VoIP Phone System Explained - How VoIP Works?

VoIP stands for Voice over Internet Protocol. The technology and a set of specific web communication standards enable you to make both audio and video calls, deliver text messages, photos, videos and fax over the internet. It is also known as IP telephony or VoIP. Previously, public switched telephone networks(PTSN) were used to make calls. A user is required to dial a particular sequence of numbers to place a call. Other than being expensive, it has other shortcomings as well. For example, it requires a dedicated line for making a call, limited scalability, one can not use bandwidth fully and requires you to pay a maintenance fee every month. 

Brief History of VoIP

The first VoIP phone system was introduced by an Israeli businessman Alon Cohen. In 1989, he laid the foundations of VocalTec Communications Inc. Later on; he invented the audio transceiver, which proved to be the bedrock of future VoIP phone systems. This transceiver laid the early framework of VoIP. Later, in 1996, VocalTec introduced the world’s first VoIP app named internet phone. And thus, VocalTec is hailed as the pioneer of the VoIP phone system.

We’ve expanded this guide to take a closer look at what you need to know about Voice over Internet Protocol. We’ll cover everything you need to know, including the benefits of VoIP phone service.

What is VoIP?

VoIP stands for voice over internet protocol, and it is a modern technology that lets anyone make phone calls over the internet. VoIP has become a definitive choice for phone services for businesses and consumers alike with broadband emergence. Say goodbye to copper wires and handsets and use an internet phone for making calls through the internet. It is also called a VoIP application device. This device converts voice into digital packets processes it through an analogue to digital circuits and sends data via the internet to the other user. You can use VoIP technology to send different kinds of data, such as pictures, fax, multimedia messages, and voice communications. 

How to Setup VoIP?

The complete guide to setup VoIP phone:
An analogue telephone adapter is equipped with a modular phone jack or a cable modem that connects it with the network through the internet. Ethernet and wifi are used to establish the connection between the internet and the telephone.
  • The VoIP apps convert analogues signals to digital signals and transmit them over the internet via a cable modem. The modem at receiving end receives the signal, and the VoIP app converts these signals back into the original movements. Some state of the art VoIP apps like Whatsapp uses user-to-user encryption technologies that ensure the security of the data transferred among users. These apps are available for both smartphones and computers.
Softphone application installed on a networked computer requires a microphone and speaker or a headset to make and receive calls. The application interface facilitates the user with a virtual dial pad and contact list. Thus with speed dial, you can connect with others over the same network. 
A trusted VoIP provider can handle everything for you. There are many VoIP providers in the UK, offering VoIP services for residential and business sectors. Unlike traditional phone systems, VoIP phone systems use softphones and do not require any on-site hardware. Recent innovations and advancements in VoIP, making it a standard and reliable way of communication for businesses. A VoIP phone system has several valuable features and offers significant advantages. Here are some benefits that you can have when using VoIP systems for your business.

In four steps, here’s how VoIP works.

VoIP uses broadband internet to place and receive calls the same way as one can make with regular landline and mobile telephone networks. VoIP services providers also provide inbound and outbound services. Some providers offer special offers that include free domestic and international calls for a month. Generally, phone calls between the same service providers are free. 
  1. Your phone connects to your switch or router in your Local Area Network (LAN).
  2. When you dial a telephone number, your IP phone tells your VoIP service provider to call the other party.
  3. Your VoIP service establishes the call and exchanges data packets from your IP phone.
  4. Your VoIP phone converts these digital signals back into the sound you can hear.

How VoIP has revolutionised Cloud Communication technology?

After the rise of globalization and when local businesses transcended national boundaries, the existing means of communication started losing their worth. A fast, cheap and robust form of communication was needed to cater for this issue.  In 1995, VocalTec introduced its first VoIP app named internet phone. Using the same app, individuals could make calls over the internet around the world. Later in 1999, Intrado introduced its VoIP app specifically for enterprises with more robustness, functionality and reliability.  Since then, many breakthroughs have been made in the internet and other communication technologies like email; it was felt to add functionalities in a VoIP to entertain file transfer and video chat. To facilitate file transfer and video calls in 2005, skype added the features mentioned above. Since then, a lot of VoIP applications have been introduced to make calls easy and fast. Additionally, after the emergence of smartphones, the number of VoIP apps has drastically increased. Not only one can make calls using computers but smartphones too. WhatsApp is the leading VoIP app that has more than 2 billion users around the world. Most of these apps are free and do not cost a dime for personal use.

