Newbie's Information: What Is VoIP and How Does It Work? (Defined)

Beginners often ask us: what is VoIP and how does VoIP work? If you're not a technical user, you may have heard that you can use VoIP to add a work phone number for your website.

VoIP is a cheaper way to get a business phone number for your website compared to a traditional phone line. Before making a decision, however, you need to fully understand what technology is all about.

In this beginner's guide, we're going to answer what VoIP is and how VoIP works behind the scenes. The aim is to show you how VoIP can save you money and grow your business.

Here is an overview of what we'll cover in this guide. You can click on these links to jump directly to different sections.

What is VoIP

VoIP (Voice Over Internet Protocol) is a telephone technology that allows you to make and receive calls over the Internet instead of traditional telephone lines.

Unlike landline phone systems, which are limited to a single desk phone in your office, VoIP lets you make and receive business phone calls from your laptop, tablet, normal smartphone (via an app) and even VoIP-compatible office phone sets.

Since all calls are made over the Internet, it is extremely cost effective for both domestic and long distance (international) calls. Most VoIP providers offer unlimited minutes at no additional cost.

In addition to the cost savings, you also get all of the advanced phone features like call waiting, call forwarding, caller tones, auto attendant, multiple phone numbers and more.

It is for this reason that most small businesses and even businesses are switching from traditional phone providers to business VoIP providers.

At WPBeginner we use Nextiva, a leading VoIP based business phone system.

How does VoIP actually work? (Look behind the scenes)

To understand how VoIP actually works, let's look at what happens when you make or receive a call on a VoIP phone.

This is how VoIP works behind the scenes

When you make calls using VoIP, the business phone number app or VoIP adapter picks up the analog audio signal and converts it to a digital signal.

This digital voice data is then sent to the business phone service provider over your internet, and ultimately the message is routed to your customer's phone.

This process is almost instantaneous, which is why the VoIP sound quality is sometimes even better than normal phone calls.

How does VoIP differ from the traditional telephone system?

VoIP works differently behind the scenes than a normal landline phone system.

Traditional telephony systems use the circuit-switching method to connect calls. When you make a call using the public switched telephone network (PSTN), you are connected to the person on the other end and they are connected to you on a circuit.

"Circuit Switching" technology has been used for more than 100 years. It's reliable and still works, but it's not the most efficient or inexpensive.

Instead, VoIP uses the packet switching method. This means that data is only sent when necessary. A brief, instant connection is established every time you speak. The connection does not always have to be in both directions. You and the person you're talking to don't usually both speak at the same time.

In addition, data packets are sent efficiently. You can use many different routes through the Internet. The packages are then reassembled when they reach their destination.

The data packets can also be compressed to save space. This enables them to travel even faster over the Internet.

All of this happens very quickly. Unless there is a problem with your internet connection, you will not notice any delay during the call.

Two women are on the phone

While VoIP sounds quite technical and complicated, it is important to understand that VoIP is a more efficient method of transferring data during a phone call.

You've probably used VoIP before, through an app like Skype or Google Voice, without realizing it.

VoIP advantages and disadvantages in comparison

Having used a VoIP business phone service at our company for years, we can rightly say that we know a thing or two about the pros and cons.

Here is our detailed analysis of the pros and cons of VoIP.

VoIP Benefits – Benefits of Using VoIP

There are many benefits to moving from a traditional company telephone service to a cloud-based VoIP telephone system.

Lower monthly costs

One of the greatest advantages of VoIP is that it gives you lower monthly costs for both domestic and international calls.

Most VoIP phone providers often offer unlimited free national calls. International calls are usually very cheap too.

Apart from that, you also save money on repair and maintenance costs that you currently pay your landline provider.

Answer calls from anywhere – completely portable

With VoIP, you don't have to be in a local office and sit on your desk phone to receive calls. You can answer incoming calls from anywhere using an app on your phone, tablet or laptop.

This is a huge benefit for teams working remotely or in the field. It's great when you're on the go too.

Extended functions for business phones

VoIP solutions typically include many additional features for business phones. For example, you can easily set up conference calls with VoIP.

Additionally, most VoIP service providers offer a virtual receptionist, hold music, wait for calls, voicemail via email or text, and more. You can even take advantage of advanced telecommunications features such as video conferencing.

This can also result in additional cost savings as traditional phone service providers often charge recurring charges for these add-ons.

Improved scalability and flexibility

Another advantage of VoIP is that it is more scalable. Whether you're hiring more people or opening a new office in a new city, VoIP makes it easy to grow.

Unlike a traditional phone service that requires money to be spent on expensive hardware on a leased line, VoIP lets you add your team members to your account dashboard with just a few clicks.

Since VoIP works on all smartphones, you can even cut additional device costs and free up desk space by having your team members install the app on their personal phone.

VoIP Cons – Cons of Using VoIP

VoIP is an amazing technology, but it may not be suitable for everyone. There are a few drawbacks to VoIP that you should be aware of.

You need a good internet connection to be able to make calls

As explained in the section on how VoIP works, you need an Internet connection to make calls.

When your internet is slow, your call quality can be affected.

