What is VoIP and how does it work? A guide for modern businesses

Traditional phone systems can be a hassle. They’re often expensive and inflexible, and they lack the modern features today’s businesses need. Luckily, the days of relying solely on traditional phone systems for communication are long gone. Voice over Internet Protocol (VoIP) has revolutionized the way we connect, offering a flexible, cost-effective, and feature-rich alternative that sends voice data over the internet rather than through physical phone lines.

Whether you’re a startup looking to cut costs or a large enterprise aiming to boost efficiency, VoIP has something to offer. In this post, we’ll explore all the essential information about VoIP, including what VoIP is, how it works, pros and cons, and key features to look for in a VoIP system.

VoIP is a technology that lets you make phone calls using the internet instead of traditional phone lines. Unlike regular phones, which rely on physical wires, VoIP turns your voice into data and sends it over the internet to the person you’re calling. It works similarly to sending an email but uses your voice instead of text. 

In a VoIP setup, the organization typically manages and maintains its own VoIP system, which includes the necessary hardware, software, and infrastructure. In the case of hosted VoIP, the provider manages the system. Both of these options can make communication cheaper and more flexible for businesses.

You know voice over IP lets you make calls using the internet rather than traditional phone lines, but how does VoIP actually work? We delve into the specifics below.

1. Digitization of voice signals: The VoIP system converts spoken words (analog voice signals) into digital data. This conversion process allows the voice data to be transmitted over the internet in a format that computers and other digital devices can easily process.
2. Packetization of data: After your voice is digitized, it’s broken down into smaller chunks called packets. Each packet contains your voice data and information about where it’s coming from and where it’s going. This packaging helps your voice data travel efficiently across the internet.
3. Transmission over the internet: Now that your voice data is packaged into packets, it’s ready to travel across the internet. These packets move through various network devices, such as routers and switches, which help guide them to their destination.
4. Reassembly of packets: After the packets arrive at their destination, they’re reassembled in the correct order. It’s like putting together pieces of a puzzle to reveal the complete picture. After all the packets are assembled, the original voice signal is reconstructed. Despite being transmitted in smaller, discrete packets, the recipient hears a seamless and clear audio transmission, just like in a traditional phone call.

When it comes to communication options for your business, VoIP and traditional phone services are two prominent contenders. Let’s take a closer look at how they stack up.

• Cost: VoIP typically offers cost savings compared to traditional phone services, with lower monthly fees and reduced long-distance charges. But, there may be initial setup costs for equipment and infrastructure.
• Features: VoIP offers a wide range of advanced capabilities, such as call forwarding, voicemail-to-email, and video conferencing. Traditional phone services, while reliable, may have fewer features available.
• Flexibility: VoIP is highly flexible and scalable, making it easy to add or remove users and adjust features as needed. Traditional phone services may be more rigid and less adaptable to changing business needs.
• Reliability: Traditional phone services are known for their reliability, with established infrastructure and backup systems in place. VoIP reliability can vary depending on factors like internet connection stability and service provider reliability.

Looking for a VoIP phone system that meets all your communication needs? Here are some features that can make your business communication easier:

Unified communications

Imagine having all your communication tools in one place. With unified communications, you get seamless integration of meetings, phone, and team chat. It’s like having a supercharged command center for your team’s collaboration efforts.

Auto receptionist

Say goodbye to missed calls and hello to a virtual receptionist who greets your callers professionally and directs them to the right person or department. It’s a helpful assistant managing your calls 24/7, routing customers to the services they need.

Desktop and mobile compatibility

Stay connected on the go with desktop and mobile compatibility. Whether you’re at your desk or out and about, you can access your VoIP phone system from any compatible device, so you don’t miss important calls.

Encryption and security

Protect your sensitive communications with encryption and robust security measures. It’s like a secure vault for your calls, keeping your conversations private and confidential.

Call and audio quality

Experience crystal-clear call quality that sounds like you’re talking face-to-face. With high-definition audio, you can communicate with clarity and confidence, making every conversation a breeze.

With Zoom Phone’s comprehensive suite of calling features, you can enjoy the benefits of a flexible and mobile cloud phone system without compromise. You can even streamline your workflows with seamless integrations, enhance productivity with AI-driven tools like post-call summaries and voicemail task extraction, and experience crystal clear communications with HD voice quality.

Plus, with features like call recording, voicemail transcription, and mobile app access, managing your business communications has never been easier.

