VoIP Service And Phone Systems

VoIP. Voice over Internet Protocol.

You know it is a type of phone service, but how does it work and why is it fast becoming the choice in business phone service?

A VoIP phone service can save you money—money that you can spend on growing your business.

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The Basics

VoIP became popular once high speed internet was an accessible commodity.

In 2011, Ibisworld Research reported that VoIP was the fastest growing technology of the past decade based on revenue growth from 2000-2009. Since 2011, the market has seen rapid growth among residential and business customers who are looking to switch from traditional wired phones. VoIP’s popularity will continue to increase as the demand for fast, reliable phone (and internet) connections in the business sector increases.

What is VoIP? 

VoIP stands for Voice over Internet Protocol. Simply put, VoIP is phone service over the internet. Technically speaking, VoIP takes traditional analog audio signals and converts them into digital signals that are sent over the internet. These protocols are the rules that make for orderly communication. And VoIP, also called IP telephony (IPT), utilizes the same protocols that the internet uses.

In fact, you are already paying a monthly fee for internet service. Why not use that same internet connection to place phone calls? Using VoIP software to make calls over the internet bypasses traditional phone companies and the fees they charge.

Bonus: VoIP service providers typically offer lower rates than traditional phone companies.

  • VoIP systems only require an internet connection and a device for making calls.
  • A good internet connection is necessary.
  • Business VoIP often has integrated 3rd party applications for contact/voice management, increasing flexibility and convenience for the user.
  • Business VoIP is feature-heavy giving it an advantage over POTS.

How Does VoIP Work?

To make a VoIP call, a phone is connected to an internet cable rather than a phone line.

VoIP enables traditional telephony service to operate over computer networks using packet-switched protocols. A codec (coder-decoder) converts audio signal into compressed digital packets and then back into uncompressed audio signal. These packets include both the caller and receiver network addresses and travel on a VoIP compatible network. A digital packet can carry more information over the network than traditional telephony, s the quality of the line is better.

A traditional telephone line cannot distinguish between voice communication and silence; therefore, it requires a constant connection. The notion of transmitting only the useful, audible parts of a phone call is the basis of packet-switching and VoIP. VoIP makes connections to send and receive information ONLY as needed. By transmitting data in packets and only doing so when necessary, the speed of data transfer is increased. Additionally, a VoIP network sends a call in packets and finds the least congested route available to keeps your computer or phone free to send and/or receive other messages and calls. You will find that traditional phone companies even use VoIP to streamline their networks in order to reduce the bandwidth they are using.

If your internet service maintained a constant connection, your connectivity speed would be incredibly compromised (in other words, slow!). Data networks only send and retrieve data as you need it and that’s exactly what VoIP does with your voice data.


The basis of POTS (plain old telephone service) is circuit-switching. To make a call, a connection between callers must be maintained in both directions for the duration of the call. Connecting two points in both directions creates a circuit. Circuit-switched POTS routing is less dynamic. So, if a line is down, then a call cannot be completed. POT relies on the method of connecting calls know as circuit switching. For example, making a 30-minute call using circuit-switching requires the circuit between two phones to be continually open.

The basis of VoIP is packet-switching. VoIP converts analog data into digital packets. With packet-switching, VoIP can establish multiple routes to complete a call. That means if one line is down, the packet can move to another viable route.

To summarize, circuit-switching maintains a continuous, open connection and packet switching opens connections briefly to send data packets. Because of this, VoIP is more dynamic than POTS. It is interoperable, meaning it works well over all kinds of networks. And, it is very portable, meaning it is compatible with an IP-enabled device like an IP phone or computer.

Types of VoIP Connections

There are 5 types of VoIP connections. This variety in connectivity means that consumers can find the right fit, the right features, and the right cost for their usage. All VoIP connections require registration with a provider. There are some options that don’t require additional hardware to use VoIP services.

