What is VoIP (Voice over Internet Protocol)?

Voice over Internet Protocol (VoIP) is a technology that allows phone service over the Internet by transmitting voice over Internet Protocol networks.

How does VoIP work?

Your VoIP phone or app turns your voice into small data packets.

These packets zip worldwide via the internet in less than a second! They go directly between your mobile phone and your VoIP provider.

Your Voice over Internet Protocol provider receives the packets and reassembles them, turning them back into the sound of your voice.

With VoIP solution, you bypass entirely regular phone lines. You only need a good internet connection (like DSL, cable, or fiber).

Here are the steps involved in this process:

  1. Your mobile device connects to your Local Area Network (LAN) router.
  2. When you dial the number you want to call, the IP phone tells the VoIP service provider to call that telephone number.
  3. Then, your VoIP service connects the call and exchanges data packets from your phone.
  4. VoIP converts these digital signals (converts your voice to a digital file) and sends them over the Internet.

This process goes back and forth until the call is ended.

Session Initiation Protocol (SIP) plays a crucial role in this process. SIP:

  • Establishes calls – SIP sets up a VoIP call between two devices.
  • Manages calls – SIP controls how the call functions –adding participants, putting calls on hold, or transferring them.
  • Terminates calls – SIP disconnects calls when they end.

What equipment do you need to set up Voice over Internet Protocol?

For a basic setup, you likely only need:

  • Subscription – Sign up with a business VoIP provider.
  • A device to make voice calls – A VoIP desk phone, a softphone app on your laptop, or a mobile VoIP app on your smartphone.

For larger businesses:

  • Dedicated switches or firewalls – These may be used for enhanced network management and security.
  • Analog Telephone Adapter (ATA) – This handy device lets you connect existing analog phones, fax machines, etc., to your VoIP system.

What are the advantages of Voice over IP?

Some of the advantages of using Voice over Internet Protocol include:

  • Lower costs – VoIP plans are often significantly cheaper than traditional landline service.
  • Simple integration – VoIP easily integrates with existing business tools like your CRM, email, and collaboration software. This streamlines your workflow and improves communication across your team.
  • High-quality sound – Thanks to advanced codecs and the reliability of modern internet connections, VoIP calls frequently surpass the quality of traditional phone systems, offering crystal-clear conversations.
  • Worldwide calls – VoIP makes international calls incredibly affordable, often with flat-rate plans or drastically reduced per-minute fees. This fosters global collaboration and opens new markets.
  • Added features like call recordings and custom caller ID – These features give you valuable communication insights. Call recordings are great for training or resolving disputes, while custom caller ID boosts your professional image.
  • Number portability – Switching to VoIP doesn’t mean losing your established business phone number. You can usually transfer your existing number to your VoIP provider, ensuring a seamless customer transition.
  • Flexibility – VoIP lets you take calls from anywhere you have an internet connection using a VoIP phone, mobile app, or softphone on your computer.  This is ideal for remote workers, business travelers, and teams that need to stay connected on the go.

What are the disadvantages of VoIP?

The primary thing to remember with VoIP is that your call quality depends on the strength and reliability of your internet connection. Here’s how to ensure a smooth transition:

  • Pre-VoIP network checkup – Thoroughly assess your internet speed and stability before switching. A high-speed broadband connection is ideal.
  • Troubleshooting tools – Use a VoIP quality test to pinpoint potential network issues like latency, jitter, or packet loss. These can impact call quality, so address them proactively.

With the proper preparation, Voice over Internet Protocol’s benefits far outweigh this potential disadvantage. A proactive approach to network optimization ensures clear calls, cost savings, and a wealth of new features.

Best VoIP phone system features

The best VoIP phone system features depend on your needs (business size, industry, etc.). However, here’s a breakdown of the features commonly considered highly valuable:

Auto attendant

  • Streamline customer incoming calls with customizable menus (“Press 1 for sales…”).
  • Direct calls to the right person or department instantly.
  • Easily update your options via a web interface – no technician visits needed!

Mobile and desktop apps: Work from anywhere

  • Don’t be tied to a desk – take and make calls on your laptop or smartphone.
  • Perfect for remote workers, sales teams, and anyone on the go.
  • Save on hardware costs by using headsets or existing devices.

