Phone System VOIP: What Is It & How It Works

Phone System VOIP

In today’s fast-paced digital world, staying connected is more crucial than ever. But are you leveraging the most efficient business phone system for your company?

Enter VoIP phone systems – a game-changer in business phone systems. It is not just about making calls; it’s about revamping how businesses communicate.

Don’t get left behind in the traditional telephony era; it’s time to embrace the future with VoIP phone service.

What Is A Voice Over Internet Protocol (VoIP) Phone System?

Telephone on Top of a Table

A Voice Over Internet Protocol (VoIP) [1] phone system is a cutting-edge technology that transforms voice communications into digital data transmitted over the internet.

Unlike the traditional phone system, Voice over Internet doesn’t rely on physical wiring but uses your existing internet connection. This innovative approach allows for more flexible, scalable, and feature-rich communication solutions tailor-made for modern businesses.

It’s an integral part of digital transformation, offering a seamless blend of voice, video, and data services along with conventional phone calls in an all-in-one platform.

How Does A VoIP Phone System Work?

A VoIP phone system converts your voice into digital packets sent over the internet to the recipient via VoIP servers. When you make VoIP calls, your voice is processed by a codec that compresses the data, facilitating efficient transmission through the web.

These packets are then decompressed and converted to sound at the other end. This process is so swift it is virtually unnoticeable.

VoIP systems can be used with dedicated VoIP phones, mobile and desktop apps, or even traditional phones with adapters, offering unparalleled flexibility.


  • Cost Efficiency: Significant reduction in call costs, especially for international calls with VoIP service.
  • Scalability: Easily add or remove lines without extensive infrastructure changes.
  • Portability: Use your number anywhere for VoIP phone calls with an internet connection, untethered from the desk phone.
  • Advanced Features: Access to features like call forwarding, voicemail to email, and conference calling.
  • Improved Productivity: Integrations with other business tools streamline workflow.
  • Flexibility: Suitable for remote or on-site work environments as it can be accessed from any computer or mobile device.
  • Enhanced Quality: Clearer voice quality compared to traditional phone systems.


  • Dependent on Internet Quality: Requires a stable and robust internet connection to receive phone calls and make outgoing calls.
  • Power Outages: Can be impacted by electricity outages if not backed up.
  • Security Concerns: Potential for cyber threats, necessitating strong security measures.
  • Limited Emergency Calls: Some VoIP services may not support emergency calling or may not provide accurate location data to emergency responders.

How Much Does It Cost?

VOIP Phone Setup

The cost of a business VoIP system varies based on factors like the number of users, features, number of business phone numbers, and the VoIP service provider.

Typically, small to medium-sized businesses can expect to pay between $20 to $40 per user per month for unlimited calling. This pricing often includes essential features like call routing, voicemail, and conference calls.

Advanced features, like call recording or CRM integration, may incur additional costs. Unlike a traditional phone system or private branch exchange, VoIP requires minimal upfront investment. It is a cost-effective solution for businesses seeking cutting-edge communication tools without breaking the bank.

What is VoIP Used For?

VoIP technology is used for a wide range of communication needs, transcending the limitations of traditional landline phones. Businesses leverage VoIP for:

  • Regular Voice Calls: Standard outgoing and incoming calls with improved clarity and reduced costs.
  • Video Conferencing: Facilitating virtual meetings with global participants.
  • Unified Communications: Integrating voice, video, messaging, and file sharing.
  • Remote Work: Enabling employees to connect from anywhere in the world, even from mobile devices.
  • Customer Support: Providing flexible, multi-channel support services.
  • Automated Attendant Systems: Enhancing customer service efficiency.

VoIP’s versatility makes it an indispensable tool for modern business communication strategies.

Traditional Telephone Line vs VoIP Phone System

Traditional telephone lines, or PSTN (Public Switched Telephone Network), operate on analog signals over copper wires, limiting features and scalability.

In contrast, VoIP phone systems use digital signals over the internet, offering a broader range of features and greater flexibility. VoIP systems are more cost-effective, providing lower call rates and reduced maintenance costs.

They also offer advanced features like call forwarding, voicemail-to-email, and video conferencing, typically absent in traditional systems.

While traditional lines are reliable during power outages, VoIP systems require power and internet connectivity, making them susceptible to outages without power solutions.

When To Migrate To A VoIP System

Migrating to a business VoIP service is ideal for businesses seeking scalability, cost-efficiency, and enhanced communication features.

Consider switching when:

  • Expanding Business: Easily add lines or features as your business grows.
  • Needing Advanced Features: If you require capabilities beyond basic calling.
  • Moving Towards Remote Work: VoIP facilitates efficient communication for remote teams, even from a mobile phone.
  • Seeking Cost Reduction: Business VoIP services can significantly lower communication costs.
  • Updating Infrastructure: Replace outdated systems with modern technology.

The transition to VoIP from traditional desk phones is a strategic move towards future-proofing your business communications, offering a competitive edge.

Factors To Consider Before Choosing a Business VoIP Phone System

You must consider multiple factors before identifying the best VoIP phone service suitable for your business.

The following sections cover the most critical factors. Many VoIP service providers offer a free trial of their services. Use them to evaluate different service providers.


When evaluating business VoIP systems, consider both initial investment and ongoing costs. Look at the pricing structure of different providers, including the cost per user and any additional fees for features or upgrades.

Assess if the system offers a good return on investment, especially compared to your current communication costs. Factor in potential savings from reduced call charges and eliminating current rentals for the landline phone system.

A thorough cost analysis ensures the VoIP phone services align with your budget and financial goals.

Internet Reliability

VoIP call quality is heavily dependent on your internet connection. Ensure your internet service provides sufficient bandwidth and reliability to support VoIP communications without disruptions.

