How does VOIP work?

Voice Over Internet Protocol (VoIP) takes audio and uses Internet Protocol language to create discrete packets of data that can be transmitted the same way as other Internet data. VoIP technology revolutionizes phone service by reducing costs and increasing efficiency, allowing people to communicate via phone more cheaply and effectively. In many respects, it is significantly better than traditional analog phone service. For businesses and individuals, VoIP services allow for cheaper long distance calls, reduced per-minute costs for local service and additional features.

VoIP can:

  • Bypass Analog Systems–VoIP uses the language and technology of the Internet to place phone calls, skipping older technologies to reach the same phone numbers.
  • Call Old Phones–VoIP still allows you to place calls to traditional phones, and you can even use traditional analog phones to place VoIP calls if you have the right technology.
  • Cut Your Phone Bills–You can cut your phone bills with VoIP. VoIP calls are free or low-cost, depending on the technology you have, service you use and who you are calling.

Internet networks connect devices and computers around the world. VoIP uses the Internet to make phone calls instead of using analog phone lines to transmit voice. If you make long-distance calls, you are probably already using VoIP systems, since many phone companies now use VoIP to send their calls more effectively.

This article explains how VoIP works and how you can use it in your business. You will learn about some of the available features and technologies.

We will talk about:

  1. How VoIP Works
  2. Types of VoIP Phones
  3. Uses for VoIP
  4. Am I Ready to Use VoIP for My Business?
  5. VoIP Tips and Tricks

How VoIP Works

VoIP differs from traditional analog landline phones in the sense that VoIP uses the Internet instead of traditional electronic networks used for phone service. VoIP signals can bypass the cellphone and landline networks created and maintained by traditional phone companies, allowing for nearly-free phone calls. As the signal reaches the recipient, what happens next depends on what technology the recipient is using.

This technology can use traditional analog phones if the user has an analog telephone adapter, or calls can be placed between IP phones or computers. In every case, the data is interpreted for the listener and they can hear the voice transmission. Transmitting phone calls across the phone creates data that is different from analog signals. As a direct result of significant improvements to VoIP technology, VoIP calls are now comparable in quality to analog calls and provide many additional benefits.

Because VoIP uses the Internet, the costs of maintaining a traditional copper wire analog phone network are eliminated. VoIP providers can offer their phone services at a substantially lower cost, passing along these savings to customers. Many analog phone companies, in fact, are beginning to use VoIP to expand their networks at a reduced infrastructure cost.

Types of VoIP Phones

There are multiple types of phones that can be used with VoIP services. In fact, you can even use your old analog phones. Here, we compare the options for you:

Analog Telephone Adapter (ATA)

ATAs are devices that enable you to use your analog phones with VoIP. You can use ATAs to directly translate VoIP signals for your old phones, so you would not need to buy additional equipment beyond the ATAs you need and you can keep your landline phones.

Internet Protocol (IP) Phones

With an IP phone, you can readily make VoIP calls and avoid the need for an ATA. By connecting these phones to your router, you can quickly begin making VoIP calls.


Calling between computers does not need special hardware beyond the basics, such as a microphone, sound card and speakers. You need an Internet connection and subscription to a VoIP service of some kind. Inexpensive and easy-to-use software for computer-to-computer VoIP calls is readily available.

Uses for VoIP

You can use VoIP for a variety of home and business applications and this technology can be deployed rather quickly and inexpensively, particularly in comparison to traditional landline phone service.

Use VoIP to:

  • Deploy Business Phone Systems–You can inexpensively deploy phones for call centers, multiple extensions, providing phone service to multiple departments and other uses within your organization.
  • Reduce Costs–VoIP does not use the same infrastructure of traditional phone services, so it is usually much cheaper. For companies that use phone services frequently or have high call volumes, it may make sense to deploy VoIP service to reduce per-minute and per-call expenses.
  • Create Phone Trees, Extensions and add other Features–VoIP special features allow you to do complex things with phones that would otherwise be expensive or difficult to deploy. Since VoIP uses the Internet, you can use VoIP with different software platforms and applications, such as customer relationship management (CRM) systems.

You can have your phone infrastructure and data hosted in the cloud using a hosted private branch exchange (PBX) service, taking the confusion and technical efforts out of the process. VoIP service vendors can help you obtain the technology and software you need to fully deploy your new systems.

Am I Ready to Use VoIP for My Business?

Many small to medium-sized businesses (SMBs) and other organizations need call centers but also need to reduce costs. Others make a substantial number of calls and would typically rack up significant phone costs. If this sounds like your organization, then you could significantly benefit from adding a VoIP phone subscription.

Ask yourself if VoIP is right for you:

  • Do I need low-cost phone services for my business, or will a typical phone plan fit my needs?
  • Am I willing to get the equipment and software I need for VoIP?
  • Do I want to use my CRM or other software integrations with my phone system?
  • How do I typically plan to use phones in my business?
  • What special features (such as virtual extensions, multiple lines, call recording, etc) do I need?

VoIP Tips and Tricks

To get started with VoIP and use your new phone system effectively, consider these tips:

  1. Shop around for the right vendor. Many different types of VoIP plans are available with different rates, features and integrations. You should carefully compare features, costs and functionality to find the best one for you.
  2. Choose your technology carefully. Different types of phones, as well as different models and brands, are available.
  3. Remember, not all vendors allow you to use every phone. Check with your vendor before purchasing new equipment. If possible, find the right vendor first and then ask what type of phone they recommend.
  4. Ask plenty of questions when comparing vendors. You can also use our website for help gathering information about what different VoIP services offer.
  5. Use integrations with software and popular platforms to expand the features and functionality of your VoIP service. SalesForce, Dropbox, Slack and other frequently-used software integrations may be available, depending on the vendor you choose and the type of VoIP subscription you have.
  6. If you have employees who will be using the phones, be sure to ask for their input. Your team can help you choose the best system for your business. They may also appreciate being able to voice their opinions on a technology they will probably use daily in their jobs.

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