Rather than being powered by the electricity in your home, power is provided to the phone network at the exchange end of things.
So instead of plugging your phone into a plug in your home, you are plugging it into the end of an extension lead that reaches all the way back to the phone company.
What this means is that if you have a localised power cut, it may not affect the location of the exchange providing per through your phone line, so your phone will still continue working as normal.
And for the times where a pretty cut does affect the exchange, they have backup systems in place to keep the phone network powered – using batteries or generators for example – so that it can still be used and provide a method of contact in emergencies (assuming of course the end user isn’t using personal devices that are reliant on local power).
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