  1. ATA (analog telephone adapter). This is the most common way of using VoIP. A traditional phone is plugged into the ATA, the ATA is plugged into your computer, and the computer is connected to the internet. Your phone receives analog voice signals which are converted to digital signals over the internet. ATAs may need software to be installed on the computer in order to operate smoothly. While ATAs are dependent on electricity, some devices will automatically default to landline service if there is a power outage.
  2. IP Phones. These look like traditional phones, but instead of plugging an IP phone into a wall jack, it is plugged into your router/Ethernet. IP phones have the advantage over ATA since you don’t need your computer to plug in your phone and specialized VoIP software is already built into the handset.
  3. Computer-to-Phone. This type of connection uses a VoIP provider’s service to connect to an out-of-network phone. This means digital data is converted to analog that is then sent over traditional phone lines. This also works in reverse, allowing a PSTN phone to call someone using a computer as a phone.
  4. Computer-to-Computer. This is the simplest and cheapest VoIP option and includes all devices that use digital data and run an operating system including tablets, laptops, desktop computers, and smartphones. Calls are free and set-up fees are free or cheap as well. A computer-to-computer connection is an easy way to make both phone and video calls. All you need is internet, audio hardware (microphone and speakers on your computer), and VoIP software (which is easily found for free on the internet). A computer-to-computer connection requires that you and the other caller have VoIP enabled devices.
  5. Mobile Softphones and Apps. These two types of connections offer increased mobility, ease of use, and feature-heavy service. A softphone is a program that is installed and runs on your computer. Note: the term ‘computer’ refers to any device that uses digital data to run an operating system. VoIP apps are available in various platforms such as Android and iPhone. Mobile softphones and apps are known for their simplified setup and added mobility.

VoIP Service vs. VoIP Apps/Software

VoIP is a technology that provides phone service over the internet. In technical terms, VoIP takes traditional analog audio signals and converts them into digital signals that are sent over the internet. T

A VoIP app is simply a piece of software that allows you to use VoIP to make and receive calls on any device–your computer, mobile phone, tablet, etc.

Most people use the terms VoIP and VoIP app interchangeably. VoIP apps allow for ease of unified communications and are fundamental for Cloud communication systems. In other words, VoIP software and VoIP apps are basically the same thing.

Requirements for VoIP Apps:
  • A computer or digital communication device.
  • An internet connection, with sufficient bandwidth for VoIP communication.
  • Earphones, speakers and a microphone (which are typically included in your device).
  • Registration with a VoIP service.
Types of VoIP Apps

You have a lot of choice when it comes to VoIP apps. Here is a quick categorization to help you understand all your options.

  • Free vs. Paid. Most VoIP apps are free. But for business purposes, you will want to pay for VoIP services. Paid VoIP offers enhanced communication and collaboration aids that ensure a high quality VoIP service for businesses.
  • PC vs. Mobile. Download requirements differ for the PC and mobile versions of VoIP apps. Make sure your VoIP provider offers a mobile app version and can support the mobile device you use.
  • Service-Based vs. SIP-Based. VoIP apps typically allow you to use the username or phone number provided when you initially registered your account. This is called service-based VoIP. However, there are 3rd party apps for the more tech-savvy consumer that are considered service-independent (SIP-based) meaning you can use them with any service. These SIP-based services us a SIP address and are supported by SIP protocol. SIP stands for session initiation protocol and is used specifically for internet voice communications. The advantage of SIP: you can use your own softphone app without being restricted to a service-based app.

Types of VoIP Service

Depending on your communication needs, VoIP offers a variety of services. The basic types of VoIP service include:

  • Home phone replacement service. Here, you are hiring a VoIP service to replace your traditional landline phone. You retain your existing phone by using an ATA.
  • No-monthly-bill service. With this VoIP service, you purchase hardware upfront to setup your own VoIP system. Then you can make unlimited calls.
  • Software-based service. A VoIP app/software is installed on your computer when you register for VoIP service. The app makes and receives calls on your digital device.
  • Mobile VoIP services. Software-based services designed to be used on mobile phones, tablets and other portable devices. Here, too, you need to install a VoIP app on your phone or portable device in order to use the service. Wi-Fi, 3G and 4G connections are used instead of cellular calling minutes. Read more on mobile VoIP services. (connect to link?)
  • VoIP for Business. Many companies use VoIP with intra-office calls through a VoIP network. Business VoIP is feature-rich to allow for efficient communication and workflow. Sound quality is comparable and often better than that of traditional phones. Business VoIP is also a cost-effective and reliable option for routing international calls.


