How Does a Business VoIP System Work?

Posted on: 2016-01-27 | Categories: VoIP Services

VoIP can appear to be a mystery when a person encounters it for the first time but it is not too complicated to understand. At its core, VoIP is a technology that allows phone calls to be transmitted over data networks and the Internet rather than relying on the PSTN.

Human voice is converted to digital data which can then be routed and handled just like any other data packet, be it email, video or documents. The process is reversed at the other end and converted back to audio for the human ear.

A business VoIP system works in exactly the same way, but with a more sophisticated set of features and infrastructure.

Consumer VoIP vs. Business VoIP

Office VoIP

In a nutshell, consumer VoIP is a replacement for the phone line that most of us used to make phone calls. It doesn’t need many features beyond the basic voicemail, caller ID etc.

On the other hand, business VoIP is designed to replace the enterprise phone systems that organizations use to connect their employees internally with each other and externally to the public network.

So business VoIP has enterprise features like auto attendant, IVR, phone directories, conference calling and presence information among others.

Remote users such as employees who telecommute or work at client locations can easily access the business phone system. Business VoIP also integrates with mobile devices so that users are not tied down to the office phones for making/receiving calls.

Business VoIP – Hosted vs. On Premise


There are two basic types of VoIP systems for businesses – hosted VoIP that delivers PBX functions over the Internet or on premise solutions where the organization owns and operates the IP PBX.

Typically larger organizations can afford the investment to swap out their existing analog boxes with equipment that supports VoIP. These companies also have experts who can set up and maintain the system. This alternative offers the highest savings over the lifetime of the equipment, in terms of cost per call.

The majority of small and medium businesses however, tend to rely on hosted VoIP since they lack access to in-house expertise as well as financial capital.

All the business features that are available through an IP PBX are delivered over the Internet by the third-party service provider, hence the term hosted VoIP. The business is freed from having to invest in equipment or maintain it periodically.

How Does It Work?

Business VoIP systems work by routing voice calls over the same data network used for other purposes such as sending email, working on documents for sharing videos.

As a result, two networks become one which is used for everything – including phone calls. The network can carry more data which makes it more efficient and cost-effective.


flickr photo by pascal.charest shared under a Creative Commons (BY-NC-ND) license

In the case of cloud VoIP, the business needs to have a high-speed Internet connection to the  provider since the enterprise phone features are delivered online as a service.

Unlike landlines, IP phones also need electricity to function which means power backup becomes essential. But that is essentially where the list of requirements ends as calls can be made from IP phones, desk phones, computers, mobile phones and many other devices.

Although a basic VoIP system doesn’t need much to be functional, there are other requirements for business VoIP to ensure high audio quality and reliability.

Fast Internet connections and high-bandwidth capacity ensures that more concurrent calls can be made through the network. Routers and other network equipment should have optimized QoS settings so the phone calls receive highest priority if there is high-traffic at peak times.

Some very small businesses can get by with their existing phones or mobile devices but most organizations prefer to purchase dedicated IP desk phones for consistent quality. As you can see, business VoIP is extremely simple for organizations to comprehend and services can be provisioned in a few hours or days.