What is VoIP? A Full Guide for Understanding VoIP Phone Systems

Smooth internal and external communication is one of the cornerstones of daily business operations. Nowadays, Voice over Internet Protocol (VoIP) is increasingly becoming the golden rule of modern corporate communications. Simply put, it is a proven technology that allows people to make phone calls over the Internet connection. Developed in 1995, it has evolved to become more stable and reliable with the development of broadband and turned into the go-to solution for more and more businesses when upgrading their phone systems.

This in-depth guide will walk you through basically everything about VoIP and help you make the most of it.

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What is VoIP (Voice Over Internet Protocol)?

Traditionally, legacy phone systems carry voice signals using analog phone lines so it requires the setup of circuit wiring to make and receive calls. Under this circumstance, a piece of specialized hardware equipment called Private Branch Exchange (PBX) is used to connect internal phone extensions to the public telephone network.

Rather than sending data packets over a traditional circuit-switched network, VoIP, the abbreviation for Voice over Internet Protocol, sometimes also referred to as IP telephony, is a technology that converts voice into digital signals that can be transmitted over internet digital data packets via your local area network/WAN/other infrastructure to enable phone calls. VoIP uses RTP (real-time protocol) to ensure that these packets get delivered timely. You can use either an ethernet cable or a high-speed WiFi connection for VoIP.

Here is a short video to help you understand what VoIP is in one minute.

How Does VoIP Work?

As mentioned above, VoIP basically works by converting analog telephone signals into digital signals to facilitate telephony over the Internet. Now let’s dive a little deeper into detail into the process.

SIP Protocol and SIP Trunking

Voice over IP works by using protocol technologies and SIP is one protocol that enables VoIP. Session Initiation Protocol (SIP) is a communication protocol for VoIP calls and other text and multimedia sessions, such as instant messaging and video. SIP trunking, based on the SIP protocol, is basically a service established virtually over your internet connections and provided by Internet Telephony Service Providers (ITSP), eliminating the physical connection to a phone company.

Equipment You May Need in order to use VoIP

VoIP phone systems (PBX)

A VoIP PBX (Private Branch Exchange) is a business telephone system that facilitates phone calls over the company’s LAN or WAN data network rather than through the circuit-switched networks.

VoIP PBX is available in two deployment options – on-premises and cloud-based. With an on-premises voice solution, the hardware is installed and runs on-site at your office or data center while a cloud PBX system is delivered entirely over the Internet and managed completely off-site by a service provider.

VoIP phones or IP phones

VoIP phones, or IP phones, are the physical office phones that you can use with a VoIP phone system. Visually, they do not differ much from the traditional, stationary phones you find at your home or on your work desk. Because of this, it’s quite easy for employees to adjust to newer VoIP phones. The one fundamental difference is that they are internet-enabled, whether via WiFi or Ethernet. They are assigned IP addresses to facilitate calls over your network.

Mobile phones, computers, network-ready devices

In addition to IP phones, you can also access VoIP phone systems using your own mobile device, computer, and other network-ready devices with VoIP apps or softphone application installed. Today you can make and receive business phone calls anytime, anywhere using your own Internet-connected devices, without worrying about losing VoIP call quality. Employees are no longer tied to a desk phone and may use any device of their choice.

VoIP gateways

A VoIP gateway is a hardware device that converts traditional telephony traffic (analog or digital) into packets of data, allowing connections between legacy telephony infrastructure and IP-based communications, acting as a bridge between an IP network, the PSTN (Public Switched Telephone Network), and the cellular network.

VoIP is based on your existing internet connection.

What Are the Benefits of VoIP?

Modern businesses enjoy using VoIP phone service over traditional telephone lines because they can get a lot more value than just improving corporate communications. Below are a few of the many ways VoIP benefits businesses.

1. Cost Savings

VoIP is a budget-friendly way to set up a business communications system. VoIP services could be based on a direct IP connection to your phone service provider, simply on your existing internet connection, or a combination of both. Therefore, it cuts down the cost of internal calls in your organization to virtually none, greatly reduces the expenses of external and international business calls, saving a significant amount of investments on purchasing traditional phone lines, installation, and ongoing maintenance.

On-premises and cloud-based VoIP systems are both cost-effective but do have some differences in terms of the cost. Though you need to pay fully upfront for an op-premises system, it protects you from the risk of fee increases and means lower monthly cost after expenses are covered. As for the cloud-based hosted VoIP services, you usually go with an OpEx model with more affordable monthly or annual fees and low initial equipment cost.

If your voice and data solutions are currently separate, you can save money by combining the two under one provider. In addition to the cost savings, you’ll also be able to consolidate both internet service and telephony support.

TCO Analysis: How to Calculate the Real Cost of a Business Phone System

2. Easy to Install

Comparing to traditional phone systems, the installation and configuration of VoIP systems could be super easy. Traditionally, with a landline system, office phones require physical lines to receive phone service. VoIP phone systems eliminate the need to install any physical phone lines. All you need to do is to connect IP phones to the corporate network via Ethernet lines.