VoIP Features

One of the main benefits of VoIP is that it is incredibly feature-rich.

The number of features that can be used to enhance communication is incredibly appealing to any business who wants more for their money. Compared to traditional phone service, VoIP enhances workflow and improves communication by using features that POTS cannot support. Below are some of the most popular features that VoIP offers. Some of these are included in the basic VoIP service package, while others are considered added features (with an added cost).

  • Auto Attendant. This feature replaces the need for a receptionist. It answers calls with an audible greeting from which the caller can select various options. For example, press 1 for sales, 2 for service.
  • Call Forwarding. Users can select the criteria with which a call is forwarded. Options include:
    • Forwarding Always—Calls are forwarded when you are away from your desk.
    • Forwarding Busy—Calls are forwarded to another phone when your phone is busy.
    • Forwarding No Answer—Calls are forwarded to another phone if the call isn’t picked up after a certain number of rings.
    • Forwarding Not Reachable—Calls are forwarded if your phone isn’t reachable for any reason.
  • Contact Integration. Consolidation and integration of contacts enhances workflow.
  • Music on Hold. Callers hear music while they are on hold.
  • Ring Groups. Employees have the ability to answer incoming calls for other group members.
  • Virtual Office Call Recording. Users can record their own incoming and outgoing calls, play them back, download, or delete them.
  • Voicemail to Email Messaging. Voicemail messages are forwarded to your email. You can listen to voicemail messages directly from your computer or mobile device.

What Affects Voice Quality?

The early years of VoIP brought issues with call quality and reliability. Many businesses shied away from VoIP.

Even though the services were cheaper, the money saving factor couldn’t overcome the issues of voice quality and reliability. Because traditional phone lines provided good quality service, the idea of sacrificing that quality seemed too big of a risk. However, dramatic improvements have been made in VoIP technology since its initial debut. Now, the quality of calls rivals, if not excels, that of POTS.

But still, the technology isn’t perfect. Here are some factors to consider when choosing VoIP:

  • Bandwidth. A strong internet connection is the key to high quality voice in VoIP calls. Dial-up connection? Don’t expect great things. Broadband connection? Just make sure it is not shared with too many data-heavy applications.
  • Equipment. Finding the right hardware that suits your usage is crucial. A VoIP service provider can guide you to the appropriate equipment based on your company’s size, usage and needs. VoIP equipment refers to the ATA, router and IP phones. Do your research. Or find a trusted provider. Here are a couple of things to consider:
    • When purchasing an ATA or router: What compression technologies are supported? Does it feature echo cancellation? What about a firewall and/or security protection?
    • When purchasing IP phones: IP phone frequency can interfere with other VoIP equipment. Phones may need to be changed to a lower frequency to work properly.
  • Weather Conditions. Occasionally, static electricity is generated on a broadband line due to bad weather such as thunderstorms, heavy rain, etc. This static can affect voice quality. The solution: unplug the hardware—ATA, router, or phone—and plug it in again.
  • Location of Hardware. The positioning of VoIP hardware can create quality issues. For example, if the ATA is too close to the router, it can create electrical feedback. That causes distorted calls, dropped calls and echo. The solution: move the ATA and router farther away from one another.
  • Codec. A codec (code/decoder) is a type of compression software that converts audio signal into compressed digital packets and then back into uncompressed audio signal. Each codec is designed for a specified use. Using a codec that is not suited to your needs will result in substandard call quality.

