Everything You Need to Know About VoIP Phone Systems

Updated Aug 3, 2022.
Everything You Need to Know About VoIP Phone Systems

As the internet gets faster, many businesses are reducing or cutting off from traditional phone systems and migrating to virtual phone systems. More businesses are considering VoIP for their business phone systems.

Are businesses making the migration on false assumptions or is the hype justified? Is the VoIP phone system more affordable than the traditional phone system? Is VoIP secure? What benefits does it bring to your business?

Before you switch your business phone system for a VoIP phone system, you need to consider a lot of factors. What are the components of VoIP and how does it work? What are the key differences that exist between a VoIP phone system and traditional phone systems? What are its technical requirements?

In this article, you will learn everything you need to know about VoIP phone systems including the signs that signal the need to switch to a VoIP phone system and how to choose the right VoIP system.

Let’s get started.

What is a VoIP Phone System?

VoIP is short for Voice over Internet Protocol. It supports the transmission of voice messages and other communications over the internet. VoIP can also be in the form of emails, texts, or chats. Another name for VoIP is IP telephony.

IP telephony is available not only on phones but also on many personal computers and other internet-accessible devices like special VoIP phones and WebRTC-enabled browsers. 

A VoIP phone system changes voice signals to digital data in data packets and transports across the internet through a router. 

Only a very strong internet connection and phone system software are required to run a VoIP phone system. 

VoIP technology which is the hallmark of the VoIP phone system allows messages, calls, emails, etc to be sent through a mobile data network or WiFi connection. It uses a single unified communications system to unify all modern communications technologies,

 Instead of making use of physical communication lines to make calls, the VoIP phone system makes use of Internet Protocol (IP) to send and receive calls. 

The voice data is then converted into network packets. These network packets are later sent through the IP network you have chosen. The IP network might be a reliable and fast internet connection, a dedicated IP connection through your phone provider, or both.

VoIP Phone System Infographic
Source: GetVoIP

How VoIP Works

The VoIP phone system converts voice into digital data and sends it through the Internet connection via a router. It relies on a stable and high-speed internet connection to convert analog voice signals to digital signals. It then proceeds to transfer the digital signals in the form of data.

VoIP works through the use of packet switches. These packet switches place voice signals in packets and allow the transfer of information through email, voicemails, text, phone calls, video conferencing, etc. 

Each packet has specific destinations where it transfers the data. The data is later sent to pass through the router via the broadband line or connection.  

You can use VoIP easily on different devices. They include regular phones, IP phones, and computers. 

  • Regular Phones: The Analog Telephone Adaptor (ATA) is an analog to digital converter. To make use of VoIP, you just have to connect regular phones to the Analog Telephone Adaptor (ATA). 
  • IP Phones: These phones are connected to the router directly. All hardware and software that can be used to make IP calls are available on them. They make use of Ethernet connectors.
  • Computers: To make calls from computer to computer, a strong internet connection, speakers, sound card, and software are needed.

There are other components of the VoIP system. An example is the Private Brand exchange( PBX) system. The PBX system is a telephone network that uses the Local Area Network (LAN) to connect to enable the making and receiving of calls. 

Another component is the IP PBX. The work of the IP PBX is to allow the connection of calls between VoIP phone users and local phone users.

IP PBX systems that have SIP trunking give room for transfers and receiving of calls, texts, multimedia, video conferencing, conference calls, etc. 

The session border controllers are a vital component of a typical VoIP system. They provide call policy management, security, and network connections.

VoIP Working Process
Source: WPBeginner

Benefits of VoIP

VoIP offers several benefits for individuals and businesses. They include cheap and affordable pricing, adequate security, reliability, service mobility, easy communication, conference calls, and additional features.

1. Cheap and Affordable

VoIP does not need new or expensive hardware to function. If the need for new hardware arises, it is always the readily available ones that are free for public access.

The charges for calls with VoIP are cheap for both international and local calls. There are also no extra charges even though voices are sent over long distances. 

VoIP phone systems are cheaper than local phone systems. There are free VoIP service providers that provide quality VoIP services such as CloudTalk, RingCentral, Grasshopper, and RingCentral alternatives

2. Adequate Security

VoIP systems reduce security threats by using advancements in IP technology to improve identity management and password encryption.

