whether the premises uses FTTP, FTTC, HFC, fixed wireless, FTTN or FTTB. This tells you whether the WAN device needs a VDSL2 modem function.

2. Trace the connection path. Identify the NBN termination equipment, router, switch and phone devices. Label each cable so another staff member can understand the setup during an outage.

3. Check the router features. Confirm that the router provides QoS controls and, where useful, VLAN support. Don't assume a product labelled “business” includes the settings your hosted PBX requires.

4. Update firmware. Install the router and handset firmware recommended by the manufacturer or phone provider. Firmware updates can address faults and improve compatibility, but schedule changes carefully.

5. Review SIP ALG. Find the setting and ask the PBX provider whether it should be disabled. If calls register and audio works correctly, document the setting rather than changing it casually.

6. Use Ethernet for fixed phones. Connect desk handsets by cable where practical. Test a softphone over Wi-Fi separately, particularly in meeting rooms and areas distant from the router.

7. Test during normal activity. Make calls while staff use cloud applications and upload files. Listen for delay, clipped speech and one-way audio, not just whether the call connects.

8. Check handset compatibility. Confirm that your Yealink handsets, such as the T53, T54W or T57W, are supported by the hosted PBX configuration. Record each handset's location and assigned user.

9. Test continuity. Decide what staff should do if the NBN connection or office power fails. Confirm whether calls can be redirected to mobiles or remote softphones and record who can make that change.

10. Keep a network record. Store the device models, provider contact details, cable layout and key voice settings securely. Good documentation turns a future fault into a traceable process rather than a guessing exercise.

Troubleshooting Common Issues and Getting Support

A business owner may report that calls drop whenever someone uploads a large file. Start with the router's traffic controls, test a wired handset and check whether QoS is configured. If the problem affects only wireless users, inspect coverage and interference before replacing the NBN equipment.

One-way audio or handsets that won't register often point to a router feature or PBX network setting. Review SIP ALG, confirm that the phone has a network connection and ask the provider to check the account and device configuration. Avoid changing several settings together, because that makes the cause harder to isolate.

Wi-Fi dead spots deserve attention because ACMA's NBN Wi-Fi modem study found greater variation in Wi-Fi performance than in direct network connection performance. A wired test can show whether the NBN service is working while the wireless network needs improvement.

If the NBN equipment appears offline, follow the provider's restart procedure and check cables and power before escalating. The NBN box troubleshooting guide provides a starting point, but persistent faults need provider investigation.

Call for professional help when multiple handsets fail, audio problems continue after a wired test, or the office has several routers and switches. Australian-based onsite and phone support can identify whether the fault sits with the NBN connection, modem, router or hosted PBX configuration.

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Hosted Telecommunications can help small businesses match their NBN setup with hosted PBX, Yealink handsets and softphone users, including configuration and ongoing Australian-based support. Visit Hosted Telecommunications to discuss your connection type, call-quality requirements and the right phone system for your office.