Advantages and Disadvantages of VoIP

Before making the switch to VoIP it is important to note the advantages and disadvantages of the service.

While the PSTN (public switched telephone network) is considered a proven system for transmitting calls, VoIP comes equipped with numerous advantages. When speaking to the disadvantages of VoIP, most hinge on reliability.

Advantages of VoIP

  • Free calls with internet connection. A standard internet connection is all you need to make free VoIP calls.
  • Flexibility in call location. Do you have a broadband connection? If so, you can make a call…from anywhere. VoIP’s use of internet gives the user flexibility in call location. Incoming calls are automatically routed to your VoIP phone wherever you have a connection.
  • Voicemail to email. VoIP users have the ability to have their voice messages sent to their email.
  • Efficient packet-switching. Packet-switching compresses data efficiently. The same space needed for one circuit-switched call can accommodate multiple VoIP calls.
  • Fast. VoIP reduces the size of each call which, in turn, reduces the transmission time of a call.
  • Cheap. Using a single provider for both voice and data will lower your cost. If you are already paying for internet, then by using that same service, VoIP calls could be considered free.
  • Feature-rich. Such features include: auto attendant, voicemail-to-email, call forwarding, contact integration and more. Learn More in the VoIP Features section. [link to section]

Disadvantages of VoIP

  • Need electricity. No power, no internet, no phone. Enough said.
  • Emergency call flaw. VoIP uses IP-addressed phone numbers. There isn’t a way to link a geographic location to an IP address. In case of emergency, the caller must know the physical location of the emergency when dialing 911.
  • Broadband can affect call quality. The same issues that arise with internet service also affect VoIP call/voice quality. These include latency, jitter and packet loss. Find out more: What Affects Voice Quality in VoIP Calls. [link to section]



VoIP calls can be made for free, but if you want high quality, reliable service, it will come with a cost. But remember: the price of VoIP is still cheaper than traditional landline service.

If your business makes frequent international calls, the savings you receive from VoIP could be the motivation you need to switch over from POTS. A starting price point for VoIP service averages approximately $20 per month per user.

Why is VoIP cheaper? Since VoIP uses the existing IP infrastructure to transfer voice, it’s as if you are getting two services (voice and data) for the price of one. However, the larger your business (the more lines you need), the less cost-effective VoIP becomes. VoIP calls are cheaper than traditional calls, but you need to look at the rate per minute and calculate your usage.

Additionally, be aware of these “hidden” costs that can affect the total price:

  • Taxes. Some VoIP services charge taxes and VAT on each call. Different tax codes can apply to different parts of the country. Ask your provider how much tax is charged per call.
  • Connection Fees. The amount of money charged for each call is called a connection fee. This fee will vary depending on call destination and the type of line to which you are connecting. Ask your provider how much they charge per connection.
  • Data Fees. When using VoIP through Wi-Fi or a wired internet connection, your calls are free. But, using VoIP on the go will require a data plan. Calculate how much data you plan to use on your mobile devices.
  • Hardware. Most VoIP services allow consumers to use their own device. But some services require ATAS or specialized IP phones. Ask your provider if you need to purchase equipment or if it is part of the monthly rental agreement.
  • Software. Some VoIP software isn’t free. For example, if you are looking for a VoIP software/app with advanced encryption, then you may have to pay a minimal fee for the service.

10 Questions for VoIP Providers

Business VoIP providers offer a wide range of features at various price points. While you can get some pretty high-tech features, know that all these extra perks will quickly increase your cost. If you are looking to save money by making a switch to VoIP, do your research. Don’t be afraid to ask questions. Before you sign anything, read reviews on potential providers. Print out a copy of these ten questions to ask them. Be an educated buyer.

  1. What are my startup costs?

It’s important to know what you are willing to spend before you sign a contract. Don’t be afraid to ask what it costs to get VoIP up and running. Startup costs include: set-up fees, activation fees, equipment costs and porting fees. If you know how many lines you will need, that will help the provider give you an accurate estimate.

