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In today’s age of digital transformation, technology is rapidly evolving. Technology’s purpose is simple: to bring convenience to our lives. One such technology that businesses all over the world are leveraging is Voice-over-Internet Protocol, or simply VoIP.

VoIP (also called IP telephony or Internet telephony) isn’t a new technology. It’s been around since 1995 when it was developed by the company VocalTec as a way for people to save money on long-distance or international call rates.

There are currently 34 million VoIP users in the US, and the global VOIP market share is predicted to be $93.2 billion by 2024. VoIP is growing – fast.

Nowadays, VoIP phone systems are a popular tool for small-medium businesses and enterprises as they provide enhanced functionality, convenience, and affordability.

Despite its popularity, understanding what VoIP is and how it works can be challenging.

In this article, we’ll cover all things VoIP! From how VoIP phones work to the business benefits they offer, after reading this article you’ll be an internet telephony expert. We’ve got a lot to cover, so grab a cup of coffee, get comfortable, and let’s dive right into the wonderful world of VoIP.

What is a VoIP phone system?

First things first: What exactly is a VoIP phone system?

Put simply, a VoIP phone system uses IP telephony technology to make calls via the internet. This means that users can make outgoing calls and receive incoming calls from anywhere in the world from any computer or mobile device with an internet connection.

A VoIP phone system offers a much more convenient, scalable, and affordable solution to traditional PBX phone systems hosted via Public Switched Telephone Networks (PSTN). VoIP service provides all the possibilities of traditional phone systems, like great call quality and calling features, as well as a range of modern communication benefits like mobility, video calling, and business continuity. Read our next post to read more about hosted PBX services.

VoIP is available for home and business use. VoIP service providers offer a range of affordable pricing plans which allow businesses to scale their phone systems up or down, making them a popular choice for new small business communications needs, particularly for customer service.

Now that we know what VoIP is, let’s find out how it works.

How does it work?

So, how does a VoIP telephone system work?

VoIP phones convert analog voice signals into digital data packets. These data packets are then sent over the internet via a router and converted back into voice signals for the person on the line to hear as voice signals.

Since IP phone systems run over the net, all of your data is stored in the cloud. This means no expensive copper wiring or office equipment is required.

Business owners can manage their phones via an easy-to-use online dashboard. This way, they can easily adjust business contacts, add or remove any number of phone lines as necessary, update business phone numbers, and effectively utilize a range of advanced features for calling.

What do you need to use a VoIP phone?

So you know the science behind VoIP phones, but what is needed to use business VoIP?

IP telephony services can be used with regular desk phones by using a SIP server, VoIP adapter, and router.

The other option is to use a softphone app. A softphone app is a software installed on a computer or mobile app on a smart device that offers desktop phone functionality, as well as a variety of extra features like video conferencing and text messaging/chat.

To achieve crisp call quality and call processing, a VoIP phone system requires a robust internet connection with high bandwidth. An excellent connection is essential if you want your VoIP system to function well.

VoIP vs Regular Phones: Similarities and Differences

If you’re considering switching your traditional business phone system to a VoIP provider, you’re probably curious about the similarities and differences between the two.


This is one of the key differences between an IP phone and a regular phone system. A regular office phone system requires expensive copper wiring and on-premises hardware. This can be restrictive as businesses grow, and the costs associated with equipping all employees with desk phones add up quickly.

Alternatively, an IP phone requires no on-premises hardware at all. All you need is an internet-enabled device and the right software! It’s important to note that VoIP doesn’t work without an internet connection. For this reason, it’s important to have a robust and reliable internet service provider to avoid system outages.

Installation and maintenance

With lots of hardware comes expensive installation costs and constant maintenance. Instead, installing a VoIP phone is as easy and downloading software. Moreover, application maintenance is handled by VoIP providers.

Adding/removing phone lines

Adding and removing phone lines can be done from a computer dashboard, which mitigates the challenges of making changes to on-premise phone lines.


