What is VoIP?
VoIP or Voice Over Internet Protocol is a communication technology that uses the internet instead of traditional phone lines to make and receive calls. The basic process includes a router (for the internet) connected to a handset (to make calls). VoIP aids in processing high-quality calls in addition to providing advanced features that you may not find in a landline service.
Unlike a landline phone that needs to be attached at a specific place in your office, VoIP lets you take the handset anywhere. You can also handle calls from your phone, tablet and laptop. Moreover, it can be integrated with other software (e.g., a CRM system) to provide much more efficient connectivity between your customers and business agents.
To set up a basic VoIP system for your business, you will need the following components:
- A VoIP software subscription
- A stable internet connection with bandwidth enough to support VoIP calls (an average of 100-180 kbps per call)
- A digital device with internet connectivity, such as a softphone, an IP phone, a smartphone, a laptop, or a tablet
How VoIP Works
A VoIP phone system works in the following steps:
Voice Conversion: When you speak in a VoIP device, it converts voice signals into data packets
Data Transmission: These data packets travel over your broadband network
Call Routing: A VoIP provider routes this call to the recipient’s phone
Audio Reconversion: The digital packets are then converted back to the voice by the recipient’s VoIP phone
What is a Digital Phone System ?
A digital phone system is a modern upgrade of a digital phone that converts voice into digital signals and transmits them through standard copper wires or a private PBX (private branch exchange). It does not rely on the internet and uses dedicated telephone networks to function. It is also known as an on-premise PBX.
A digital phone system includes several hardware components like
- Digital desk phones or handsets.
- A PBX cabinet or key system unit to manage call routing and internal and external connections.
- Phone lines to connect the service provider, PBX and all the devices.
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How Digital Phones Work
A digital phone is a traditional telephone with digital processing capabilities. Here is how it works:
Voice Conversion: It converts incoming voice into digital packets
Signal Transmission: These digital packets travel over copper, ISDN or PBX lines
Call Routing: A PBX or service provider routes this call to the intended recipient’s phone
Digital-to-Voice Conversion: The digital packets are then converted back to voice
Features: Additional features like call forwarding, voicemail & more are available on digital phones
VoIP Vs Digital Phone: Key Differences
| Features | VoIP | Digital Phone |
|---|---|---|
|
Technology |
Internet-based |
Uses copper or ISDN lines |
|
Infrastructure |
Cloud-based; minimal hardware required |
Heavy hardware: PBX cabinet, digital phones, cables |
|
Features |
Rich features e.g. video calling, analytics, CRM integration, mobile apps |
Limited features of calling, voicemail, call transfer |
|
Setup & Installation |
Instant activation within minutes |
Physical installation required |
|
Scalability |
High, easily add more users |
Costly, requires hardware investments |
|
Call Quality |
High-speed internet ensures HD calls |
Consistent quality, not dependent on internet |
|
Cost |
Low upfront costs; pay monthly subscription |
High upfront & maintenance costs |
|
Mobility |
Calls can be made and received anywhere with internet |
Tied to a physical location |
|
Maintenance |
Low maintenance costs |
High; need IT support for hardware maintenance |
Choosing the right mode of communication is an important decision, as it will impact your day-to-day operations, budget, and subsequent growth. VoIP and digital phone systems differ significantly in terms of the technology they utilise, the features they offer, and the costs they incur. Their detailed comparison is given below.
Technology
VoIP converts the user’s voice data into digital data packets for transmission over the internet using packet-switching technology. The use of the internet rather than physical lines augments it with a great many features.
Digital phone systems use circuit-switching technology to convert voice into digital signals. The key difference is that digital signals get transmitted through dedicated physical lines. This method ensures consistent quality without relying on the internet.
Infrastructure
VoIP requires minimal on-site hardware to operate. It uses existing internet connections, routers and devices such as IP phones and computers with softphones. VoIP is an ideal solution for businesses wanting to avoid considerable hardware investments.
Digital phone systems, on the other hand, require substantial physical infrastructure, including a PBX cabinet or server, digital phones or handsets, and physical lines.
Features
VoIP provides a wide range of cloud-based features that are readily scalable at limited or no additional costs. These include video conferencing, voicemail-to-email transcription, analytics, CRM integration, and mobile apps.
Digital phone systems provide standard features like call holding, transferring, and basic voicemail. Additional features, such as conferencing or business integrations, come as add-ons and cost substantial hardware investments.
Scalability
Adding additional users and locations is very convenient with VoIP. It requires no hardware changes and can be done within minutes. It makes VoIP a perfect choice for businesses aiming to grow and scale rapidly.
Digital phone systems require hardware expansion in order to scale the existing usage. Expanding such a system requires installing new lines and phones and sometimes even upgrading the entire PBX unit. This involves lead times, professional setup, and significant expenses. It might not be the most suitable option for businesses with changing needs.
Call Quality
VoIP call quality is highly dependent on the quality of the internet. If the internet is stable and high-speed, VoIP delivers excellent HD quality. If issues like jitter or latency arise, they can usually be resolved with Quality of Service (QoS) network settings.
Digital phone systems are known for consistent and reliable call quality, as they are not affected by internet issues. However, they generally do not support HD audio quality, as they operate over physical cables.
Cost
VoIP costs significantly less to a business in both the short and long term. There are no large upfront hardware investments. You only pay for phones and monthly subscription charges, which include maintenance, updates, and support from your service provider. The rates of international calls are also cheaper.
Digital phone systems involve high upfront costs, as they require considerable hardware investments: PBX equipment, phones, installation, and licensing fees. Operational expenses like maintenance, repairs, and upgrades are costly as well. Digital phone systems often require support from either an in-house or external IT team. These expenses make digital systems a less attractive option for businesses with budget concerns.
VoIP Vs Digital Phone: Which One is Right For Your Business?
For most modern businesses that prioritise cost savings, flexibility, remote work, and future growth, VoIP is the ideal communication option. It reduces expenses, simplifies scaling, and easily integrates with the tools you already use. Digital phone systems may still suit organisations with ultra-stable infrastructure, low internet reliability, or very basic communication needs. But even they are becoming outdated as VoIP technology continues to improve in the UK market.
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