To secure your VoIP phone system, work with your VoIP service provider to implement rules like ensuring the use of passwords by the staff, undergoing security audits, and setting automatic alerts against suspicious acts.

3. Reliability

If the office phone system shuts down or stops working for a while, calls can be forwarded to other devices with VoIP. It makes work effective despite any form of emergency with normal devices.

4. Service Mobility

VoIP is highly mobile and in events where there is a relocation, the VoIP phone system can be moved without interfering with the normal functioning. 

The VoIP phone system is a software application downloaded on your device to send voice calls, this means there's no need for physical phone lines. It is very portable and valuable to business operations.

5. Easy Communication

With the right business plan in place, businesses can grow rapidly over the years. This accelerated growth can result in a small business turning into a large enterprise with many branches located in many parts of the world.

To bridge the gap, using a VoIP phone system allows you to communicate with many workers despite the geographical barrier.

VoIP helps to share information instantly between you and your team members thereby leading to the smooth running of your business. Calls can also be forwarded to many devices so they can be picked up by any of your team members.

6. Conference Calls

The VoIP system is built with the capability to connect many participants over a conference call over a data network without adding extra costs. There is enough room to create and host conference calls for as many participants as possible. 

You can also use conference call services for small businesses such as RingCentral, JustCall, GoToMeeting, ClickMeeting, and UberConference.

7. Additional Features

VoIP allows wide connections to various devices to keep your business running smoothly and effectively. There are additional features such as caller ID, voicemail, email, contact list, etc that can be used for boosting work efficiency. These features can be designed according to how the business is organized.

For example, more than one message, voicemail, or email can be sent to a lot of people at the same time. Also, you can pick up voicemails that were automatically converted to text and routed to your email.

Benefits of VoIP
Source: Yeastar

VoIP vs Traditional Phone Systems

Traditional phone systems and VoIP phone systems are two popular phone systems utilized by businesses. While they provide the same services, some distinctions exist between them in terms of flexibility, sound quality, cost efficiency, reliability, security, and more.

1. Flexibility

Working with a VoIP system is very easy compared to using traditional phone systems. You can work from anywhere without any noticeable drop in quality. It allows you to communicate with your team directly.

On days when you are out of work, you can stay connected through your devices no matter the distance. VoIP provides working teams with outstanding calling features without extra charges or extra hardware.

2. Sound Quality

Data sent through a VoIP phone system has better voice quality compared to traditional phone systems. 

There is an increase in the voice quality of phone calls whether they are static or not. It leads to smooth communication between the clients and the working team. On every VoIP call, there is an improvement in sound quality enhanced by wideband audio codecs.

3. Fast Installation

Installing VoIP systems takes less time compared to the installation of traditional phone systems. Moving your business telecommunication operations from landlines to VoIP is easy and quick.

4. Reliability

VoIP phone systems are more reliable than traditional phone systems. In cases of emergency like power outages or technical problems, the VoIP system is always monitored round the clock. Transmissions can be rerouted to avoid missing a call, text, or email. 

5. Cost Saving

VoIP phone systems are way cheaper than traditional phone systems. There are a lot of cheap VoIP services to lower your business phone bills, with some even offering free plans.

Long-distance calls made using VoIP are at the same cost as normal calls because VoIP converts voice messages to data that can be transmitted over the internet. With traditional phone systems, long-distance calls remain expensive because many circuits have to be kept open during these calls.

6. Security

Calls you make with VoIP phone systems are encrypted digitally. Information cannot be easily tapped like on traditional phone systems.

VoIP service providers such as RingCentral, Ooma, and Ooma alternatives ensure there is constant monitoring of activities. They protect you against breaches and carry out independent security audits. 

These VoIP service providers also inform you of operating system updates that require completion to avoid putting the business at risk. VoIP phone systems also provide Caller IDs.

When to Consider Switching to a VoIP Phone System

1. Limited Growth

Consider switching to a VoIP phone system when you notice these events playing out in your business: limited growth, poor voice quality, high cost of hardware, and missed calls. You do not have to wait to see all these signs before switching to a VoIP phone system.

