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What is VoIP? Everything You Need To Know (2024 Guide)

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What is VoIP?

VoIP or Voice Over Internet Protocol is a phone 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 along with 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. CRM system) to provide much more efficient connectivity between your customers and business agents.

With the news that the UK landline telephone network will be replaced by digital technology by the end of 2025 (AgeUK), it has now become even more significant for businesses to understand this technology, its types and the advantages it carries.

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How does VoIP work?

Simply put, VoIP works by converting the analogue voice signals into digital signals that are sent to the VoIP service provider through the internet. They are then converted into digital packets and transferred to the receiver side.

Before sending the voice call to the receiver end, the call is encoded using codes (which include compression and decompression algorithms) that decrease bandwidth requirements. Voice over Internet Protocol bypasses the landline company completely.

What is required for VoIP setup?

Setting up VoIP is simple. At the basic level, you only need an internet connection (powered by a modem and router) and an adapter that can handle the VoIP calls. You can use the VoIP phone to make the call or simply install the software on your devices (laptop, cellphone or tablet).

Can I plug in my VoIP phone anywhere?

Yes, since a VoIP phone is not limited to a physical phone line, it can be used anywhere within the range of your internet connection. That means you can move it around your office or take it along with you to other locations.

How is VoIP different from the traditional phone system?

The biggest difference is that a traditional landline phone system requires a specific handset that needs to be connected to a PSTN network by copper wires. VoIP doesn’t necessarily require a physical phone and is connected to an IP network without the need for wires.

Moreover, a VoIP phone system offers cost savings. It not only eliminates the need for investment in copper wires required for setting up a landline but also allows for international calls at reduced rates.

Advantages of using VoIP

It saves cost

VoIP phone system is cheaper than a landline. Firstly, on average, a landline phone system costs around £14/user minimum in the UK. VoIP plan, in comparison, starts from as low as £7/user. Going by these figures, you can halve your phone bill by shifting to VoIP (of course, these rates will vary depending on the company and plan you choose.)

Secondly, VoIP uses an internet connection to be set up. This means, unlike the landline phone system, you don’t have to pay for the copper phone lines and PBX system.

Thirdly, you can easily use VoIP on devices like laptops and phones, so you might potentially never be required to purchase any additional hardware.

Fourthly, most VoIP systems come with additional features like call queuing, call waiting, auto-dialer and conference calls without any extra price.

All these reasons compile to make VoIP a cost-cutting solution when compared with the traditional landline system.

It is portable

Unlike the landline handset, you can take a VoIP handset anywhere (in the office, home and travel) and still make and receive calls (provided you have an internet connection).

Also, some VoIP service providers offer virtual phone numbers that can be used wherever you go. For people who travel a lot, this is a huge benefit.

It provides ease of adding or removing phone lines

One of the biggest benefits of VoIP is the convenience it provides in adding or removing phone lines. Unlike the landline phone system, where you need additional wiring and installation for an extra line, VoIP lines can be added easily because it’s a cloud-based system.

Think about how useful it would be for your business at times of high product demand in the holiday season. You can conveniently add phone lines for that time period and then get them removed afterwards.

The advanced features are great for communication and business collaboration

Another benefit of the Voice over IP is its special features. One of them is call transferring which allows the call to be distributed among different departments. This helps your business become more approachable.

The other feature is virtual extensions that allow you to give extensions to your team members who are located in other parts of the world.

Other features include video conferencing and screen sharing, which fosters greater collaboration among employees during remote meetings and enhances teamwork.

It is more reliable

VoIP phones offer more reliability in comparison to traditional landline systems. They are less prone to interruptions in service resulting from weather or other environmental conditions. Unlike the landline system where the whole branch may get affected by an outage, you can shift from one internet connection to another quickly with a VoIP.

Disadvantages of VoIP

You are dependent on the internet connection

You require a stable internet connection for the VoIP to deliver high-quality phone calls. If the internet is unstable or slow, your communication will encounter issues like distortions, echoes or even dropped calls. Bandwidth limitation can affect the call quality as well. The good thing, however, is that it doesn’t use a lot of bandwidth; generally, 85- 100 Kbps (kilobits per second)/line is enough to make a high-quality phone call.