Benefits of VoIP Phone System for your Business


Here the Following Benefits of VoIP Phone System – Cloud Communication technology

  • Ultra-Reliable

VoIP uses proven secure internet protocols and end-to-end encryption algorithms that ensure reliability. No third party can tap your calls and see your exchanged messages.

Many people think that when there is no internet connection, there would be no calls as well. However, it is not true because VoIP phones have another important feature that is call forwarding. In case you have no internet connection, your call is forwarded to your mobile phones or any device you want. It means that weather issues and power loss will no longer affect the productivity of your firm, and you will never miss a call from an important client or your team member.

  • Supreme Flexibility

VoIP applications let you adjust call flow instantly. VoIP gives you the best Uptime – a term used for the amount of time an application is online and functioning. To ensure high uptime, VoIP providers use multiple redundant servers. VoIP phone systems offer more flexibility and portability as compared to traditional phone systems. When you are using a conventional landline, you are restricted to one location, and it is difficult to take your services with you when moving from one place to another.

As long as you have an active internet connection, software or app, you are all set. It is suitable for the business with multiple branches to make calls and connect to your staff easily. Just install a VoIP phone system in your employee’s computers, tablets and smartphones and keep working.

  • Enhanced Accessibility:

VoIP phone systems provide you with a great deal of accessibility. With a decent data connection, you can place and receive business calls from anywhere. Even if you are unable to receive a call, you can redirect it to another person or transfer it to the voicemail option.

If your employees are working in some remote location, you can communicate them on a VoIP app and can monitor work progress and delegate tasks. Furthermore, VoIP can be installed on computers and smartphones, which means you can use any of them and conduct business.

  • Cost-Efficient

The cost of using a VoIP phone is much lower than the traditional phone. You may need to install too many phone lines, and it would be expensive, especially when you make long-distance calls regularly. However, when using VoIP technology, the calls are sent over the IP network, and the problem of one phone line being able to be used by two callers only is solved. Moreover, the infrastructure involved in the VoIP system is relatively inexpensive. It means that even small businesses can enjoy the high-quality business phone system without putting pressure on their budget. Call charges of VoIP phones are also low as compared to conventional phones. Furthermore, VoIP’s repair and maintenance costs are also less, making it more suitable and cost-saving for business.

  • High Portability

Since the VoIP phone system operates on the internet, so it is highly portable. You can carry VoIP phone services operating devices anywhere. Even you can monitor your work progress on the go. Another advantage of a VoIP phone system is that you can easily expand it as your business grows. For expanding a traditional landline, you need hardware installation and extra phone lines that add high cost to your budget. While in the case of VoIP expansion, You don’t need to install additional hardware or phone lines. VoIP allows you to add or remove any number of phones and extensions so you can avail the services to fulfil your business requirements.

  • Multitasking

VoIP phone systems not only enable you to place and receive phone calls but also conduct video conferences, exchange text messages and transfer files simultaneously; you don’t need different applications for placing and receiving calls and transferring files at the same time. A VoIP system is more than making and receiving calls. Advancement and innovation in VoIP phone systems incorporate multiple communication services such as video conferencing, instant messaging, teleconferencing, receiving voicemails and many more. Video conferencing helps you to keep in touch with your staff even when you are abroad for business meetings. You can enable intelligent routing features, so your clients do not need to wait and contact the right person at the right time. Call screening is another feature of VoIP that enables you to look at a number on caller ID and treat it accordingly. Features may vary from provider to provider, and you can custom VoIP services according to your business needs.

  • Higher Scalability 

VoIP phone services are highly scalable. If you are expanding your business, then you don’t need to buy a new expensive telecom infrastructure and spend money on setting it up. On the other hand, VoIP services can come with you no matter wherever you go. The VoIP phone system enables its users to make and receive calls from anywhere.

Another benefit of using VoIP phone systems is that your IT team will not need to work on a new technology layout. You can use your existing ethernet connection or WIFI as the foundation of your network. The complexities of conventional phone networks are eliminated. VoIP allows you the implementation of a standardised system that supports a variety of communication types. It also requires less equipment management.

  • Best Audio Quality

VoIP apps are famous around the globe for the best audio quality. VoIP phone systems use state of the art audio and video codecs that minimize background noises and echoes. HD audio codecs use twice the bandwidth and produce a wide range of great quality audio sound as compared to standard audio codecs.