Better yet, if you need your IT staff to prioritize more important and revenue-generating projects instead of managing the phone system, hosted phone services leave the work to the service provider and there is no need to worry about any network issues. It would be beneficial for small businesses and start-ups lacking in technical expertise or resources, too.

3. Clear Voice Quality

When Voice over IP was first introduced, its call quality was indeed unsatisfactory. Long gone are those days thanks to the advancement of broadband and Voice over Internet Protocol technology itself. The “poor call quality” is probably the biggest misconception about VoIP now.

Rest assured as long as you have a fast and stable Internet connection. Most VoIP providers offer a vast number of different protocols and codecs to ensure HD sound quality. With a robust solution and proper implementation, the voice quality of VoIP can be as good or even better than the landline-based calls. You can’t even tell the difference.

Related Conquering 6 Common Fears of Upgrading a Legacy Phone System

5. Mobility & Geographical Flexibility

VoIP enables businesses to extend their communications system to remote offices and on-the-go workers over SIP-enabled devices. For remote workers, the office is wherever they make it as long as the Internet connection is available.

The deployment of a multi-site VoIP system can not only keep all dispersed branches connected seamlessly but also reduces the spiraling inter-office call costs. Softphones enable employees to make their office extensions mobile with a wide range of call handling features at hand. Additionally, cloud phone systems make it easy to connect geographically dispersed offices under one phone system and the IT admin can easily manage it from any location.

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5. Scalability

Scalability, as one of the most valuable characteristics for businesses, refers to the ability of a system to handle a growing amount of workload, normally by adding resources to the system, without affecting its overall performance or efficiency.

VoIP is a scalable solution that can grow with your business, especially the cloud-based VoIP service, which offers greater flexibility for businesses with staff growth or reduction. The increase and decrease of phone extensions can be made immediately and businesses only pay for what they need, without purchasing additional hardware equipment or new dedicated lines. It can all be done, practically in real-time. If you are a seasonal business with fluctuating communications needs or experiencing rapid growth, a hosted model can be a perfect fit for you.

6. Abundance of Features

VoIP services deliver a number of features that are either not supported by traditional telephone systems or only available for an additional fee. These features are more than ‘extras’. Many businesses have found it easy to use VoIP and became more competitive with the full suite of built-in features. Some features may help companies meet important safety and security needs, including the ability to connect with emergency services while using internet VoIP.

Below is a list of must-have VoIP features that will boost your business communication efficiency:

a list of must-have VoIP features

  • Call Forwarding

When the called party is unavailable, Call Forwarding helps redirect incoming calls to another desired destination, such as the mobile phone number or other telephone numbers. You can also set up different rules for various scenarios. For example, automatically forward phone calls to another extension when you are busy, ring your mobile phone when no one answers calls to your desk phone, and ask callers to leave voice messages when you are on vacation. Sales personnel and field staff especially no longer need to worry about being away from their desks.

  • Interactive Voice Response (IVR)

IVR helps even small businesses offer 24/7 customer services without costly human resources. When customers call in, pre-recorded greetings will direct them to the most appropriate destination with the minimum waiting time. With IVR, you are able to automate customer service, provide satisfactory answers timely, leave a good impression on your customers, and build a professional company image.

  • Ring Group

Include a group of extensions into a ring group so that when a call comes in, all available extensions will ring simultaneously or sequentially up to different ringing strategies you set up. It is very useful in sharing and distributing calls effectively among employees in particular departments. As a result, the overall productivity of your team will be increased and the fastest response to customer calls is guaranteed.

  • Queue

It is a smart move to let an incoming call queue up while waiting for an available agent. Better than being on hold, going to voicemail, or getting a busy tone, the customer is informed that there is currently no available agent to answer the call, and he or she is queueing right now. It reduces the number of missed calls as well as the negative effect of busy signals on customer experience. By segmenting agents into several queues, you can even provide different service levels for different customer groups.

  • Music on Hold

Phone calls may be put on hold sometimes, such as the intervals while you transfer a call to another number, or the waiting time when people participate in a conference call, or Nobody likes awkward silences, so just upload some audio files and customize the on-hold music to please your customers and enhance your corporate image.

  • Call Recording

VoIP phone systems can be set up to automatically detect and record every phone conversation made over the system, including inbound and outbound calls. Businesses usually leverage call recordings as training or coaching tool, to help resolve disputes, for the purpose of review and confirmation, for compliance with their regulations, and to track whether or not customers are satisfied. VoIP technology makes them all simplified.

Feature List A Full Suite of VoIP Phone System Features

“Does My Business Need a VoIP Phone System?”

We understand that some businesses might have been using traditional phone systems for quite a long time and are not sure whether a VoIP phone system makes sense for their businesses. There are indeed significant differences between VoIP and traditional landline. Here are some questions you could ask yourself before making an informed decision.

1) Is your country experiencing the ISDN switch-off?