The worst-case scenario is when the power goes out and you don’t have a backup. In that case, your internet connection will be off and thus you will not be able to make or receive calls with VoIP at all.

It can incur security concerns

Since VoIP require calls to be transferred over the internet, it can fall prey to hacking and unauthorised access if proper security measures are not integrated. Therefore, it’s essential to apply encryption protocols to ensure the confidentiality of the calls. This is why it is important to choose a VoIP provider that offers reliable security features (e.g. VPN establishment, call blocking, remote device management, etc.)

Types of VoIP

Hardware-based phones

hardware-based voip phone

Hardware-based VoIP phones are physical devices that receive and make calls over the internet. These phones resemble traditional desk phones but are integrated with built-in VoIP technology. They offer high-quality audio, dedicated call control buttons and come with additional features like HD displays, programmable keys, auto-responder and call transfer.

Hardware-based phones are ideal for SMEs (Small & midsize enterprises) who are looking for reliable and efficient communication without the complexities of software-based alternatives.

Benefit Disadvantage
  • Less prone to interruptions because they do not rely on the stability of computer or mobile devices.
  • Purchasing the desk phone will be an upfront cost for the business.

If you want to convert your existing landline phones into VoIP phones, that is possible as well with the help of a VoIP adapter. This adapter works as a connection to link the analogue technology with the digital network.

Software-based phones

software-based voip phone

Software-based VoIP phones are called softphones and are applications that enable VoIP calling directly from your devices such as a computer, laptop and smartphone. These apps use the internet connection to make and receive calls, eliminating the need for dedicated hardware.

They provide enhanced flexibility and mobility as users can stay connected from anywhere where the internet is present. They often include features such as instant messaging, contact management and integration with other business applications.

Benefits Disadvantages
  • Require no physical phone to function. Hence there are no upfront hardware costs.
  • Workers can use other software on the computer screen (or mobile) while conversing on the phone.
  • The need for a stable computer and a charged mobile phone might hinder the reliability of operation.

Why VoIP has become important for businesses?

There are 3 big reasons why VoIP has and will become integral for small and medium businesses.

Firstly, it can be set up quickly and incurs no initial hardware cost (equipment or wiring). Since every business looks for ways to optimise their spending, they could highly benefit from this technology.

Secondly, VoIP offers automatic disaster recovery which means you can easily reroute your calls to mobile devices or remote workers in case of an emergency.

Thirdly, since the rise of remote working after COVID-19, many businesses have been operating with remote teams. These companies can benefit from advanced networking features VoIP offers e.g. video conferencing, screen sharing, virtual extension and call centre analytics. And since the system is easily scalable, you can add the phone lines as the team grows (or cut them if a team member leaves).

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A VoIP (or Voice over Internet Protocol) number is a virtual number you get after signing up for a VoIP service. You can use this number to call from any internet-connected device such as a laptop, computer, desk phone or cellphone. Unlike a traditional landline phone number, it’s not tied to a specific location or device.

Although both VoIP and Wi-fi use the internet to make and receive calls, they are different. Wi-fi calling is a feature of your cellphone and it uses Wi-fi to make personal calls. VoIP uses 4G/5G cellular network and it is primarily used for business implementation. It includes many features like call queuing, auto-responder, etc.

The rate of VoIP packages in the UK will vary depending on the company, plan taken and the contract type (monthly or yearly) but it is generally within the range of £5-25/user.

If good internet is in place, the voice quality of a VoIP phone will be better than a traditional landline phone. This is because the cloud-based system uses wideband audio codecs that limit quality issues like time lag and noise.

One of the biggest advantages of VoIP is that you can use it on multiple devices like cellphones with an internet connection. You can easily install the VoIP phone app and use the VoIP number on your phone to make and receive calls.

Written by:

Isabella Robinson
Isabella Robinson
Isabella Robinson is a seasoned business content writer, leveraging several years of experience to craft impactful narratives that seamlessly blend business insights with engaging storytelling across diverse industries. Her expertise lies in delivering compelling content that resonates with audiences.