What Is a VoIP Phone? An Introductory Guide 

What are VoIP Phones, and how do they work?

What Is a VoIP Phone - An Introductory Guide 
Unified CommunicationsInsights

Published: March 17, 2023

Rebekah Carter - Writer

Rebekah Carter

What is a VoIP phone? Most people in the business and communications landscape are already familiar with “VoIP”, which stands for Voice over Internet Protocol. However, even as companies evolve and digital transformation continues to accelerate, many organisations still don’t fully understand why VoIP is valuable or how it works.  

Once considered the “next generation” of calling technology, VoIP has become a mainstay of most business landscapes. Currently, the market is expected to reach a value of around $354.7 billion by 2032, growing due to new workplace trends and the impending PSTN switch-off in 2025. 

VoIP empowers companies to move away from legacy communication tools into a world of cloud and internet-based interactions. Here’s everything business leaders need to know. 

What is a VoIP Phone? Voice Over Internet Protocol 

VoIP, or Voice over Internet Protocol, is a form of modern phone system which leverages an internet connection to power interactions rather than relying on traditional landlines.  

VoIP was introduced as an alternative to the traditional “POTS” (Plain Old Telephone Service) offered by telecommunications vendors. Users don’t need any copper wires or phone systems to begin conversations. All that is needed is a VoIP service provider, an internet connection, and a phone.  

So, what are VoIP phones? 

VoIP phones are any device or solution which enables VoIP calling. VoIP phones can come in both hardware and software variations. Hardware solutions are similar to a standard desk phone, though they may include some unique features, like a screen where users can browse through contacts or interact with a UCaaS tool such as Microsoft Teams.  

Software solutions, or “softphones”, are VoIP applications which can be integrated into existing tools, such as smartphones and tablets. Softphone clients generally offer similar capabilities to hardware-based phones, such as call conferencing, transfer, and voicemail. However, some can provide additional capabilities like video conferencing and instant messaging.  

Most VoIP phones will enable users to access a range of calling features, including global reach for contacts, as well as speakerphone accessibility, and the ability to access files, images, and other data during calls. In some cases, traditional “analogue” phones can be converted into IP VoIP phones through the use of an analogue telephone adapter, or ATA. Ethernet cables are plugged into the ATA, which can then be linked to the phone solution.  

How Do VoIP Phones Work? Features and Functionality 

VoIP phones convert voice calls into digital signals or data packets, which can be transferred through an IP network (the internet). A VoIP phone can be either a physical device using VoIP technology or a virtual phone application installed into an internet-connected device.  

For VoIP phones to work, they need to be assigned IP addresses using the Dynamic Host Configuration protocol. VoIP phones also need access to a server to transmit information through the internet. VoIP systems use a few common technology standards and protocols, such as H.323, for transferring data, video, and audio across networks.  

SIP networks are used to manage multimedia sessions between two or more participants, and RTP (Real-Time Transport Protocol) helps to carry digital voice packets in a streamlined and reliable format through the internet.  

The main capability of a VoIP phone is that it allows calls to be made through IP networks like the internet. IP phones can also include capabilities typically not available in traditional analogue phones, such as options for messaging, video conferencing, online faxing and more. 

The exact capabilities of a VoIP phone can vary from one provider to the next. However, many of these tools include access to omnichannel communication capabilities, speech-to-text transcription, voicemail, call recording and logging, conferencing, and auto attendants.  

Many VoIP phones may also feature call routing capabilities, call recording, call analytics, mobile and local number porting, and mobile or desktop apps. Most VoIP phones on the market today can also integrate with other software solutions for UCaaS, collaboration, and CRM functionality.  

The Benefits of VoIP Phones 

Compared to traditional phone systems, VoIP solutions offer a modern way to access the internet to manage calling and communication data. Thanks to the use of the internet as the primary avenue for communication, VoIP phones are often a lot less expensive to manage and deploy than their traditional counterparts. However, they rely heavily on the quality of the internet connection leveraged by a business.  

The primary benefits of VoIP phones include the following: 

  • Cost savings: Many companies can save money on calling costs by switching to VoIP services. There’s no need for any initial setup expenses, and maintenance costs are often greatly reduced. IP phones also allow for more affordable international and long-distance calls, as connections are often charged at the local rate for the call’s destination.  
  • Simplicity: Most VoIP phone solutions are extremely straightforward and user-friendly. They’re easy to set up without the need for additional support. Additionally, they offer exceptional scalability, with the option to add new features and unlock different functionality options remotely. Adding new phones to a VoIP system only requires a couple of clicks.  
  • Flexibility: VoIP solutions can offer companies access to a wider range of features than a standard phone system, such as call routing capabilities, SMS, video conferencing, and messaging. Additionally, VoIP doesn’t tie a user to a specific location. This means users can continue to access the same features wherever they are, using softphone technology.  
  • Integrations: Most VoIP phones can integrate with a range of other business applications to provide companies with a more comprehensive environment for communication management. Companies can link their CRM software to VoIP phones to manage customer service. There’s also the option to align phones with existing collaboration and workforce management tools. 
  • Security: The majority of VoIP phone providers will offer additional security and privacy features to provide companies with peace of mind. Conversations are generally encrypted, and data can often be stored according to the company’s specific preferences. Additionally, VoIP providers take extra steps to ensure uptime is maintained for users worldwide.  

As an added bonus, while traditional business phones are static and somewhat restrictive, VoIP phones can evolve to suit the needs of any business. As companies expand overseas and into different territories, they can continue to access the benefits of VoIP technology.  


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