Consider the number of simultaneous calls your business makes and the data usage of other applications.

If your internet service is inadequate, you may need to upgrade to a higher bandwidth plan or a more reliable provider. Internet stability is paramount; even the most advanced VoIP system can falter with a poor connection.

Current Setup

Assess your current communication setup and how seamlessly a VoIP system can integrate. If you are using legacy systems, determine the compatibility of VoIP with your existing hardware and business software.

Some businesses may require additional equipment, like VoIP-compatible phones or adapters. Also, consider the training needs for your team to adapt to the new system. A VoIP solution should enhance, not hinder, your current operations.

Understanding your existing infrastructure helps you choose a VoIP system that complements and elevates your communication setup.

Sound Quality

Sound quality is a critical factor in VoIP phone systems. Poor audio can hinder communication, affect professionalism, and frustrate users.

Test the sound quality of different VoIP providers, considering factors like latency, jitter, and packet loss. High-quality VoIP systems offer clear, crisp audio that rivals or exceeds traditional phone lines.

Additionally, look for systems that provide noise cancellation and echo reduction features. Prioritizing sound quality ensures effective communication, the cornerstone of any successful business operation.


Phone System VOIP

When selecting a VoIP provider, consider the availability of their service in your region. Not all VoIP services are available or operate effectively in every area.

Ensure the provider offers consistent and reliable service where your business is located, and check their reputation in your local market.

Additionally, evaluate their customer support structure — availability for troubleshooting and assistance is crucial, especially during the initial phase of installation and for ongoing maintenance.


The range of features offered by VoIP phone systems can significantly vary. Identify the specific features your business requires.

Standard features include call forwarding, voicemail to email, conference calling, and auto-attendant. Some providers offer advanced functionalities like CRM integration, call recording, and analytics.

Determine which features align with your business goals and workflow. Also, consider the ease of use and customization possibilities. The right mix of features can enhance efficiency and provide a competitive edge.

Remote Teams

If your business operates with remote teams or plans to, the VoIP system’s compatibility with remote work is vital. Look for features like mobile apps, flexibility in call routing, and the ability to use the system on a computer or mobile device.

The system should support seamless communication across different locations and time zones. It should also ensure data security and privacy, which are crucial for remote interactions.

A VoIP system that effectively supports remote work can significantly contribute to the productivity and cohesion of distributed teams.


Customization is a key factor when selecting a VoIP system. A good VoIP solution should offer flexibility and tailor features to your business’s needs.

It includes customizable call routing, the ability to receive calls with an automated system, personalized voicemail greetings, and adjustable on-hold music or messages.

Additionally, consider whether the system allows for scalability – can it grow and adapt as your business expands? The ability to customize user profiles, set up call groups, and manage call flows is also important.

The right level of customization ensures that the VoIP system enhances your business operations and communication strategies effectively.

Integration Options

Integration capabilities of a VoIP system are crucial for streamlining business processes. Evaluate how well the VoIP system can integrate with your existing business tools, such as CRM software, email platforms, and collaboration tools.

Seamless integration allows efficient data sharing and communication, improving customer service and team collaboration. Also, consider whether the system supports API integrations for future scalability.

The more integrated your communication system is with other business tools, the more efficient your workflows will be.

Thus, assessing the integration options is vital for ensuring the VoIP system complements your business technology ecosystem.

Technical Requirements You Need To Install It

Several technical requirements must be met to install a modern VoIP phone system.

  • High-Speed Internet Connection: A robust and reliable internet connection is critical.
  • Sufficient Bandwidth: Ensure your network can handle the increased load, particularly if you have multiple simultaneous users.
  • Compatible Hardware: Depending on your chosen system, you may need IP phones, analog telephone adapters (for existing phones), or computer headsets.
  • Networking Equipment: Up-to-date routers and switches capable of handling VoIP traffic, with Quality of Service (QoS) settings for prioritizing voice data.
  • Power Over Ethernet (PoE) Switches: Useful for powering phones through the Ethernet cable.
  • Backup Power Supply: To maintain service during power outages.
  • Secure Network Infrastructure: Adequate firewalls and security protocols to protect against cyber threats.


What is the difference between VoIP and IP phone systems?

VoIP and IP phone systems are often used interchangeably, but there’s a subtle distinction. VoIP refers explicitly to the method of sending voice data over the internet.

In contrast, IP phone systems encompass a broader range of technologies that use Internet Protocol for communication, including VoIP.

All VoIP phone systems are IP phone systems, but not all IP phone systems are limited to voice data and may include video and messaging services.

What is an example of a VoIP phone system?

An example of a VoIP phone system is Skype for Business. It allows users to make voice calls over the internet and provides features like video conferencing, instant messaging, and file sharing.

Skype for Business [2] integrates seamlessly with other Microsoft Office tools, enhancing business collaboration and communication.

It is a typical example of how VoIP systems can offer more than just voice calls, supporting a comprehensive suite of communication tools.

Does a VoIP system need a phone line?

No, a VoIP system does not require a traditional phone line. It uses the internet to transmit voice data, so a stable and robust internet connection is essential.

However, VoIP can work with existing phone systems through adapters, and users can also make calls via computers or dedicated VoIP phones, offering flexibility in terms of hardware.

Wrapping Up

Embracing a VoIP phone system could be the transformative step your business needs for enhanced communication and efficiency. If you are considering making the switch or need more information, The Network Installers are here to help.

Contact us for a free consultation and discover how a tailored VoIP solution can benefit your business.

Do not wait to modernize your communication tools – take action today and propel your business into a more connected, productive future.


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About Us
The Network Installers is a low voltage electrical contractor that provides data cabling, network installation, fiberoptic installation, and WIFI installation. We've been serving commercial customers since 2008 with exceptional quality, consistency, and professionalism.


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