Do VOIP systems work with regular phone lines?

Hey there, I'm an old phone tech and I'm looking to expand from regular telephone systems into the VOIP market.
What I need to know is whether a VOIP system can be hooked to regular dial-tone?
I basically want to hook the telephone numbers into the system, let the phones in my customers office have access to these lines, and use the VOIP side of things to connect a remote office on the other side of the state.
I need to be able to connect anywhere between 1-20 phone numbers and 1-60 telephone sets.
Can anyone help me out or point me towards a model that will do this?

Always good to see an old PBX tech embracing the new and wanting to understand this sort of technology.
PBX's and analogue voice ports work fine together, we have made many grumpy customers happy after we understood their requirements and reverse engineered how the PBX actually functions :-)
What you are talking about is refered to as toll bypass - you set up a first choice route on the PBX to point to the tie line and outpulse digits to the router which then makes the call.
Best way to connect PBX's and VOIP systems is using E&M ports as they give end to end answer and disconnect supervision, but these are not all that common on smaller PBX's and key system.
You can trunk via FXS and FXO ports, but these may cause issues with disconnect supervision, especially if the PBX does not support battery reversal or disconnect tones.
The short answer is basically that everything you want to do is possible and we have successfully done it many times. There are a lot of other things to consider though, such as -
Call Signaling - SIP or H323
Dial Plans - scaling the network as it expands
Bandwidth per call - codecs used between sites
DTMF relay - passing digits over the IP cloud
Interface types (E&M type 1,2,3,4,5) , FXO, FXS, Loop start , Ground start
Disconnect supervision - battery reversal, tone based, power denial
Hookflash control of features
There is a lot of good material in the Cisco Press book on VOIP. Check out Amazon or one of the on line booksellers.
If you give us some more details about what you are proposing we could give some more pointers.
You may want to consider becoming experienced with CallManager Express as this is an ideal way to get started with VOIP, IP telephony and IP based voice mail systems. This book covers it very well -
http://www.amazon.com/Cisco-Communications-Express-CallManager-Networking/dp/158705180X

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