HD call quality: Sound professional

  • Crystal-clear conversations thanks to advanced audio technology.
  • Impress clients and boost your company’s image.

Unified communications (UCaaS): All-in-One collaboration

  • Combine voice, video conferencing, instant messaging, and more on a single platform.
  • Improve internal teamwork and streamline communication.
  • VoIP is the perfect starting point for upgrading to UCaaS.

Call encryption and security: Protect your conversations

  • Keep your sensitive business calls secure from prying eyes.
  • Data is encrypted during calls and when stored, ensuring privacy.

Call recording: Never miss a detail

  • Record calls for training, quality control, or compliance purposes.
  • Get a basic recording or advanced features like sentiment analysis to identify customer pain points or sales opportunities.

What is the difference between VoIP and landline phones?

While landline phones use analog lines to carry voice signals and are hardwired into a physical location, Voice over Internet Protocol, as the name suggests, makes calls over the Internet and is not bound to a specific area.

FeatureVoice over Internet ProtocolLandline
TechnologyInternet (IP technology)Copper telephone lines
CostOften cheaper, especially long-distanceMore expensive, especially long-distance calls
Caller IDYesYes
Call waitingYesYes
Requires InternetYesNo
FlexibilityUse from anywhere with Internet connectionTied to a physical location
Reliability Depends on Internet qualityReliable, less affected by outages
Reliability during Internet/Power outagesCalls can be routed to another number or voicemailCalls drop or are routed to voicemail
Advanced featuresVoIPLandline
Phone number privacyIncludedVaries
Call queuingAdd-onAdd-on
Call encryptionYesNo
Integrations (CRM, text messaging, surveys)YesNo

Consider using VoIP if:

  • Your country plans to discontinue landline phones
  • You often experience bad call quality
  • You need advanced features
  • You are employing remote or hybrid workers
  • You are paying too much for external calls
  • You’re paying too much for long-distance international calls

How to choose a VoIP provider?

Choosing the right VoIP provider is essential for getting the most out of the technology. Here’s a step-by-step guide to making an informed decision:

1. Define your needs

  • Type of use – Are you using VoIP for personal use, for a small business, or a large enterprise?
  • Number of users – How many people will need phone lines?
  • Call volume – Do you expect a high volume of inbound or outbound calls? Long calls or short ones?
  • Specific features – List must-haves (call forwarding, voicemail, etc.) and nice-to-haves (video conferencing, CRM integration, etc.)

2. Research providers and plans

  • Explore options – Check popular providers and find the one that suits you.
  • Compare plans – Look for plans that align with your needs and budget. Check for hidden fees or limits on minutes.
  • Read reviews – See what other users say about a provider’s reliability, customer support, and overall experience.

3. Evaluate key factors

  • Reliability and uptime – Look for providers with a strong track record of uptime (99.99% or higher is ideal) and minimal outages.
  • Features – Does the provider offer the features you need at the price point you’re considering?
  • Call quality – Prioritize providers known for excellent call quality and minimal latency.
  • Customer support – Choose a company with responsive, 24/7 support if you encounter issues.
  • Security – Ensure the provider prioritizes encryption and other security measures to protect your call data.
  • Scalability – Pick a provider that allows easy line and feature addition if you expect growth.

4. Additional considerations

  • Contracts – Be aware of contract lengths and termination fees.
  • Hardware – Do you need to purchase VoIP phones, or can you use existing ones? Does the provider offer hardware options?
  • Trial periods – Use free trials to test the service if possible.
  • Integrations – If you use other business software (like CRMs), ensure the VoIP provider offers seamless integration.


  • Request quotes – Contact a few providers directly to get customized quotes and understand their pricing structure.
  • Ask questions – Don’t hesitate to ask about anything unclear – reputable providers will be transparent.

Analog to digital: The history of VoIP

Early foundations

1920s-1940s – Homer Dudley of Bell Labs invents the Voder, an early voice synthesizer. This marks fundamental research into how voice could be manipulated electronically.

1969 – ARPANET, a precursor to the Internet, is established. This lays the foundation for sending data – including voice–over networks.