There is a need for businesses to grow, it is the number one sign that your business is healthy.  

Once your traditional phone system is limiting your business growth or cannot handle its new growth, it is best to switch over to a VoIP phone system. Fast network connection gives room for enough capacity for the digital part of your business.

Having limited call lines can limit business growth but by making use of VoIP, there is no limitation as new lines and users can be added and removed easily.

2. Poor Voice Quality

In situations where the call is static, there is no way to hear or listen to voice calls. Traditional phone systems compress voice data, therefore, resulting in low quality of the audio sent.

With VoIP, there is clear HD quality that makes audio very clear. You avoid missing out on crucial information with VoIP phone systems. It makes calls more professional.

3. High Cost of Hardware

Using a VoIP phone system is economical, there is no need to buy expensive hardware that might later require maintenance costs or replacement. Expenses like long-distance call charges are reduced.

4. Missing Calls

Important calls may be missed when unpredictable events arise with traditional phone systems. Making use of the VoIP system prevents such incidents as you have more control and flexibility over your business communications.

You and your team members can make and receive calls from any location without having to be present in the office.

How to Choose the Right VoIP System

There are two factors to consider before picking the VoIP system suitable for your business or needs: What your needs are and the type of VoIP service provider you want. 

1. What Do You Need?

Ask yourself this question before selecting any VoIP system. Consider the following before selecting a VoIP phone system:

  • Your business size
  • The number of calls you make in a month (Estimate if you do not have that data)
  • The number of workers that will benefit from the VoIP system
  • How frequently your business receives calls
  • The types of hardware you prefer to use
  • Maintaining or changing your devices.
  • The types of calls you would prefer.

2. Types of VoIP Providers

There are three types of VoIP providers: VoIP Providers Only, VoIP and Cloud Providers, and Unified Communications Providers. You can pick one suitable for your business.

VoIP Providers Only

This VoIP provider offers a VoIP phone system with a basic package that includes voicemail and call forwarding. It is meant for small business phone systems. Note that it only provides VoIP (Voice Over Internet Protocol) services.

VoIP and Cloud Providers

VoIP and cloud providers offer VoIP alongside a cloud system. They combine their VoIP with cloud PBX technology. It also offers packages like auto attendant and virtual extensions.

Unified Communication Providers

This VoIP provider offers VoIP system benefits alongside cloud systems and more benefits like video conferencing software, IT services, business mobiles at a lesser rate. 

VoIP Phone System Features
Source: VoIPTech

Setting Up a VoIP Phone System is Simple

There are various straightforward methods of setting up a VoIP phone system. They are listed below:

Setting Up a VoIP Phone System at Home

Starting a VoIP system is much easier at home than in an office. As a safety precaution, turn off all the devices before starting up.

1. Sign Up for a VoIP Service Provider

The first step involves signing up for a VoIP service provider. Some of the best VoIP service providers include Nextiva, RingCentral, Vonage, Ooma, and Vonage alternatives

2. VoIP Phone Adapter

Get a VoIP phone adapter and plug it either directly into the router or between your computer and modem. Some phone adapters need a WiFi connection while some need Ethernet cables. There are instructions on the phone adapter you need to follow for a successful installation.

3. Connect Phone to Adapter

Proceed to connect the phone(s) for the VoIP system to the adapter. Make sure the phone is connected to the port with the label ‘Phone/Line 1'.

You can now power your phone adapter and make sure it is turned up every time alongside the router. It leads to the smooth running of the VoIP system.

4. Turn on Devices and Wait for Updates or Downloads

After connecting the devices, turn them on and allow the router, modem, and phone adapter to sync. Also, give the phone adapter time to update or download some firmware. Proceed to pick up your phone, a dial tone indicates you have set up your VoIP system. 

Setting Up a VoIP System In the Office

Using a VoIP phone system is easy and very affordable. It is also easy to set up. There are two ways to set up a VoIP system in the office. You can do it either with physical VoIP phones or using software-only through Android or iOS devices.

