How Do VoIP Systems Work?

Updated October 6, 2023

Voice over Internet Protocol (VoIP) is a standard of phone calls using an internet connection instead of a traditional phone company. VoIP technology takes your phone call and converts it into a digital signal, uses compression encoding technology and then sends it to the receiver via the internet. The receiver hears your call by uncompressing the digital signal into the audible sound that you hear through your headset or handset.

Why Choose VoIP?

Phone companies have traditionally been very expensive, especially if you make international or long-distance calls. Since nothing is really long-distance when it comes to the internet, many customers choose VoIP technology so they can eliminate having to work with traditional phone companies altogether.

Another huge reason for choosing VoIP is that eliminates the need for having wires hooked up to phone terminals in walls or buildings. If you can get a WiFi or internet signal, you are all set to make VoIP phone calls without the need of phone lines and copper wire running through the walls of your office.

What Do I Need To Run VoIP?

A high-speed internet connection, which typically includes a modem and router, is required for VoIP to work. Most typical VoIP configurations include having a desk phone and a SIP server. An SIP server is usually a VoIP service provider, which there are many to choose from.

With these two things, you will get many more features with VoIP than exist with analog phone lines. For one, your phone calls are secured via the cloud when using VoIP. Also, most SIP’s have monitoring software and dashboards that can give you useful data on answered calls, call length, as well as storing your phone contacts and phone numbers in the cloud – goodbye rolodex!

Since you are already paying for an internet connection already, adding on the cost for VoIP services is a drop in the bucket compared to paying a traditional phone company which limits you with physical wires.

VoIP For Business

This solution is much better for businesses for several reasons:

  • Take your phone with you – No longer are you chained to a physical location due to a physical line. If you have a laptop and an internet connection, you can make and take a call from anywhere.
  • One low price – Most SIP’s charge one low price for all calls, no matter where they are being made.
  • Cloud phone system – Administrators can manage permissions and features via an online interface.

Most VoIP companies now offer apps for mobile phones which even further eliminate the need for physical hardware. This can be great for businesses that have large sales staff that can just use their existing mobile phone with the VoIP app installed to take and make calls wherever they are.

To learn more about VoIP for business, check out this guide to VoIP systems.

Common VoIP Features

Here are some of the most common features when it comes to VoIP:

  • Unlimited Calling – Call whoever, whenever you want without fear of overage charges.
  • Call Queues – In a busy environment, callers can wait in line until the next available agent can help them.
  • Voice Quality – Gone are the days of static inaudible calls. VoIP offers crystal clear HD quality.
  • SMS – Most VoIP services allow you to text customers and colleagues.
  • CRM Integration – When you receive a call, it can automatically put in the person’s credentials into the CRM of your choice. This can make lead follow up much simpler and easier.


As you can see, there are several benefits to VoIP technology over that of analog traditional phone lines. Having the ability to make and receive calls on the go via an app without being tethered by physical lines opens up the world to businesses and customers alike.

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