As technology advances and demands on business communications grow rapidly, the traditional PSTN and ISDN lines can barely live up to the expectations of today’s businesses, gradually slipping further and further into obsolescence. Now the ISDN switch-off is happening all around the globe. As large telecom companies successively announcing to switch off ISDN and PSTN, Germany, Australia, Italy, and many other countries around the globe are experiencing a transformation from traditional landlines to all IP solutions.

If you are among the trend, it is critical f to find a seamless and reliable VoIP solution in response to the shutdown. Otherwise, you could lose your telephone service. If you aren’t facing an immediate ISDN switch-off, pay attention to this issue as you may find that your own nation mandates this in the future. You can get ahead of future developments by planning to implement VoIP technology sooner than later.

2) Do you have employees working from home?

Since the outbreak of COVID-19, many businesses, which used to be restricted to traditional landlines, have upgraded to VoIP phone systems to facilitate a teleworking environment.  Thanks to VoIP, the remote workforce can make and receive business calls with the same number they have in the office with their own devices and access the same calling capabilities.

VoIP has become a must-have tool for remote working and also a major step towards digital transformation. Furthermore, by using a VPN (virtual private network) connection along with the VoIP solution, your conversation will be shielded by a tunnel of encryption. A reliable VoIP service provider should be able to provide detailed information on how they secure remote and long-distance communications for customers using their business VoIP solutions.

Related Work from Home Smartly: Best Practices on Unifying Your Remote Workforce

3) Can your current analog system address your needs?

There are several major problems plaguing traditional telephone services.

First of all, traditional PBXs require a high upfront investment, including the purchase of phone lines and hardware (which also needs to be installed by experienced technicians), as well as ongoing maintenance fees. After the installation, it can also be expensive and difficult to scale the system when you experience the need for expansion, such as a significant increase in staff or additional branch locations.

Besides, traditional telephone systems generally provide only basic call features and cannot cope with more sophisticated business communication scenarios. With an increasing number of mobile and remote workforce, lack of mobility is becoming one of its major drawbacks. Analog phone services rely on physical lines to transmit voice traffic, which chains employees at desks to handle business calls.

Unlike a modern option like VoIP, customization and integration are quite limited on legacy phone systems. They are not able to integrate into today’s business communications ecosystem, which consists of a complex series of advanced applications, leaving voice calls in soils from the rest of a business’s information systems.

Infographic: VoIP vs. Analog Phone System: The Differences and Top Considerations

Keep reading to find out more about whether a VoIP Phone system makes sense for your business.

Things to Consider When Choosing a VoIP Service?

It could have a huge impact on your business when deciding on a business communications solution. VoIP may be the best solution, but it’s important to conduct a current state and needs analysis first. Then, you can determine if business VoIP works for you. Here are some tips to help you determine your needs and make smart choices.

1) Do you want to keep existing equipment? Does it support your needs?

If you are using the traditional PBX and with a limited budget for a complete replacement of the existing equipment, make sure you select a VoIP solution that allows you to take a phased transition. Whether the new VoIP system is compatible with your traditional phone system, how to connect them together, how to ensure that the upgrade does not affect business continuity, etc. It’s also important to verify that the VoIP service providers you are considering will support that equipment. This is a stage where direct communication with the VoIP provider is key.

2) What kind of unified communications capabilities does it offer?

VoIP phone systems offer a range of telephony functionalities to handle audio calls, but communication with colleagues and customers is not only limited to voice. This is why unified communications is introduced to the business communications landscape and also why UC should be one of the top priorities as you evaluate your VoIP options.

Unified communications at its simplest is all about making a wealth of communications channels and options into a single point of access. In fact, most UC products reply on VoIP as a core foundation, and many VoIP providers do offer some UC features in their portfolios to further extend the capabilities and flexibility.

Common UC features include:

  • Unified Messaging
  • Instant Messaging (chat)
  • Presence
  • Corporate Directory
  • Video Conferencing
  • Team Collaboration

3) Is it possible to integrate into other platforms and tools?

It’s critical for businesses to stay agile and ready in such a fast-changing world. With more and more systems, platforms, and software appearing in the workplace, both managers and employees expect to have a unified and integrated solution to improve efficiency, which is why a VoIP system’s ability to integrate and seamlessly work with other solutions becomes way more important than ever.

With your telephony system connected to other business-enhancing tools, it will be easier for you and your team to communicate, collaborate, engage with one another, and streamline the overall workflow. Fortunately, there are VoIP providers that ensure their phone service is compatible with some popular collaboration and communication tools.

VoIP Phone System Buyer’s Guide

When shopping for VoIP, you’ll find there is a list of VoIP service providers competing for your attention. If you need more information to help figure out what kind of phone system is the best fit for your organization. Here is a guide for you!

This guide includes all the key information and useful tips to help you make an informed decision in an easier way. It will help you understand just how VoIP phone systems work, how to select a VoIP provider, and whether this is preferable to regular phone service. Just click to download!

Buyer's Guide: VoIP Phone System for Small Business

 

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