Think of it like sending an email instead of mailing a letter. Your voice is transformed into digital data packets, zipping across the internet to reach your customers anywhere in the world.
In this guide, we’ll explain how VoIP phone systems work and why VoIP isn’t just about saving money, it’s about reimagining communication
What Is VoIP?
Voice over Internet Protocol ( VoIP ) refers to the standards that facilitate voice-based phone calls using an internet connection instead of a local telephone company.
Voice over IP converts your voice into a digital signal, compresses it, and sends it over the internet. This allows you to make calls using a broadband internet connection instead of a regular (or analog) phone line.
To use VoIP, you need:
A broadband internet connection
A VoIP phone service provider
VoIP endpoints — either a VoIP phone, VoIP adapter for a regular phone, or VoIP app on your computer or mobile device
People opt for VoIP because they can make phone calls without any telephone service, which saves them on long-distance calls.
If you have internet access, you don’t need to run any extra copper wires. This lets employees work from home or telecommute to the office as well.
How Does a VoIP Phone System Work?
A VoIP phone system transforms standard phone calls into data packets that are transmitted over the internet, rather than traditional landlines or mobile networks. It works by taking the analog audio signals from your voice and converting them into digital signals sent over your high-speed internet connection.
VoIP systems bypass phone lines and use your existing internet infrastructure for making and receiving calls. The result is a flexible and cost-effective business phone solution.
Here’s a quick rundown of how VoIP works:
Converting your voice: When you speak into a VoIP phone , microphone, or computer, your voice signal is captured and converted into a digital format using analog-to-digital conversion (ADC).
Digital data packets : This digital data is then broken down into small packets, similar to how files are sent over the internet. These packets are tagged with information like who’s calling and who’s receiving the call.
Traveling over the internet: The data packets then ride the waves of your internet connection and travel to the VoIP provider’s servers.
Routing and codecs: The VoIP provider acts as a switchboard, figuring out where to send your call based on the recipient’s number. Here, specialized software called codecs may compress the data to save bandwidth and ensure smooth call quality.
Converting back to voice: At the recipient’s end, whether it’s another VoIP device, a traditional phone, or a mobile phone, the data packets are reassembled and converted back into an analog signal using a digital-to-analog converter (DAC).
Hearing the other person: Finally, the recipient hears your voice through their handset, speaker, or headset, and voila! You’re having a VoIP conversation.
As long as you have a high-speed internet connection, which includes a router and modem, you are ready to use VoIP.
Related Article
What Is IP Telephony? How Does It Work?
VoIP vs. Landline — What’s the Difference
Landline phones use old Public Switched Telephone Networks ( PSTN ) that transmit voice calls over dedicated copper wiring.
While basic and limiting in features, landlines can offer consistent quality and uninterrupted service powered by private branch exchange ( PBX ) systems during outages.
However, they come with higher costs than VoIP since traditional phone systems require professional installation and dedicated infrastructure to operate.
VoIP uses modern internet infrastructure to convert voice into data packets that are transmitted flexibly across broadband connections. VoIP systems provide businesses with significant cost savings, mobility with remote access, and convenient calling features.
Call quality and reliability may vary based on the quality of your VoIP service provider and internet speed. Power outages and network jitter can also disrupt service.
VoIP problems are easy to fix with a few best practices, and choosing a reliable VoIP service helps.
VoIP is the future of telecommunications and a better choice than landlines any day (despite a few challenges).
Feature Landline VoIP Technology Physical wires Internet Cost Typically more expensive Often cheaper Features Basic More advanced Reliability More reliable Can be affected by internet Mobility Limited Flexible
Related Article
VoIP vs. Landlines: Which Is Right and Better for Your Business?
Types of VoIP Technologies + How They Work
Hosted VoIP for business
A hosted VoIP phone system consists of many devices, including smartphones, to provide unified business communication. This is packed into a cloud phone system or a “cloud PBX.”
Administrators can manage the permissions and features for each employee along with more sophisticated VoIP features with an online interface.
When an employee calls a customer, they pick up the handset and dial them just as they normally would. The IP phone (or app) travels through your Local Area Network (LAN) switch and business router before reaching the VoIP service provider. From there, the VoIP provider establishes the call.
If the network path to the called party supports a digital voice signal, then the call quality is upgraded to high definition. Otherwise, a VoIP provider connects the call over the Public Switched Telephone Network.
Using a hosted VoIP system in your business is that simple. However, for established businesses with a more sophisticated phone system, there are different needs.
If the office uses a PBX, you probably also pay for trunked telephone lines. These trunked lines handle voice calls from the PBX to the phone company — and they’re not cheap!
SIP trunking for PBX phone systems
In some cases, companies are locked into their hybrid phone system due to the costs of replacing hardwired phone lines in every office. Since VoIP uses the Session Initiation Protocol , it can be used to establish multiple lines of calls through the internet.
You’ll see in the diagram below SIP trunks accept calls from the VoIP provider. Inbound and outbound calls are funneled in much the same way until they reach the business location and are hardwired into a PBX.
Like old-school analog circuit switches, the “trunk” acts as a switch to control and funnel data.
The most significant benefit for large and small businesses alike is if they have a hardwired telephone system on site. SIP Trunking allows you to mix analog phone systems and new VoIP solutions to eliminate redundancy.
SIP Trunking provides multiple channels of voice service on-demand for any IP-based PBX.
A SIP Trunk can either be metered or unmetered for $15–$25 each month. They aren’t too hard to set up, either. Simply provide the SIP username and password to your PBX.
Mobile devices & Wi-Fi connectivity
Thanks to the meteoric rise of mobile devices in the workplace, unified communication is a requirement.
Employees are no longer tethered to their desks. Road warriors and remote staff can take business calls using nothing more than a VoIP app for their smartphones.
In some offices, Ethernet might not be a practical option. The speed of Wi-Fi has improved substantially, which has made way for Wi-Fi calling .
Keep an eye on your network congestion bandwidth utilization. You might need to adjust a few network settings for optimal performance.