Not only does a VoIP service reduce the long-term costs associated with hardware and maintenance, but it’s also much more affordable upfront. It also allows businesses to tap into a remote workforce, as communicating across cities and countries is made possible with video conference calls, team messaging, and collaboration apps.

Most VoIP phone service providers offer a range of pricing models to suit different business needs. Business VoIP phones are usually available on a pay monthly basis. This means a business can choose what features they need from a phone service provider and add or remove them as they please. Installing a new business phone solution is simple with VoIP.

If you’re more convinced by numbers, then the fact that the average cost of a VoIP system is between $20-30 per month. That price gives you access to voice calls, video conference calling, messaging, and a whole host of extra attributes! Of course, the cost goes up the more capabilities you want to add to your VoIP package, so enterprises might be more inclined to purchase a more expensive service plan.

Extra features

Regular business phones offer little to no extra capabilities beyond simple phone calls. What’s more, once it’s set up, there’s not much room for change. This means that if more advanced features and functionalities become available during that time, the business is stuck with the system they installed in the first place.

Instead, IP phones offer a number of extra capabilities to improve business operations. The best features of IP phones enable organizations to boost productivity, streamline customer support, and connect effectively and efficiently at all times.

Some of the best features of these phones include:

Unlimited calling

Users can access an unlimited number of calls to overseas destinations at no extra cost.


Businesses can instantly greet customers and direct them to the right agent or department. Not only does it just create a great first impression, but it also streamlines and improves the customer experience.

HD voice and video

Calling over the net offers much higher call quality than regular phone systems. What’s more, video conferencing has changed the way we communicate forever. With VoIP, dispersed teams can meet and collaborate face-to-face from different locations.

Call forwarding

Call forwarding allows agents to easily and seamlessly forward calls to the right department.

Call routing

The call routing feature allows businesses to set up routing routes to make it easier for customers to get put in touch with the right customer service representative from the get-go. Fewer transfers, and more satisfied customers.

Call recording

Keep all the info and data from each new customer call to inform customer service strategies and provide employees with constructive feedback. Calls from business phones can also be repurposed for training sessions when onboarding new employees.


This enables users to receive voicemail messages straight to their email inboxes.

Mobile app

With an IP telephone system, users can answer a business call on the go from their mobile phones. All you need to do is download an app to your iOS or Android mobile phone.

Team collaboration tools

Business teams can keep in touch via a unified communications system with messaging. Video and screen sharing makes collaborating on projects outside the office a breeze.

Text messaging (SMS)

Customers can get in touch with an SMS. This streamlines the process of booking appointments or finding answers to quick questions when people don’t have the time to make a call.

CRM Integrations

IP telephone systems can integrate with CRM systems. It’s like having a virtual office, where everything is available in the same place. Moreover, most IP phones offer a whole host of integrations with productivity-boosting apps.

What Are the Benefits of VoIP Phone Systems?

There are a number of benefits to using a VoIP business phone system. Let’s take a look at the advantages of switching your legacy phone system to VoIP services.

Low cost

With toll-free phone calls, free conference calling, and no installation and maintenance costs – VoIP phone service is a cost-effective solution to traditional office business phone service.

You won’t have to budget for upfront costs as you get started either. The costs of PBX hardware can quickly add up, often totaling more than $20,000. With a cloud phone service, equipment costs are virtually zero. Moreover, business owners can reduce overall telecommunications costs by up to 50% with a VoIP phone system.

Business is a global affair these days. You’re likely to need a phone service that allows unlimited phone calls to overseas phone numbers. Voice and video conference calls made via a wi-fi network are free, so you can stay in touch with colleagues, contacts, and customers without racking up a huge bill each time.


Mobility is one of the most important things business owners need to consider in 2020. As the remote workforce grows by the day, organizations need a robust solution to manage employees spread all over the world.

