VoIP: Voice over IP

Definition: Voice over Internet Protocol, or VoIP, is the technology used to transmit voice conversations over an internal or external data network using IP packets (digital form); without loss in functionality, reliability or quality; and in compliance with the International Telecommunications Union specifications. The term is also used to refer to the hardware and software used to carry such calls over the network.

What is an IP number?

IP stands for Internet Protocol. An IP address is a long and unique number that devices use to identify and communicate with each other. When you log into the internet your computer equipment is essentially given a unique (to keep the explanation simple) number.

How is the VoIP call made?

A voice signal from a VoIP phone (or an older phone connected through an adapter) is passed through a VoIP device that converts the regular telephone voice signal to a digital one so it can use a broadband internet connection where it travels to the destination equipment. The digital signal is then converted back to the original voice call.

In other words, when the originator calls a number the VoIP adapter logs on to the routing server - which looks up the destination IP number that's associated with the dialled phone number - and it makes the connection. If the destination number isn't using VoIP, and doesn't have the phone number tied in with an IP number, then it is recognised that the destination number is a Public Switched Telephone Network (PSTN) phone and the call is routed through the PSTN*.

*The PSTN is also known by names such as POTS (Plain Old Telephone System) and PATS (Publicly Available Telephone Services).
click for larger image (new window)
voice over IP. Image released to public domain

Devices involved

Major advantages for small businesses:

  • Cost: The major advantage of not paying per call - and on length of call and on the destination location - results in substantial savings. You still do pay for calls to PSTN numbers but you tend to pay less. Calls between your own offices across the country can all be free. As calls to other VoIP users are free your call costs are likely to go down as more people sign up for VoIP.
  • Manageability: Employees spread all over the country working from branch offices (or even their homes) can all be given extensions of a single number with the ability to route calls between themselves. Customers are unaware that employees aren't all in one central office location. There are numerous other advantages to this better control.
  • Equipment: While having VoIP phones involves it own equipment it does dispense with the complexity, cost, and training that most PBX equipment demands.
  • New features: VoIP allows businesses to access new features they may not have enjoyed before e.g., video conferencing.
  • Integration: (or "Convergence") You can better integrate your phones, voicemail, email, SMS, faxes and other communication.
  • Feedback/Monitoring: You can get better stats on phone usage, better monitor remote phone users' phonetime etc.

Other articles on VoIP:
VoIP Providers
VoIP Phones
Business VoIP