What is VoIP?

VoIP Definition

Voice over Internet Protocol (VoIP) is the transmission of phone calls over the Internet instead of using traditional telephone landlines.

Among other things, VoIP enables businesses to:

  • Reduce and consolidate IT infrastructure
  • Eliminate the need to pay a phone company for traditional phone lines
  • Save as much as 60-70% on phone bills
  • Enjoy advanced features that aren’t available with traditional business phone systems

To learn more about how VoIP works and how it can benefit your business, watch our free on-demand webinar “Understanding the Basics of VoIP.”

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D80 IP Phone for VoIP phone system

Benefits of VoIP

As we’ve mentioned, VoIP is more affordable, especially for international and other long-distance calls. In fact, one of the main advantages that VoIP brings is considerable cost savings since calls are often free.

VoIP also allows businesses to reduce their IT infrastructure by eliminating the need to maintain separate voice and data networks.

Another advantage of IP phone systems is what’s called Unified Communications (UC). As voice communications evolved, the idea to unify all of the office communications was the logical next step, so Unified Communications (UC) was born. Basically Unified Communications allows you to use an IP phone system to do more than just talk - you can integrate chat, conferencing, instant messaging, fax and more, all in one system.

Learn more about IP phone systems To learn more about each of these aspects of VoIP, take a look at our What is VoIP page.

History of VoIP

When telephones began being used in the late 1800s and early 1900s, they required the use of a switchboard and an operator who would relay calls to and from individuals. Each phone had a line running from it to a central location with a switchboard and an operator (or group of operators). Callers would pick up their phones, tell the operator who they were trying to reach, and the operator would quite literally “patch” them through to that person. This was the beginning of what was called a Public Switched Telephone Network (PSTN). As you can imagine, this was not a very scalable form of communication, but it was functional for the time. It wasn’t until later in the 20th century that touch tone buttons were used on telephones, eliminating the need for a third-party operator.

Fast-forward to the late 20th century, and the introduction of the Internet (as well as advances in telecommunications technology) forever changed the face of telephone communications. One of the most noteworthy milestones was in the 1990s when a company called VocalTec created a transceiver that ultimately enabled the possibility of internet phone service. As the Internet grew in popularity, and as broadband internet began to replace dial-up, VoIP technology also become more useful and popular.

In the late 1990s, our own Mark Spencer developed the open-source PBX software Asterisk, which sparked widespread interest and adoption among developers and entrepreneurs alike.

Since that time, VoIP has grown in population due to largely in part to its accessibility and low cost. Companies like Skype and Apple have also utilized VoIP technology to build popular consumer products that have helped change the way people communicate forever.

With modern technological trends such as cloud-based services being applied to VoIP phone systems, the outlook for growth of VoIP technologies is good.

What is VoIP?To learn more about how VoIP works and how it can benefit your business, watch our free on-demand webinar “Understanding the Basics of VoIP” Watch Now

VoIP Adoption

As bandwidth has increased, so has the demand for VoIP phone systems. Also, previous to VoIP, business phone systems were traditionally very cost-prohibitive for small businesses. So not only have larger companies made the switch to VoIP, but small businesses have adopted VoIP technology as well - which is partly why VoIP has become so popular and spread so far in recent years.

Another factor that has contributed to the increase in VoIP phone systems is the rising popularity of cloud-based technology.

With tools like Skype, Dropbox, and Google Drive, more and more people are understanding and utilizing the cloud for their technology needs.


How does VoIP work?

Most businesses today have an internet connection coming into their building or physical location. And if you don’t have VoIP already, you probably also have a second connection that comes into your building that delivers your phone service. These phone lines could be analog lines (like old house phones) that deliver either one phone line per call or phone number. Think about the phones you’ve seen with a button for each line on the phone, and several lines running to the phone for each line.

Your analog lines could also be digital lines (which are called PRI, T1, etc.), which allow one line coming into your building that can be divided into 23 or 24 calls per each line. So digital lines could hold more calls per line, and they were popular before VoIP, and still remain in many businesses today. Which brings us to the “new way” to connect a business phone system that’s gaining more and more steam today.

With VoIP, instead of having two different types of lines coming into your office - one for phone and one for internet - you now have one network that can support both. So you don’t need analog lines anymore, you can take advantage of your existing internet connection.

By using your internet connection for both phone and internet, you can save money, deployment time, and management hassles.

The technology behind VoIP converts your analog voice into digital packets which are then sent across Local Area Network (LAN) and/or Wide Area Network (WAN) to their end destination using your internet connection and the Internet Protocol (IP).

There are basically 3 “parts” of the VoIP pie:

VoIP and SIP Trunking

SIP Trunking

If you want to make calls over your existing internet connection instead of analog phone lines, you’ll need to first pay a SIP provider to provide what’s called SIP trunking - the method by which phone lines are accessed over the internet - for your existing internet connection.

SIP providers give access to phone lines over the internet, similar to how phone companies charge for analog phone lines, but SIP service is significantly less expensive. You can sometimes see as much as 60-80% savings using a SIP provider over a traditional phone company.

Unified Communications and VoIP

Unified Communications

While VoIP refers to taking calls over the internet as opposed to analog phone lines, Unified Communications refers to the actual phone systems that are used to take advantage of VoIP. Think of VoIP as the “service”, and Unified Communications as the “device” that delivers that service (VoIP) and the features it's capable of.

To elaborate on that a bit, think of your mobile phone. You likely have a cellular service that is provided by a company like Verizon, AT&T, etc. and then you have your actual mobile device (iPhone, Samsung, etc.) that uses that service. Similarly, VoIP is the service that is provided by a VoIP or SIP provider, while Unified Communications is the actual device with all the cool features.

What is a VoIP cloud phone system

Cloud Phone Systems

Cloud phone systems are the same as Unified Communications, but everything exists in the cloud, instead of sitting on your desk with physical lines plugged into it. With cloud-based phone systems, there is no hardware on-site at your physical location; everything is instead managed through a web interface, which saves you even more time and money if you’re a growing or mobile business.

Next Step:

To learn more about how VoIP works and how it can benefit your business, watch our free on-demand webinar “Understanding the Basics of VoIP

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