The good thing is that VoIP technology isn't using as much bandwidth as you might think. A good connection with less than 70 ms ping and an upload speed of at least 500 kbit / s is sufficient for VoIP calls.

However, if you have a large number of team members in your office, you may need to review your bandwidth needs for the number of simultaneous calls your company is making at the same time.

You need to take power outages into account

The regular telephone service works in the event of a power failure. However, you cannot make VoIP calls if you do not have power or access to the internet.

Typically, most offices have wireless internet with wireless routers. These routers require electricity. If there is a power outage in your building, your internet can go down too, affecting your VoIP service.

We can mitigate this in our office by using a battery backup system for our internet router. Since our internet is provided by a different company than our electricity, we never have both outages at the same time.

Since our team members use the VoIP app on their phone, they can use their mobile data for business phone calls at any time.

You have to retrain your employees on the new system

If you move to a new telephone system, you will need to train your staff on how to use it.

Fortunately, most VoIP services are designed to be as simple and intuitive as possible. This means that it should be easy to train team members to use the cloud phone systems, even if your employees are working remotely.

What is the Best VoIP Phone Service?

Here at WPBeginner we use and recommend Nextiva as the best VoIP phone service. They offer a free local or toll free number with all of their plans.

Nextiva

Nextiva has all of the major features you need including call forwarding, unlimited domestic voice calls, unlimited business SMS, voicemail to email / text, number porting, caller ID, call forwarding, custom greetings, auto attendant, music on hold, Online VoIP fax, team member phone extension, and more.

You have an easy-to-use smartphone app for Android / iPhone (iOS) and a softphone app for your computer.

For corporate customers, you can even convert your existing PBX (Private Branch Exchange) system into a cloud phone system using SIP (Session Initiation Protocol) trunking. This means that you can easily route calls to different departments and employees using your existing system and local network.

Nextiva also has some useful advanced features. For example, you can connect your VoIP phone system to real-time live chat and your CRM system to create a unified communications system.

Plus, the support team is extremely helpful so you can get started right away. That's why we use Nextiva for our business.

Other great VoIP alternatives to Nextiva are:

  • RingCentral – a large, well-known VoIP company that costs a little more than Nextiva. They have all the features you need, and they have screen sharing and conferencing tools too.
  • Ooma – an easy to set up option that has toll free numbers as well as all of the features you would expect. You get 500 minutes for free, but you have to pay extra for more.
  • Grasshopper – another great business phone service for solpreneurs and small businesses that has all the essentials.
  • Phone.com – a good IP phone for businesses that do business with Canada and many EU countries as these locations are covered as local calls.

How to make a call using VoIP

To place a call using VoIP, you first need a VoIP business phone service such as Nextiva. You will also need an internet connection with good bandwidth. This usually means using a broadband internet connection.

You can then make calls with VoIP using one of the following devices:

  • Your existing phone. This can be connected to the VoIP system via an ATA (analog telephone adapter), which gives it an IP address. Essentially, you just plug your phone into the ATA, not directly into the wall outlet.
  • A special IP phone. This looks and works just like a normal phone. It has a handset with buttons that fit in a charging cradle. Instead of an RJ-11 telephone connection, however, the IP telephone has an RJ-45 connection. This means that it plugs into an ethernet port on your router rather than a phone line. Depending on the time of year, some VoIP companies may give you a free cell phone.
  • Your computer. You need an app with which you can make calls via VoIP. This is sometimes referred to as a "softphone". Of course, you also need a sound card as well as a headset or a microphone and speakers. You will also need an internet connection, either via ethernet or wifi. Most popular VoIP companies offer apps for Windows and Mac.
  • Your cellphone. Again, you need the right app and a WiFi connection. You can also use a mobile data plan with 4G or higher speeds. Most VoIP apps work on all smartphones such as Android mobile devices and Apple iPhone (iOS).

Frequently asked questions about VoIP telephones (VoIP FAQs)

There are many different business VoIP providers out there and it can be difficult to know which one is best for your needs.

Over the years we've helped thousands of beginners choose the best VoIP phone platform. We've heard almost every possible question about VoIP you can think of.

Below are answers to some of the most frequently asked questions about Voice over IP (VoIP).

How much do domestic and international calls over VoIP cost?

Most VoIP services include unlimited national calls at no extra charge. However, some cheaper VoIP services will depend on the number of minutes you use.

The international tariffs vary depending on the VoIP provider used. However, these tariffs are almost always cheaper than traditional landline tariffs for international calls.

Can you keep your existing phone number on VoIP?

Yes, if you switch from the traditional landline phone to the VoIP business phone, you can ask for number porting that allows you to keep your existing business phone number.

Most good VoIP services allow you to do this. Please check with them before signing up.

Is there a VoIP backup if your internet connection goes down?

Some VoIP services have a backup in case your broadband connection goes down or the power goes out. For example, Nextiva can automatically route calls to a cell phone.

Does VoIP offer call forwarding or extensions for team members?

Yes, most good VoIP phone service providers include call forwarding, phone extensions, call queuing, and auto attendant at no additional cost.

We hope this article has helped answer the questions of what VoIP is and how it works behind the scenes. You might also like our comparison of the Best Platforms for Website Builders and the Best Email Marketing Services to Grow Your Business.

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