Do you want to purchase or lease equipment?  Decide if keeping your original phone equipment makes sense from both a productivity and budget standpoint. You may be able to use your old phones and lease an ATA from your provider.

2.  What are my recurring costs?

A reputable provider understands that your monthly recurring costs affect your bottom line. VoIP providers who are familiar with your service area should be able to estimate the monthly state and federal taxes and fees.

Your recurring costs will also depend on what type of calling plan you choose. Look at your past phone bills to determine usage. What type of calling plan works best for your business?

With unlimited calling, you pay a flat monthly fee per user. In contrast, metered calling charges by the minute. Some providers will allow you to bundle calls. When you purchase a “bundle” of minutes, the rate per minute is lowered.

 3.  What are the contract terms? 

Does your VoIP provider offer a free trial period or money back guarantee? How much will it cost to cancel your VoIP service or switch providers?

What is the length of the contract you are expected to sign?  Will you get a better price by signing a contract?

4.  What about hidden fees?

There are often additional fees that you aren’t aware of or the provider may not think to tell you about unless you ask.

For example: How are international calls charged? What about toll-free calls?

5.  What features are included at the basic service level? Which features cost extra?

One of the main advantages of VoIP is its feature-rich nature. VoIP offers an abundance of features that simply cannot be provided with POTS. However, only certain features are included in the basic service level agreement. Decide which features are important to you and which features you are willing to pay extra for.  Will certain fee-based features will really make a difference for your productivity and/or profitability?

6.  What kind of tech support and customer service do you offer?

Decide what level of customer service you want before you run into a problem. Every company handles tech supports differently. Do they offer 24/7 service? Is it an added fee? Are there different levels of tech support at different price levels? All of these are important questions to ask before signing a contract.

7.  Do you offer 911? Is it included in your basic service?

VoIP services can be used anywhere there is an internet connection. Since a VoIP connection is associated with an IP address rather than a physical location, the availability of emergency services can be limited.

Find out if your VoIP provider supports 911 calls and if so, how it works. Some VoIP providers will ask users to register an address in connection with a phone number. That way, they can provide the physical address to 911 services in case of an emergency. Large companies can assign a physical address for every VoIP endpoint to provide to emergency services.

8.  What about accessibility?  

If you will be using VoIP to increase your mobility, you need to know what mobile platforms and devices your VoIP provider supports.

9.  How can you guarantee reliability? 

Will you still have service if there is a power outage or a server crashes? Ask VoIP providers about their redundancy measures. Does your provider use multiple servers in multiple locations? Do they rely on traditional analog lines in emergency situations?

10.  How long will it take to port phone numbers? 

Number porting is when you switch service providers, but choose to keep the same phone number. To make the transition from one provider to another, there will be a brief overlap when two phones (lines) will have the same number. This overlap means you must keep your old service active until the number is switched over to the new service.  FCC rules require simple ports to be processed in one business day. Shifting from one wireless provider to another is a simple move that may take only a few hours. But if you are transitioning from PSTN to VoIP, the process could take a few days.

What is the Future of VoIP?

The telephony industry is experiencing a global shift towards VoIP. Eventually all circuit-switched telephone networks will be replaced with the packet-switched technology of VoIP.  Traditional land lines just cannot compete with VoIP prices, features and flexibility. As VoIP technology continues to improve in reliability, speed and bandwidth, you can expect more and more businesses to turn to VoIP.

VoIP is cheap. Often free. Both locally and internationally. If you have a computer with microphone and speakers, and a good internet connection, you can start using VoIP. How you use VoIP depends on where and how you will be making the calls–from home, at work, using the corporate network, while traveling. The way you make calls varies with the VoIP service you use. A VoIP service provider helps you make and receive calls once you are registered with them.

Today, VoIP and internet phones are becoming commonplace. Many cable TV providers offer bundles that include VoIP. Businesses have begun to embrace VoIP, nearly eliminating the need for telephone lines in the workplace. While telephone lines are not completely gone, technology is moving things in that direction.

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