What is VoIP, how does it work, and why is it beneficial for today’s business leaders?
VoIP has become a relatively commonplace term in the communication industry.
The rise of cloud-based comms, hybrid and remote work, and UC has accelerated the need for more advanced IP-driven communication systems. VoIP, or Voice over Internet Protocol, allows users to reduce their reliance on traditional telephony systems and landlines.
VoIP transfers audio data and other content over the internet, allowing for greater scalability, call quality, and reduced costs. By 2032, the market for VoIP is expected to reach a value of $108.5 billion as companies look for ways to reduce operational costs and improve efficiency.
With the impending switch-off of the PSTN and IDSN services on the horizon, this tech is quickly becoming an essential part of the communication stack.
What is VoIP? A Definition
VoIP stands for Voice over Internet Protocol.
VoIP is a phone system that uses an internet connection to process (make and receive) calls rather than relying on traditional landlines. It’s basically a digitally transformed alternative to the old-fashioned telephone system.
While the history of the tech began in 1995, demand for VoIP technologies has increased drastically in recent years. Companies now need cloud and internet-based phone systems to align and synchronize global and distributed teams without excessive expense.
The tech also offers an essential alternative to the traditional PSTN and IDSN lines offered by telephone companies, which soon won’t be available in many parts of the world. Instead of relying on landlines, VoIP allows anyone with an internet connection to make and receive a call.
For today’s hybrid and remote workers, VoIP also eliminates the need to be tied to a desk or physical copper wire. All companies need to do to deliver high-quality voice to their teams with VoIP is choose a reputable provider and maintain a strong internet connection.
What’s the Difference Between VoIP and Landline Phones?
So, what’s the difference between VoIP and a standard landline?
Landline or traditional phones are hardwired to a physical location. Conventional phone lines rely on a massive network of interconnected wires to transmit signals worldwide. VoIP replaces this “physical” web with the digital web, using the internet to share information.
VoIP phones aren’t bound to a specific location, and users can access their phone systems using various tools, from softphones or apps to desk phones and headsets.
Here’s a quick insight into the difference between Voice over Internet Protocol and landline phones in terms of functionality.
| Functionality | VoIP phones | Landline phones |
| Phone calls | Yes | Yes |
| Long-distance calling | Yes | Optional on some plans |
| User-to-user calls | Yes | PBX needed |
| Call Waiting | Yes | Yes |
| Caller ID | Yes | Yes |
| Simplicity | Easy to set up with a VoIP provider | Can be complicated to install wires and cables. |
| Internet connectivity | Required | Not necessary |
| Wireless connectivity | Wi-Fi, DECT, and Bluetooth headsets and phone systems | Some Bluetooth and DECT phone systems and headphones. |
| Technology | IP (Internet-based) | Analog signals (wires) |
| Call quality HD | HD quality controls | Variable quality |
| Auto attendant | Yes | PBX needed |
| Privacy and security features | Yes | Varies |
| Number control | Yes | Available at a cost |
| Phone extensions / hunt groups | Yes | With a PBX |
| Conferencing | Yes | Varies |
| Call encryption | Typically included | Not usually included |
What is VoIP? How Does VoIP Work?
VoIP might seem like a complex concept, but the functionality is quite straightforward. Voice over Internet Protocol systems convert voice and telephone call data into digital files. These data packets are compressed using codecs and transferred over the internet.
A reliable VoIP system can send phone call data through the internet in small packages in a fraction of a second, minimizing connection lag. VoIP solutions use quality-of-service tools to prioritize voice traffic over non-latency-sensitive tasks and improve voice quality.
They also leverage tools like IP branch exchanges (PBX) to manage devices, features, clients, numbers, and gateways, and to provide users with local survivability in the event of a network outage. Some VoIP vendors also offer session border controllers for security, location-tracking databases for E911 call routing, and priority routing tools.
By eliminating the need for circuit switched networks, VoIP instantly reduces infrastructure costs and provides greater flexibility to business owners.
What Equipment Do VoIP Systems Use?
VoIP phone systems often require much less initial investment than a traditional phone system. However, there are still a few things most companies will need to invest in, such as:
- An internet connection and router: At least 90-156kbps for strong call quality
- Compatible devices: Desk phones, smartphones, desktop computers, tablets, or laptops
- Accessories: Phone systems or microphones and headsets
- Cables: PoE adapters and ethernet cables for VoIP over Ethernet
- Analogue telephone adapters: A solution for connecting analog phones to VoIP systems
- VoIP gateways: A software gateway for converting analog signals into SIP packets
What are the Features of a VoIP System?
The exact features offered to a business for a VoIP system can vary depending on the provider chosen. However, most VoIP systems include IP PBX tools, gateways for linking networks, call policy management software and session border controllers.
Most modern vendors also offer access to features like:
1. Auto Attendants and IVRs
Auto attendants can answer calls and direct diallers to the correct extension automatically. They can also forward calls to a voicemail or a mobile device outside business hours. IVRs, or Interactive Voice Response systems, offer similar functionality.
However, with IVRs, the system uses voice prompts, speech recognition, and sometimes even natural language processing to assess a caller's needs and route them accordingly.
2. Softphones and Hard Phones
Users of a VoIP system can access their telephony features by using a traditional desk phone or an app for a mobile device or computer. These apps are known as “softphones” or software phones, allowing users to interact with phone capabilities anywhere with an internet connection.
Softphones have become particularly popular in the age of remote and hybrid work, but there’s continued demand for desk phones in some professions.
3. Call Quality Features
Most VoIP solutions offer a higher voice quality than a traditional landline phone. These systems can use quality management tools to prioritize voice traffic in a network. Some vendors also use intelligent features to minimize echo and voice distortion.
Accessory vendors also create specialist headsets and softphones with integrated technology for improved audio experiences.
4. Voicemail
While some standard landline phones feature voicemail, most of the voicemail capabilities on VoIP phones and systems can be more advanced. Some VoIP vendors offer access to customizable voice recordings and speech-to-text options for transcribing voice calls.
5. Advanced call controls
Call control capabilities built into Voice over Internet Protocol systems include various ways to manage calls and contacts, such as intelligent call forwarding, find me/follow me functionality, and secure caller ID. Specific solutions can also offer hunt groups, phone extensions, and routing capabilities.
6. Conference calling
Most VoIP calling systems support multi-user conferencing. While it’s sometimes possible for three people to share a call on a landline, VoIP goes beyond these limitations. Participants can engage in extensive, group-wide calls through apps and systems.
7. Call Routing
Another popular feature among VoIP systems is call routing. Routing is crucial in the contact center to ensure customers are sent to the right agent based on their needs. Different VoIP and UC systems offer other routing options. Solutions include list-based routing, round-robin routing, time-based routing, intent-based routing, and more.
8. Call Recording
Call recording is often essential for compliance, call monitoring, and quality control. Most VoIP solutions can offer compliant call recording capabilities with various options. Some can even allow users to choose whether to record calls manually or automatically, and whether to omit specific personal details from call recordings.
Some companies even offer call recording services with built-in AI functionality for transcription and translation.
9. Number Management
VoIP lines can route calls to various numbers, including existing landlines, mobile, and virtual numbers. Most VoIP providers will allow companies to port their existing numbers into a VoIP system or purchase new numbers. Options can range from local geographical numbers to toll-free numbers.
10. Call Security Features
VoIP security and protection against call fraud are often major concerns for business owners. Telephone calls can often include personal information, whether HR personnel discussions or customer interactions. Phone service providers use encryption to protect criminals from accessing your calls and other security measures, like session border controllers.
