By now, you’ve heard about VoIP, which is short for Voice over Internet Protocol. Originally launched on  the internet in 1995, it’s an understatement to say that VoIP has changed the way we communicate. 

In this post, we’ll explain how VoIP phone systems work, including all the ins and outs about making  phone calls over the internet. Even if you consider yourself a beginner or a seasoned business leader,  you’ll learn a great deal about what you need to know about internet phone service, including: 

  • What is VoIP? 
  • How Does a VoIP Phone System Work? 
  • Why Do Businesses Use VoIP? 
  • Top VoIP Phone System Features 
  • VoIP Phone System Requirements 
  • Selecting the Right VoIP Phone System

What is VoIP?

Voice over Internet Protocol 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. A  VoIP service provider sets up the call between all participants. On the receiving end, the digital data is  then uncompressed into the sound that you hear through your handset or speakerphone. 

People opt for VoIP because they can make phone calls without any telephone service, which saves  them on long-distance charges. 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. 

To call someone using VoIP, you need a SIP-compatible desk phone or a VoIP calling app, which means it  is assigned an IP address so that calls can be made from your network. Unlike landline phones, they are  capable of high-definition (HD) phone calls. 

How Does a VoIP Phone System Work?

A VoIP phone system is a technology to make phone calls through your internet connection instead of a  regular landline or a mobile network. A VoIP system converts analog voice signals into digital signals  over your broadband connection. A VoIP server is used to connect calls to other telephone networks. 

As long as you have a high-speed internet connection, which includes a router and modem, you are  ready to use a VoIP. A typical VoIP configuration involves a desk phone and a SIP server, which is  typically a VoIP service provider. It works even better than your traditional landline phone because it  offers many more features than what analog phone service could ever provide. 

Since VoIP runs over the internet, your data is stored securely in the cloud. You can manage the VoIP  system through an online dashboard. This dashboard allows users to adjust contacts, business phone  numbers, call forwarding, and add new phone numbers. 

You probably already pay for internet service regardless of which phone system you use. Cable and fiber  broadband makes it possible to use internet phone service to cut out the costly telephone company. It’s  also much easier to add new features that essential to your business needs. 

Why Do Businesses use VoIP?

For a business application, VoIP is an ideal solution to provide employees reliable phone service, and the  price is competitive with traditional systems. But one of the top reasons VoIP has far outpaced  traditional phone service is the flexibility and professional calling features. 

Instead of having a server room with an on-premises PBX (Private Branch Exchange), all you need are  configured VoIP desk phones. Don’t worry, if you have a PBX, you can still benefit from VoIP technology.  We’ll get to that in a bit. 

Hosted VoIP for Business

A hosted VoIP phone system consists of many devices, including smartphones, to provide unified  business communication.

Diagram of a Hosted VoIP Infrastructure (2019) 

This approach is known as 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 (PSTN). 

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 to replace  hardwired phone lines in every office. Since a 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 it reaches the business location and is hardwired into a  PBX. Like old-school analog circuit-switches, the “trunk” acts as a switch to control and funnel data.

SIP Trunking in a VoIP Business Phone System

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 into 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. For road warriors and remote staff, they can take  business calls using nothing more than a VoIP app for their smartphone. 

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. While a CAT 5e or CAT 6 connection is optimal, employees can go  completely wireless and take calls around the office if you have a strong Wi-Fi signal throughout. 

Keep an eye on your network congestion bandwidth utilization. You might need to adjust a few network  settings for optimal performance.  

Can I Use My Existing Phone With VoIP? 

To use your existing analog phone with VoIP by using an Analog Telephone Adapter (ATA), which can  retrofit existing phones with more features and capabilities. In many cases, it may be more desirable to  use a SIP phone because of its native functionality to work with VoIP services. 

Did you know that your fax machine may not work correctly on VoIP? It’s true. Since VoIP compresses  and uncompresses the audio over the line into a digital format, the codecs clip little bits along the way  for maximum reliability. You can also use an ATA specifically designed for fax machines that can provide  full functionality with VoIP. 

