VoIP stands for Voice Over Internet Protocol and is a technology that allows users to make and receive telephone calls using an Internet connection. It can also be referred to as “IP telephony” or “cloud telephony”.
You might not realise it but common examples of VoIP are the voice chat functions within Skype, Viber, Facebook Messenger and WhatsApp that most of us use on a daily basis.
VoIP technology was developed in the mid 90’s but took many years to gain popularity as a mainstream method of communication as it relies on a relatively fast and stable internet connection to work effectively. Back then, the common dial-up connection was far too slow to be useful for this type of communication.
However, with the availability of today’s high-speed broadband, all but the slowest remote connections are sufficient to sustain multiple concurrent calls in high quality.
VoIP is highly configurable, offering countless advanced features and benefits that exceed what many antiquated on-premise phone systems are capable of, boasts almost unlimited scalability and most importantly, is often far more cost effective for businesses of any size. It is therefore not surprising that VoIP is fast becoming the first and obvious telephony choice for many companies around the world.
In this article we will try to simplify the concept of VoIP and explain its various benefits to help you decide whether it would suit your business needs.
How does VoIP work?
VoIP works by converting the analogue sound of your voice into a digital audio stream and sending it in chunks (packets) over the internet. If the person you are speaking to is using a traditional PSTN telephone line, the data packets are fed into the telephone network somewhere geographically close to the other caller, converted back to an analogue signal and your voice travels the remaining distance over a traditional PTSN circuit.
If you are calling another VoIP handset, the data packets travel directly to the destination over the internet without passing through the PSTN telephone network at all.
Why VoIP is less expensive?
Unlike traditional landlines or on-premise telephone systems, VoIP doesn’t require separate cabling infrastructure in your building as the handsets plug into your normal computer network using standard network cables. VoIP simply uses the same internet connection as your PCs so the only ongoing costs are the small monthly subscription fees and any call charges.
Internal calls between VoIP extensions on the same system are completely free regardless of the location. In a hosted system, each handset can technically work from any internet connection in the world, so internal calls to your branch office in Hong Kong wouldn’t cost a penny!
Furthermore, calls to international destinations are generally much cheaper from a VoIP system than from a standard telephone because only a small portion of the call travels over the PSTN network. In fact, recent studies suggest that VoIP users save up to 40% on local calls and up to 90% on international calls.
What is hosted VoIP?
VoIP handsets work by connecting to and communicating via a central control server. Hosted VoIP simply refers to a VoIP service where the control server is hosted off-site in the cloud by the service provider, as opposed to an on-site physical VoIP server which is generally costlier and requires time and expertise to configure and maintain yourself.
It is the service provider’s responsibility to purchase, install and maintain all the equipment needed to provide a good quality VoIP service to their clients. The clients in this case will only pay a monthly subscription fee and avoid the hassle of maintaining their own systems in the future.
Hosted VoIP is usually preferred by small to medium businesses who are looking for simplicity in the configuration and running of the service, leaving them to get on with their own business.
Does VoIP require special hardware?
Aside from ensuring you have compatible handsets, there is not usually any requirement for other hardware purchases. Your existing handsets are unlikely to be capable of communicating with a VoIP server so new handsets would normally need to be purchased or rented. There are many varieties of handset models available to suit the features you require.
Alternatively, it is possible to use computer software or a smartphone app known as a “soft-phone” to make calls from your PC or mobile device. On a PC, you would just need a microphone headset exactly as you would when making calls through Skype.
On a smartphone, you can use the phone as normal as well as dialling and receiving calls through a softphone app connected to your corporate VoIP server. As this is capable of working over Wi-Fi or 3G/4G data connections, you are able to use it anywhere in the world as mentioned earlier.
Read about VoIP benefits and limitation in VoIP For Dummies – Part 2.