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What is VoIP? A Comprehensive Guide to VoIP

What is VoIP, and how can your business use it to increase communication efficiency? How can you find the best VoIP service provider for your needs?

What is VoIP?

Voice over Internet Protocol – also known as Voice over IP or VoIP – allows you to make phone calls over a data network and internet connection. Bypassing legacy phone lines helps you control costs for long-distance phone calls and save on telephony hardware and maintenance. 

How Does VoIP Work?

VoIP converts your voice and other multimedia into a digital data packet that can be transferred over your network connection. A VoIP phone connects to a VoIP server that can reside on-premises or in the cloud. The server will convert the phone number you dial into an IP address so you can connect to the other person via the internet. Voice data packets are then transferred back and forth between the VoIP endpoints until the call is finished. 

VoIP can be used on almost any device. You can place a VoIP call from a special hard phone, or use a “soft phone” by installing software on your computer or smartphone. VoIP allows companies to consolidate their unified communication platforms – landlines, smartphones, voice and videoconferencing, email and more – to let you collaborate from anywhere. 

VoIP Examples

You might already be using VoIP services. WhatsApp, Facebook video chat, Google Hangouts  and Skype are just a few examples that consumers use every day.

But for business, enterprise VoIP systems can greatly expand the number of simultaneous users and functionality for your VoIP calls. They can also scale to your needs, grow with you, and be hosted anywhere you need them to reside — even the cloud. Cisco Webex or Microsoft Teams are good examples of enterprise VoIP platforms that can help you collaborate with even more of your own employees or with clients outside of your network.

What is Needed for VoIP Implementation?

As long as you have a high-speed internet connection, you can set up VoIP. VoIP telephony uses about 100 kbps of bandwidth per line of voice service. But, it’s a good rule of thumb not to max out your network bandwidth — anything in the ballpark of over 80% total network usage will affect the quality of your phone calls.

It can help to combat speed or bandwidth issues by connecting VoIP devices to a wired Ethernet connection. Even better, a Power over Ethernet (PoE) switch can power your phones and your network over one wire.

You’ll also need to carefully review your Quality of Service rules with your provider. All bandwidth is not created equal, and having rules that prioritize voice calls over, streaming YouTube can keep VoIP calls clear and reliable.

You should also consider VoIP equipment needs in terms of specialized hardware.

  • Do you want your VoIP infrastructure onsite? Then you’ll need to buy IP gateways and IP servers. 
  • How many users do you need to connect, and how many of them need their own business phones? 
  • Do users need to handle simultaneous calls?
  • Do they require a separate webcam if they work on desktop computers? Or would a software-based option that allows everyone to make calls through their computers and a pair of headphones suffice?

An overhaul of VoIP technology can be expensive. But the good news — even if you’re not completely ready to invest in VoIP architecture, a VoIP adapter allows you to use your existing telephony equipment over the internet. 

What are the Benefits of VoIP?  

A VoIP service provider should be able to align your implementation plan to your company’s staffing growth plan so you can easily add voice lines as needed. VoIP allows you to quickly expand phone service to branch offices or remote workers. And VoIP phone systems don’t require expensive upgrades and maintenance like analog phone systems.


As long as there’s a reliable internet connection, VoIP can be used. Your employees can connect to your network from their home, a coffee shop, multiple office locations, the airport – literally anywhere with a Wi-Fi connection. VoIP software can also enable functionality like call blasts or allow IP phone calls to be transferred to a cell phone. One of the greatest advantages of a VoIP platform is that it enables the flexibility your users demand.

VoIP also offers reliability in the form of business continuity. Cloud backups can help with quick data recovery for voice and video calls. And in the event of Wi-Fi or power outages, VoIP service providers can re-route calls to alternate locations, devices or third-party phone services. 


VoIP connects users to your private network, which immediately offers greater security than public internet. That said, your VoIP system is only as secure as your network. Make sure that your internal network requires end-to-end data encryption. Also be sure to tell employees to never connect mobile devices that use company data to unsecured Wi-Fi networks.

User-based security is also a huge component of overall VoIP security. Encourage best practices like changing passwords frequently and setting strong password rules. You can also frequently check VoIP phone logs — anomalies like a mysteriously deleted voicemail or an unusually large number of calls from a number where your employees aren’t based can indicate hacker activity.


Because VoIP communications are run via a single network, VoIP providers will often charge a set monthly fee for service. Pay-as-you-go pricing helps keep costs consistent, and VoIP offers significantly lower rates for international calls. Upfront costs for implementing VoIP can be steep if you’ve never invested in a unified communications platform before. But overall, a VoIP solution is far cheaper in the long run than analog phone service. 

PBX vs. VoIP

PBX, or Private Branch Exchange, is more in line with what we think of as legacy telephony technology — an on-premise phone system not connected to a network. It offers direct lines of communication over traditional phone exchanges.

PBX Pros

PBX offers simplicity, both in terms of infrastructure needs and plug-and-play phone functionality. Because there’s no reliance on internet, PBX can also be more reliable than VoIP in the event of an emergency. It can also be cheaper for your organization because you don’t need a host provider. But overall cost would depend on how many phone calls your organization makes, since there’s no fixed fee for PBX systems

PBX Cons

PBX can be an easy solution to get off the ground. But managing a PBX system gets complicated when you need to expand. It requires special hardware, and oftentimes your PBX partner will need to come physically install new hardware onsite. Maintenance expenses are hands-down heftier for PBX systems as well. 

Hybrid PBX solutions do exist. Companies can use both analog (PBX) and VoIP endpoints to balance the cost of both systems. But, moving to VoIP is the overwhelming trend among organizations today.

What Should I Look For in a VoIP Service?   

VoIP vendors have different offerings, and if you don’t take a critical eye to what features your users actually need, you could end up unnecessarily increasing the total cost of your VoIP service. A domestic-only business could save by skipping a service that offers international VoIP numbers, for example. On the flip side, you’ll also want to make sure your provider can integrate with other third-party services you already use — Salesforce, Dropbox, etc. — so you don’t waste time migrating tons of business data.

Reliability is also a huge factor. Look for a comprehensive service-level agreement (SLA) that outlines quality of service, uptime and scheduled downtime. It should also give you options for events like unscheduled downtime and fallback procedures for disaster recovery. Some things won’t be covered – you’ll need to have your own plan for when your internet or hardware fails. But problems like the provider’s system crashing or slowing down due to demand should be touched on in your SLA. Also make sure they have the right technical support options through multiple channels. If your phones are down, you won’t be able to call them to fix it.

For security, the best VoIP providers will offer high-level encryption for your calls to decrease the chance of your data being intercepted. VoIP vendors can also increase security by supporting multifactor authentication for your users and performing regular audits on their data centers. 

Should I Use VoIP for Customer Service?

The short answer is yes. A VoIP call center can be one of the best ways to meet customer expectations of 24/7 support. VoIP phones can outsource calls to anywhere in the world and forward calls to the next available support agent, or offer a call back if no one is available.

VoIP also integrates with other business apps. Hook your VoIP system up to your CRM and your agents can access the customer’s history immediately and solve problems quicker.

You can also take advantage of VoIP call logs for better analytics and business intelligence. With these recorded call logs, managers can review to learn when customers are calling in, how long calls are lasting and other data to create opportunities for increasing customer happiness.  

Ready to bring VoIP to your business?

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