what is voip

Telephones are an amazing tool. They have transformed our world by bringing us closer together, regardless of the distance. The list of telephone use cases today remains remarkably extensive. However, as technology continues to improve, we find more convenient communication methods that wouldn’t have been possible without phones. One of these technologies is VoIP.

So what is VoIP exactly? Should your business make the transition to it, too? In this beginner's guide, you’ll find detailed answers to these questions as well as more information to help you understand how the system works.

What is VoIP?

VoIP stands for Voice-over-Internet Protocol, the technology that enables you to make calls, send messages, and perform other tasks that you can do with a smartphone or a telephone - but over the Internet. In other words, you can use VoIP to make calls to any number by an Internet connection, all without extra charges, as VoIP systems, utilize broadband lines.

Essentially, VoIP means voice transmitted over a digital network. The first step here is the conversion from an analog signal to a digital signal, which is completed by an IP phone or an ATA (Analog Telephone Adapter). Next, the voice travels over the network - the Internet, that is - in the form of data packets to the receiver; this means that it undergoes conversion just like any other Internet data.

However, the receiver doesn’t receive the voice message in the converted digital format, as it gets converted to an analog format and travels directly to the destination over a traditional circuit switch. As a result, this super quick series of conversions allows the message to be received by traditional telephones.

With costs limited to typical monthly changes, using VoIP systems has become increasingly popular among businesses. The list of the most common features of these systems includes:

  1. Outgoing and incoming phone calls
  2. Conference calling
  3. Call reporting and recording
  4. Video conferencing
  5. Online management of calls and messages
  6. Voicemail
  7. Call transfers, call waiting, and caller ID
  8. Call monitoring and analytics tools.

Types of VoIP Phone Systems

The following are the most common VoIP services, categorized technology-wise. The abbreviation PBX is used to describe Private Branch Exchange, which is essentially a private, multiline telephone system that operates with an organization and allows to share a certain number of external phone lines.

Hosted PBX System

This is a virtual telephone exchange system designed to provide secure phone service for businesses using an Internet connection instead of a call server or controller. The provider of the VoIP service is responsible for managing the technology and maintaining the equipment and hardware. All VoIP services are delivered online.

A hosted PBX VoIP system allows the user to take advantage of a wide range of features, including IP telephony, multi-tenant infrastructure, voicemail, automated answers, faxing, and more. Providers of hosted PBX systems typically provide free trials, so they are common among small and medium businesses.

For example, Zadarma’s VoIP phone system provides free access to premium features, including call recording and call transfer, voice menu (IVR), auto-response, PBX integration with CRM systems, including Zadarma’s Teamsale CRM, speech recognition, call holding and queuing and much more.

How does VoIP system work

On-Premise PBX System

As the name suggests, the system resides on the premises of a PBX user. This means that you have to install and maintain the software, which might seem like a disadvantage but actually translates into a number of pros, including:

  1. More control over the phone system
  2. The ability to have two types of dial tone service. In case one goes down for some reason, you’re still in the business because you have an additional line for backup
  3. Signaling over an on-premise system rather than the Internet. This eliminates the need for a constant, robust Internet connection.

On the other hand, the biggest downside of this system is that the user will be responsible for installing and setting up a secure IP network, which can be expensive.

Open-Source VoIP Phone System

This is a combination of an operating system and PBX software that are publicly available. This means you have control over the system and can customize the features to meet your needs. For example, customizing the settings - including designing your own images, buttons, ringtones, etc. - becomes easy.

Proprietary VoIP Phone System

This is PBX software and the operating system that you can’t change by altering the source code. Perhaps the best example of a proprietary communication tool is Microsoft’s Skype where the developers locked the programming code to avoid changes from users that could undermine compatibility and reveal vulnerability issues.

Using proprietary VoIP systems has a number of advantages, including:

  1. Consistent user experience across compatible devices and software integrations, which helps to learn and use the system quickly and effectively
  2. The manufacturer of the system also provides support for all elements, so there’ll be no blaming other companies for hardware issues, etc.

However, also remember that perfect integrations and added security typically cost more than with other types of VoIP systems.

As you can see, the features provided by the VoIP are important for every business; That’s why reducing phone bills and unifying communication platforms have become some of the biggest factors that drive the growth of the global VoIP market, which, by the way, is projected to continue its growth.

Benefits of VoIP Systems for Business

There are many reasons why using VoIP for business is a good idea, so we’re going to list the most important ones for you in this section.

1. Call Recording

It’s a known fact that many companies record customer support calls to evaluate the quality of the assistance provided by operators and improve service. This is one of the features that VoIP solutions provide, and you can use it to avoid missing an important message or confusion that arises because of what was said during a call.

2. Cost-Effectiveness

Using VoIP is cheaper compared to traditional landlines because the calls travel exclusively over a data network and never enter public phone lines. For example, VoIP calls to PC are free while the cost of calls from PC to landline is still lower compared to traditional phone operator charges. As a result, you avoid monthly call charges, which can be especially helpful for businesses that rely on making international or long-distance calls.

3. Scalability

Instead of investing in expensive new hardware, you can just add new integrations to your VoIP network. Doing so is very easy, just as connecting a SIP-enabled phone to the network and configuring the settings. For businesses, this means that a VoIP system allows them to expand as they grow.

4. Easy Installation and Maintenance

Installing many VoIP phones only requires connecting them to an IP system, which could even be done by someone without significant experience. And, if your system isn’t hosted on your premises, you don’t have to worry about managing and maintaining it.

5. High Call Quality

In the early days of VoIP, the quality of calls was an issue because of low broadband speeds, so distorted and dropped calls were quite common. However, as high-speed broadband networks became available, allowing for great voice quality and video capabilities. If implemented properly, a VoIP system can provide excellent call quality from just about anywhere; in fact, in many cases, the quality can even be higher than in traditional phone lines.

6. Portability

If some of your employees work remotely or from different offices, then you can help them communicate with the head office with Hosted VoIP. All that remote workers need to do is plug the headset into the broadband line so the office-based employees can reach them.

The VoIP technology has become a part of daily communications for many businesses, and for a good reason. It’s cheaper than traditional phone services, yet ensures high quality of calls as well as video calling capabilities.