In the start, when the VoIP technology was new, the quality of the call was very low, and the call dropped for no reason. But now, with advanced technology, as long as you have a good internet connection, you can make high-quality phone calls. When you make phone calls via your cell phones, you may suffer problems of delays, echos or background noises. VoIP calls end all these issues, providing you a clear call quality so that you can focus on your meeting agenda when dealing with your clients or staff.

  • Cheap International calls

VoIP phone services offer cheap international calls. Usually, VoIP phone calls are made over the

Internet so call charges start at a penny per minute. You can establish toll-free and virtual phones numbers and make it more economical for global customers to contact you.

  • Increased Security

Phone system security is very important, especially for businesses. Many companies receive fraudulent phone calls and other security threats. VoIP systems have the capability to use encryption protocols and mitigate all the security threats. VoIP providers are more concerned about the protection of their network, so you don’t need to worry about security when using an internet phone.

When you compare VoIP vs landline, you see that VoIP phone systems offer significant advantages to your business. It will not only help you to save money but also increase efficiency and productivity through smooth and uninterrupted communication between clients and team members. If you are still using a traditional landline system, it’s time to consider the latest technologies and alternatives like internet phones. Once you decide to shift to the VoIP phone system, you should consider different providers to choose the one that meet your business needs. 

VoIP vs Landline Comparison

Is VoIP better than landlines? Read more the descriptive guide to know the difference between VoIP vs Landline when choosing the right phone system.

Landline Phone System

Landline Phone uses wired cables or optical fibre to place and receive calls. It is also known as Plain Old Telephone Service(POTS). In 2003, the CIA World Factbook reported approximately 1.263 billion dedicated landline telephone lines. 

It is a common perception that the American Alexandre Graham Bell invented the first phone. But in reality, it was an Italian-America Antonio Meucci that invented the phone in 1849. However, Alexander Graham Bell was the first who acquired the first telephone patent in 1876. The first table phone was Ericsson’s Taxen. Up till the 1930s, more than 2 million copies of it were sold globally. 


Benefits of Landline Phone System

  • Highly secure
Landline phones are highly secure and can not be hacked. No one can tap your calls. Landline phone services providers maintain a map of landline phones with fixed coordinates. In case of any emergency, the concerned authorities can use this map and help you instantly. 
  • Reliable
Landline phones are extremely reliable. You can even place and receive phone calls during power outages. Furthermore, landline calls never drop and thus are supreme reliable. 
  • Better sound quality 
Landline calls have better sound quality because of dedicated phone lines; there won’t be any background noise or interruptions. 
  • Economical
Landline phone service is quite economical. You don’t need to pay for the calls made within the same network. You don’t need to charge any battery; thus you can save money. Landline phone systems usually maintain directory listing, so you don’t need to spend time finding and dialling numbers. Just call the helpline and ask them to connect you with the desired person.

How do landline phones stack up against their modern successors? Here’s a side-by-side comparison of VoIP vs. analog phone systems.

Landline vs VoIP:

TechnologyInternet Phone(SIP, TLS, SRTP, H.323)Analogue voice signals
Transmission MediumInternet(minimum 100 kbps per line) Telephone line(insulated wire)
Ease of setup★★★★★★★★
WirelessDECT and Bluetooth within the same premises
Service Quality★★★★★★★★
Setup Cost£0£140 per connection
Monthly charges£15-25£25
DevicesComputers, Smartphones, Standalone Ethernet IP phonesTelephone
Phone Calls
Nationwide Coverage Limited
User-to-user callsPBX Dependent
User ID
Call Holding
User PrivacyVaries depending upon the provider
Free Phone Number Changing 
Phone ExtensionPBX Dependent
Video Conferencing 
Audio Conferencing ✅ But only 3-way calling
Free Call Routing
International CallsUK: $0.01/minUK: $1.21/min
Call Queuing 
Free Business Voice Mails
Hunt GroupsPBX Dependent
Customer Relationship Management (CRM)
Text Messages
Auto Attendant Requires PBX
end-to-end Call Encryption
File Sharing

Is VoIP Cheaper than Landline?

VoIP phone systems are quite cost-efficient. Enterprises can save up to 65% with VoIP phone services as opposed to traditional landline phone services. It doesn’t cost any setup fees, and you don’t need to buy and establish any bulky telecom equipment. The monthly charges are as low as $20. Additionally, you can further save money by using built-in features like file sharing, virtual video conferencing, text messaging, call routing, voice mailing and auto attendant. 

Interested in getting a VoIP system? Schedule a tailored demo of our VoIP and UC software with one of our team and find out what features your business can enjoy.