VoIP can transform your business communication. Here’s how:

• Cost-effectiveness: VoIP is a budget-friendly option compared to traditional phone systems. By using the internet for calls, it cuts down on long-distance charges and can save your business money.
• Flexibility and scalability: VoIP systems can easily adapt to your business needs. Whether you’re adding new users or you want to bring your own carrier, VoIP can scale accordingly to suit your needs. 
• Feature-rich functionality: VoIP offers a wide range of useful features such as call forwarding, voicemail-to-email, and video conferencing. These features enhance communication and productivity in your business.
• Portability and accessibility: With VoIP, you’re not tied to a physical phone line. You can make and receive calls from anywhere with an internet connection, giving you more flexibility in how and where you work.
• Integration capabilities: VoIP systems can integrate with other business tools and applications, streamlining your workflows and making it easier to manage your communication alongside other tasks.
• HD voice quality: VoIP supports high-definition (HD) voice quality, providing clear and natural-sounding calls that improve the overall communication experience.
• Environmental benefits: VoIP reduces the need for physical infrastructure and hardware, which can lower energy consumption and reduce your business’s environmental impact.

While VoIP offers numerous benefits, it also comes with some drawbacks and limitations. Let’s explore some of the challenges you may encounter:

• Dependence on internet connection: VoIP relies on a stable internet connection. If your internet goes down or experiences jitter, it can affect the quality and reliability of your calls.
• Quality issues with poor internet connection: Low bandwidth or network congestion can lead to dropped calls, delays, and poor call quality, especially during peak usage times.
• Limited emergency calling capabilities: Unlike traditional phone systems, VoIP may not provide the same level of reliability for emergency calls. Factors like power outages or internet downtime can affect your ability to make emergency calls.
• Compatibility issues: VoIP may not be compatible with certain devices or services, especially older hardware or proprietary systems. This could pose challenges when integrating VoIP with existing infrastructure or communicating with external parties.
• Regulatory considerations: VoIP is subject to unique regulatory requirements and compliance standards, which vary by region.

When you decide to invest in VoIP, it can be tricky to decide which provider to use. There are many options on the market, so how do you know which is the right choice for your organization? 

Here are a few things to consider as you assess your options: 

• Business needs: Think about the size of your organization, anticipated scale over time, and your team’s level of technical expertise. Keep an eye out for providers that focus on similar types of businesses, whether you’re a small business, an enterprise, or something else. 
• Implementation and onboarding: Look for a platform that will be easy to implement and learn. Your best bet is to select a provider that offers dedicated customer support and user training.
• Availability, reliability, and security: Find a provider that can show evidence of a high level of network reliability and availability. Also look for strong security measures and compliance with security standards.
• Network match: Make sure any VoIP provider you consider is compatible with your existing network or that you can customize it to fit your requirements.
• Budget and cost: Consider your organization’s resources and budget in conjunction with overall business needs. The sweet spot is a solution that offers the most value for the cost.  

For example, if you have a small business that just needs phones for voice calls, you likely need a provider that caters to small businesses. On the other hand, a large-scale call center may require a broader communications package, so look for a provider that includes virtual call center features.

When designing a flexible work model, you want to enhance your team’s connectivity and bridge any distance created by physical separation. That means leveraging the right communication software. In fact, traditional landlines are being phased out in the U.S., so it’s a smart idea to consider a switch to VoIP now. 

Zoom Phone, our cloud-based VoIP phone service, optimizes workflows with a unified platform for phone, chat, meetings, and more across desktop and mobile devices. Plus, its AI-driven features, including post-call summaries, voicemail task extraction, and voicemail prioritization, streamline workflows, prioritize tasks, and improve communication management.  

Zoom Phone also integrates with other tools in Zoom Workplace, an AI-first collaboration platform. Reach out today to see how Zoom Phone can transform your business’s connectivity and collaboration.

Still have questions about VoIP? We’ve got answers! Let’s dive into some common queries.

How much does VoIP cost?

Voice over IP costs vary depending on factors like the service provider, features, and the number of users. Typically, VoIP offers cost savings compared to traditional phone services, with lower monthly fees and reduced long-distance charges. However, there may be initial setup costs for equipment and infrastructure.

Can cell phones use VoIP?

Yes, many cell phones can use VoIP for voice communication with apps like Zoom Workplace. When a cell phone is connected to Wi-Fi, these apps leverage VoIP technology to make calls over the internet instead of traditional cellular networks, offering potential cost savings and enhanced features.

Can you keep your current phone number with VoIP? 

In most cases, yes! VoIP providers typically offer number porting services, allowing you to transfer your existing phone number to the VoIP system. This means you can keep your familiar phone number while enjoying the benefits of VoIP. Similarly, when porting to a Skype number, this feature allows you to maintain your existing contacts seamlessly, which is crucial for ensuring continuity in your personal or professional communications.

Is VoIP more secure than traditional phones?

VoIP security measures can vary depending on the service provider and implementation. While VoIP offers encryption and security features to protect your communications, it’s important to implement best practices like keeping software up to date.