Pro tip: You might not even need a fax machine since you can send and receive faxes with a commercial,  cloud-based fax service. 

How Much Does a VoIP Phone System Cost?

A VoIP phone system costs between $20 and $40 monthly per line. Depending on the number of users,  commitment, and features, your costs could be less. A decent IP phone starts at $125, but they can also  be leased for as low as a few dollars each month. The total cost of a VoIP phone system should factor in  phones, accessories, service, and any one-time setup costs.  

Top VoIP Phone Features

In addition to some serious cost savings, extensive phone features are another important motivation  why so many companies switch to VoIP. Here are the top features offered in most VoIP phone systems: 

Unlimited Calling –

Call any phone in the United States and Canada as much as you want. No minutes to  track. Instant savings.

Online Faxing –

Send and receive unlimited faxes, just like email. No hardware or wires. Faxing is finally  easy and straightforward. 

Auto Attendant –

Greet callers instantly when they call and direct them to the right person. Give your  company an excellent first impression from the moment they call.

Call Queues –

Handle calls when your team is busy. Callers wait in line for the next agent. You and your  customers will love it.

HD Voice Quality –

Get superior sounding phone calls. The g.722 codec is engineered to eliminate  annoying static for vibrant conversations.

Conference Lines –

Use a dedicated conference line for meetings with up to nine participants. Meet,  moderate, and record in HD.

Voicemail-to-Email –

Get voicemail messages delivered to your inbox. Listen to voicemails and respond  through your email. 

Smartphone App –

Answer business calls from on the go. Never miss an important call again. It’s  available free for iOS and Android devices.

Real-Time Presence –

See who’s available to receive calls and chat messages. Live status updates are  accurate and straightforward.

Team Collaboration –

Chat with your team on one system. Flawless video and screen sharing enables you  to get work done faster.

Text Messaging (SMS) – 

Send and receive text messages with customers. Perfect for quick updates and  appointment reminders.

CRM Integrations –

Optional integration you can use with your current CRM. Boost productivity with a  deeply integrated workflow. 

These are just the tip of the iceberg when it comes to our VoIP features. If your company has a contact  center, you should focus on these call center features to achieve faster ROI. 

VoIP Phone System Requirements-

Thinking about setting up a VoIP phone system in your business? How can you make sure your business  is ready?

Network Bandwidth-

You’ll need a reliable internet connection such as DSL, cable, or fiber from an Internet Service Provider  (ISP). The standard bandwidth required for VoIP is 100 Kbps per device. Depending on the type of data  and features you’ll use, you might need more bandwidth than the standard. 

Phones & Devices-

Another major factor is ensuring that you have the right devices in place.

You must have a SIP phone, a softphone, or an Analog Telephone Adapter to complete calls over VoIP.  

Here’s a quick summary of each:

SIP Phones –

All VoIP phones are SIP phones and vice-versa. They establish calls by using a VoIP service  provider. Nextiva offers a wide variety of VoIP desk phones that offer a ton of functionality for both  small businesses and enterprises.

Softphones –

If you don’t need a traditional telephone, you can just download an app to make VoIP calls  using your cellphone, laptop, or desktop. These VoIP applications keep your Caller ID separate because  the voice data is handled directly through your VoIP provider. 

Analog Telephone Adapters –

For the holdouts of analog phones, never fear. With an ATA, you can  retrofit your phones, so they function correctly over VoIP. They might not have all the conferencing  capabilities available, but they offer reliable service.

Selecting the Right VoIP Phone System-

Lastly, you need the right VoIP service. Partnering with a trustworthy provider ensures a reliable setup  and a pleasant experience. 

To select the best VoIP phone system, consider the following factors in your decision: 

  • Initial and monthly costs 
  • Reliability and uptime 
  • Availability and quality of customer service 
  • Longevity and reputation of the company 
  • Ease of use of the products and services 
  • Customer reviews and case studies