How Do VoIP Phones Work?

Voice over IP (VoIP) phones are a revolutionary technology that dramatically changed phone service and how phone companies provide access to voice phone calls. These phone systems use the Internet to route phone calls and provide a phone connection for these calls.

VoIP Benefits:

  • Save money on a business communications system
  • Call traditional telephones
  • Access advanced business phone features
  • Get a service that integrates well with apps and software platforms you use
  • Help your small to medium-sized business (SMB) accomplish more

This makes access to phone service much cheaper and more efficient to provide, reducing the cost of service for residences and businesses. With computers and cloud hosting, unique software applications are added to the mix—this results in a business communications experience though VoIP that is tremendously different from plain old telephone service (POTS) lines.

In this article, we will introduce VoIP service and explain some of the benefits of this form of communication. We will talk about how VoIP networks work and how you can sign up for VoIP service. At the end, we will offer some tips for shopping for a VoIP vendor and signing up for a new VoIP connection.

Article Contents:

  1. What Is VoIP and How Does it Work?
  2. What Are Some VoIP Features for Businesses?
  3. What Equipment Is Needed for VoIP Service?
  4. Is VoIP Service Right for My Business?
  5. VoIP Service Tips and Tricks

1. What Is VoIP and How Does it Work?

Traditional phone service works by using copper wire lines to connect homes, businesses and other buildings around the world in a network maintained by telecommunications companies and public utilities. These networks are very expensive and difficult to maintain, but they represented the backbone of phone communications for decades. Indeed, for almost an entire century these networks offered the best communications solution for many consumers and companies.

In contrast, VoIP uses Internet Protocol (IP) to package voice data and transmit it over the Internet to the recipient.

2. What Are Some VoIP Features for Businesses?

Many VoIP vendors offer complete business communications systems with advanced features such as third-party app integration, voicemail-to-email transcription, conference calling, queues, contact center management and other features. VoIP services can be relatively simple and limited, full-featured or enterprise grade with customized applications. Whatever you need for your business, you can probably find a VoIP vendor who can help.

Some common VoIP phone features:

  • Call waiting
  • Call transfers
  • Call forwarding
  • Do not disturb
  • Softphone app
  • Find me/follow me
  • 3-way calling/conference calling
  • Voicemail
  • Voicemail transcription
  • Queues
  • Call analytics
  • Data reporting
  • Virtual extensions
  • Third-party app integrations (such as Salesforce, Google Calendar, etc)
  • Custom integrations

If you have a relatively high call volume, you may want a software or hardware system to help you route and manage your calls. A private branch exchange (PBX) can be an onsite, physical computer system or an offsite, cloud hosted system you access online with the use of a software platform. Depending on the needs of your organization, you may want a hosted system or an onsite system. They both have unique benefits and drawbacks to consider.

  • Onsite, Traditional PBX—In the past, all PBX systems were onsite boxes. They can manage your call traffic and allow you to access your VoIP service. Generally speaking, these systems are very expensive and can cost thousands to millions of dollars. They are best for very large businesses with very significant call volumes to manage. In those circumstances, they may help businesses save money by allowing them to switch VoIP vendors rapidly via computer in order to change phone service rates. They also use less Internet bandwidth than cloud hosted systems.
  • Offsite, Cloud Hosted PBX—These newer systems do use a lot of Internet bandwidth as they use an offsite software platform that is cloud hosted to perform PBX functions. They provide smaller businesses or organizations with less call volume to access business PBX services without the high equipment costs of a traditional PBX. For small businesses, this solution is typically much cheaper than a PBX box. Cloud hosted PBX users are subject to the phone rates of their VoIP vendor, without the opportunity to rapidly switch like PBX boxes allow. As such, they may be more expensive for larger businesses.

3. What Equipment Is Needed for VoIP Service?

To get started with VoIP service, you will need some basic equipment. Depending on the vendor you choose, your exact equipment choices will vary. Generally speaking, you will need Session Internet Protocol (SIP) phones, phones using another protocol, softphone access via an app, smartphones or analog phones with an analog telephone adapter (ATA). You will also need an Internet connection of some kind, since VoIP uses the Internet for calls. You may also need a PBX box and other computer equipment. Before you purchase new equipment or upgrade, be sure to ask your vendor what they recommend.

Vendors differ in their equipment requirements. You may be able to keep your existing phones if they are compatible, particularly if they have a common protocol such as SIP or if they are analog phones. If you have headsets and computers or if you have smartphones to access VoIP, you may also be able to keep your equipment. VoIP service can be relatively inexpensive because many services use existing equipment or make it very simple to upgrade.

If you plan to use analog phones, ATAs can connect your phones directly to the VoIP network. This solution is fairly simple to use and allows businesses with an existing POTS system to quickly upgrade to VoIP.

4. Is VoIP Service Right for My Business?

If your business is looking to save money on phone service and access new features such as call analytics and voice-to-email transcription, then VoIP service is probably right for you. Many VoIP companies offer free trials if you are not sure yet. VoIP service is a great option for organizations looking to cut costs, so you will probably find something that can help your business.

As you shop around for service, consider how you currently use your phone system and think about the type of equipment you plan to use as well as the features you need. Take notes about features that interest you and ask plenty of questions. Before upgrading equipment, look at all of your options and ask your vendor if they have any special deals available. Sometimes buying phones through your vendor can save you money.

5. VoIP Service Tips and Tricks

As you shop for and begin implementing a new VoIP service, consider these tips and tricks to help you make the most of the experience:

  • Take advantage of free trial pricing to test a new service. If possible, use equipment you already have to avoid spending on a system until you know for sure that you like using the VoIP service.
  • If you have sound quality issues, it may not be your equipment that is the problem. Take notes about when you experience phone echo and other problems. Recording details may help you troubleshoot the source.
  • Save bandwidth for your VoIP calls by asking other departments to reduce heavy Internet usage during peak call times. This may be especially crucial if you have a hosted service.
  • Some services offer metered accounts, so you pay per minute but can access better features for a lower price. If you need a lot of extensions but probably will not use them all the time, this type of plan could be for you.
  • VoIP plans come in many different service levels. Smaller businesses may not need full contact center features, but they can probably benefit from other advanced VoIP features.
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