What’s more, nowadays work doesn’t just take place in the office. People want to be able to tap into their work calls, notifications, and messages on the go. A cloud-based VoIP service offers a mobile app solution, so users can stay connected no matter how far from their desk phone they are.

As long as you have a decent wi-fi connection, IP telephony allows you to make phone calls from anywhere. This means your business can enjoy increased flexibility and accessibility as employees can stay productive, always.

What’s more, a virtual phone system is entirely portable, so you can use the same phone number wherever you are.


Scalability is one of the most significant advantages that a VoIP business phone system provides.

A VoIP system is one that can grow as your business grows. This is important because traditional office phone systems made it difficult to add or alter phone lines and phone numbers as a business developed. Often, there were hidden costs involved that made it hard to scale to suit business needs.

With a VoIP system, there’s no need to purchase expensive hardware as you grow. If, for instance, you run a customer support team and you’re experiencing a particularly high period of growth. You might feel the need to expand your team to better deal with your customers’ requests. Internet telephony makes the option to add or remove lines readily available at the click of a button.

Who can benefit from VoIP?

There’s not an ideal profile for who VoIP is best suited to. Why? Because it’s a great option for businesses of all shapes and sizes! Whether you’re a solo entrepreneur, or the CEO of a global enterprise – switching to VoIP can streamline business operations and help you to effectively meet your customer’s needs.

So what types of people and businesses should be leveraging VoIP?

Small and medium-sized businesses

Small and medium-sized businesses (SMBs) need a business phone solution that’s scalable and affordable. As a growing business, you need a system that can respond to your employees’ needs and those of your customers. Your goal is business growth, and the best place to start to achieve that is to equip your employees with the best tools in the business. VoIP is one of those tools.


As a large enterprise, you’ll probably be looking for ways to save on costs to boost overall business revenue. VoIP is a great option for many businesses seeking to reduce the costs of international communications with customers and to provide exceptional customer support that boosts customer retention. With VoIP, businesses can call toll-free to any location.

In today’s competitive business landscape, a business VoIP service can make a huge difference in the way businesses deploy customer support teams and deliver standout customer service.

Remote workers

If 2020 has taught us anything, it’s that remote working is here to stay. According to a study by Gartner, 88% of organizations worldwide made it compulsory or encouraged their employees to work from home after COVID-19 was declared a pandemic.

To successfully transfer customer service operations remotely, businesses needed a robust phone system that could be accessed from outside the office. Luckily, VoIP was there to make the transition smooth.

VoIP systems make it much easier for employees to work from anywhere. With VoIP, they can access the business phone network from their home, or a cafe down the street, even from a beach in Thailand. Anywhere there’s an internet connection, employees can sign in to work. Operations are centralized with a single system hosted on the internet, which solved the problem of immobility with legacy systems.

What’s more, with VoIP systems available on mobile devices, team members can stay connected on the go. This means they can sign in to a team video call conference meeting, or stay up-to-date on projects through instant messaging all from their mobile phone or portable device.

How can VoIP phone systems improve a small business?

There are a number of ways IP telephony can improve a small business and boost growth. IP telephony means small businesses can enjoy:

  • Low up-front costs to get started and affordable monthly service plans where functions can be added or removed as the business scales up or down.
  • Enhanced productivity with a range of calling options and communication tools like video calling and instant messaging.
  • Portability and scalability are unlike those offered by regular legacy office phone systems.
  • Improved ability to satisfy clients and employees with streamlined communication that functions across voice calls, video conference calls, and mobile phone devices.

The ease, functionality, and cost-effectiveness of implementing a phone service that functions with an internet network connection make it a must-have tool for modern businesses whose business objectives center on growth.

Frequently Asked Questions

Can you use a normal phone with VoIP?

Yes, you can use a normal office phone with VoIP. To do this, you’ll need an Analog Telephone Adapter (ATA) which gives your analog phone access to a range of modern attributes and call capabilities. However, often it’s much easier to use a SIP phone that’s designed for use with internet telephony services.