Using Physical VoIP Phones

Figure out the appropriate devices that will be useful for you and your business. A PBX system is required and must be connected to the network. For accessibility, the PBX must have a static IP address and be connected through a standard Network Interface Card (NIC).

Proceed to hook up your phones. Connect the phones to the same network as the PBX using an ethernet cable. Install your VoIP software and configure your router.

You can configure your router by:

  • Enabling Network Address Translation (NAT): NAT modifies network address information. It allows the remapping of one IP address into another over a traffic routing system.
  • Enabling Universal Plug and Play: Universal Plug and Play allow network devices to locate one another. This allows the VoIP phones to connect with the IP PBX server.
Hosted VoIP Business Phone System Infographic
Source: Nextiva

Setting Up a Software VoIP System

This method is simpler and straight to the point because there is no need for new VoIP phones. Phone calls can instead be made and received through a smartphone, tablet, or computer. 

An important factor to consider is a good network connection. The connection to make a VoIP phone system work well must be fast and reliable. Some of the best high-speed internet providers include Verizon & AT&T, Viasat, Ooma Connect, and Spectrum.

Take a VoIP speed test to get the strength of your internet connection. You can also detect certain issues that might hinder or slow down VoIP. The speed test shows if your Internet connection can install VoIP.

After doing the VoIP speed test and confirming you can install the VoIP system, it is time for the installation. Install the software from your VoIP provider. The software might come as an application or softphone program. It allows you to open an interface for calls on any device of your choice.

Technical Requirements for VoIP Systems

Specific technical components are required for a VoIP system. They include internet connection, VoIP provider, hardware, software, bandwidth, PBX (Private Branch Exchange), and wired ethernet router.

1. Internet Connection

A standard and effective network and internet connection (or a strong Broadband internet connection) is needed. Using fiber optics cables is usually preferable. Connections must have less than 70ms pings and jitter to prevent stability and latency problems.

2. A VoIP Provider

Subscription to a VoIP provider is needed to make external calls. Without a VoIP provider, calls can only be made to other extensions within your working space.

3. Hardware

To choose the appropriate hardware, you must consider the needs of your business first. Phone gadgets, headsets, routers, and VoIP adapters are needed. 

Each device must have at least 100kbps upload speed. It is also important to check that your hardware is compatible with your PBX server.

4. Software

Another technical requirement for VoIP systems is software. Cloud-based phone systems, applications, and integrations are also required.

5. Bandwidth

Make sure your system has enough bandwidth to make calls. The higher your call volume, the higher the bandwidth required. 

6. PBX (Private Branch Exchange) Software

PBX software serves as the core of your local phone network. This software facilitates all your phone system functionalities, making sure that your business calls run smoothly.  A VoIP phone system requires very little from the PBX unless you have a lot of phone users.

7. Wired Ethernet Router

To run a remote VoIP system, a Virtual Private Network (VPN) router will be needed. The VPN must provide a high quality of service and a strong connection.

Should I Choose VoIP for My Business? 

The adoption of VoIP technology among businesses worldwide is growing at a rapid rate. Experts predict that it will supplant the traditional phone systems in the near future. 

You should consider switching from traditional phone systems to VoIP phone systems not because it is what others are doing, but because of its benefits to your business. 

Some of the benefits of VoIP technology include low and affordable costs, flexibility, mobility, advanced security, reliability, and additional features. Regardless of the size of your business, VoIP is beneficial for your business. 

Choosing VoIP for your business is a business decision. As with every other business decision you have to make, you need to conduct your research, consult with your employees and experts. 

If you check your competitors who keep a competitive edge, you may find out that they are adopting VoIP as a useful tool to gain ground in the market.

Remote businesses should consider switching to VoIP phone systems. VoIP has remote capabilities that support remote workers. Also, consider the bandwidth and internet connection strength your business has to support VoIP before choosing it.

Anastasia Belyh

Editor at FounderJar

Anastasia has been a professional blogger and researcher since 2014. She loves to perform in-depth software reviews to help software buyers make informed decisions when choosing project management software, CRM tools, website builders, and everything around growing a startup business.

Anastasia worked in management consulting and tech startups, so she has lots of experience in helping professionals choosing the right business software.