1970s – Researchers began exploring using internet protocols to connect phone systems. 

1973 – The first experimental transmission of voice data over ARPANET takes place. While rudimentary, it proves the concept is possible.

The high cost of long-distance calls sparked the development of real-time digital voice networks, enabling people to have conversations over early data networks.

First commercial VoIP applications

1989-1991 – Speak Freely, the first public domain internet voice application, is released, allowing simple calls between computers.

1995 – VocalTec launches Internet Phone, the first commercial Internet phone software. This marks a significant breakthrough in bringing VoIP to the masses.

1996 – VoIP standards begin to develop, with companies like Intel, Microsoft, and others initiating standardization activities.

Widespread adoption and growth

Late 1990s – VoIP gains popularity for bypassing expensive long-distance fees. Quality improves but needs to be more consistent.

2003 – Skype is released, drastically increasing VoIP adoption due to its user-friendly interface and free user calls.

2004 – The FCC (Federal Communications Commission) weighs in on VoIP regulation, which helps shape how providers operate.

2005-2010 – Mobile VoIP and smartphone integration accelerate—VoIP quality rivals traditional phones.

Integration and innovation

Video conferencing, collaboration tools, and deep integrations with other business software become common in VoIP systems.

VoIP has revolutionized communication, mainly replacing traditional analog phone lines. By transmitting voice calls digitally over the internet, VoIP offers significant benefits: lower costs, enhanced features, and unparalleled flexibility compared to legacy landline systems. It’s now a cornerstone of modern business communication.

Technical voice over IP terminology

VoIP integrates protocols and standards, ensuring successful call connections and exceptional voice quality.

Codecs (Compressing and decompressing voice data)

  • G.711 – The standard codec for uncompressed, high-quality audio in VoIP. Requires more bandwidth.
  • G.729 – A popular codec compresses audio data by balancing call quality and bandwidth efficiency.

Network transport and reliability

  • Codec – Software or hardware that compresses and decompresses digital audio or video data for efficient transmission. Examples include G.711, G.722, G.729.
  • Jitter – Variation in the delay of received data packets. High jitter can cause choppy audio.
  • Latency – The delay in data transmission. High latency causes noticeable gaps in conversations.
  • QoS (Quality of Service) – Mechanisms to prioritize specific types of network traffic, such as VoIP data, to ensure call quality.
  • RTP (Real-time Transport Protocol) – RTP delivers audio and video over IP networks. It provides timestamps and sequencing for proper playback.
  • SRTP (Secure Real-time Transport Protocol) – Encrypts RTP packets, ensuring secure voice and video calls.
  • TCP (Transmission Control Protocol) – Provides reliable data delivery. Used for some VoIP signaling, not real-time audio (which primarily uses UDP).
  • UDP (User Datagram Protocol) – An underlying transport protocol used by RTP. It’s fast but doesn’t guarantee reliability (which is okay for real-time voice, where a slight delay is preferable to missing a word entirely).


  • H.248 (Megaco) – A protocol for controlling media gateways, often used with other signaling protocols.
  • H.323 – Older signaling protocol is still in use, but SIP is dominant in modern systems.
  • SIP (Session Initiation Protocol) – The most popular signaling protocol for VoIP. It handles setting up, managing, and terminating calls.
  • SIP Trunk – A virtual version of a traditional phone line, delivered over the internet by a VoIP provider.


  • SRTP (Secure Real-time Transport Protocol) – This protocol provides RTP traffic encryption, message authentication, and replay protection.
  • TLS (Transport Layer Security) – A protocol that encrypts SIP signaling messages to prevent eavesdropping and tampering.

Devices and infrastructure

  • ATA (Analog Telephone Adapter) – A device that connects standard analog phones to a VoIP network.
  • PBX (Private Branch Exchange) – A business phone switching system. Traditionally, physical hardware is now often virtualized as IP-PBXs.

Additional capabilities

  • T.38 – Standard for reliable fax transmission over IP networks.
  • XMPP (Extensible Messaging and Presence Protocol) – Originally used for instant messaging, but can provide presence information (user availability) and contact list management in VoIP systems.


Mar 18th, 2024
9 min read

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