“Mr. Watson–come here–I want to see you,” were reportedly the first words ever uttered over the phone. That unremarkable sentence, spoken by Alexandar Graham Bell, the phone’s inventor, on March 10, 1876, to his assistant Thomas Watson, would usher in a new era for communications. Much has happened since, including the advent of wireless phones and telephony over the Internet, also known as Voice over IP or VoIP Phone services.
If you recently phoned someone via Skype or WhatsApp, you used VoIP technology. You and over 1 billion users worldwide, according to Juniper Research. Today the Internet is gradually replacing copper landlines as the primary medium for voice calls.
Businesses are also joining the party, with Blueface Research reporting that 61% of companies are switching away from landline systems to VoIP Phone setups. Overall, it is the fastest growing industry in the world.
Maybe you still use a regular call center in your business or have already tested some VoIP solutions, but you feel the need for more features and an enterprise-grade solution. If so, read on.
Table of contents
- What is exactly a VoIP phone service?
- A (very) brief history of VoIP phone services
- Types of VoIP calling
- Differences between consumer and business VoIP phone services
- Differences between business VoIP and traditional phone services
- Types of business VoIP phone service providers
- Applications of VoIP for businesses
- Benefits of a business VoIP phone service
- VoIP phone services in the omnichannel era
- Considerations before adopting business VoIP phone services
- What the future holds in store for business VoIP
What is exactly a VoIP phone service?
VoIP stands for Voice Over Internet Protocol. According to the US Federal Communications Commission, it is “a technology that allows you to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line.”
Those analog phone lines are also known as Public Switched Telephone Networks (PSTN), which have been in place since the 1800s. The VoIP acronym can be broken down into these two elements:
- Voice over. VoIP takes voice signals and packages them into smaller data packets, ready to be sent to the recipient over the Internet.
- Internet Protocol. Unlike PSTNs, which use phone numbers for user identification, VoIP uses unique IP (Internet Protocol) addresses to identify each user.
To work, VoIP transforms your voice into a digital signal before it reaches the destination. This is known as packet switching and means breaking the conversation into small packets of data without monopolizing a circuit. If the receiver is using an analog phone, the signal will be transformed again into a regular phone signal.
A (very) brief history of VoIP phone services
But what is the history of VoIP phone services? They have been around since 1995 when the first for-profit VoIP application was launched. Still, you could say their roots can be traced back to 1938, with the invention of the Vocoder, the first electronic voice synthesizer. However, they would not gain traction until the Internet reached mass adoption.
While further on it would provide many other features and applications, the original goal of VoIP was to achieve money savings on long-distance and international calls. Believe it or not, there was a time when phone calls could be rather costly. In fact, Steve Jobs’ first business was selling “blue boxes” that enabled free –albeit illegal– international voice calls.
2001 witnessed the launch of the first business VoIP phone service. A couple of years later, Skype would join the ranks as the most popular consumer VoIP service at the time. The first decade of the 21st century and its high bandwidth always-on Internet connections would spawn a host of Internet telephony service providers (ITSPs). So much so that by 2003 the number of VoIP calls leapt to 25% of all voice calls.
With the arrival of the first Wi-Fi-enabled phones on the hardware side and the launch of WhatsApp in 2009 and Apple’s FaceTime in 2010, VoIP would make its way into smartphones and initiate its journey towards becoming the worldwide voice call standard.
Throughout the last 30 years, the quality of VoIP calls has also evolved. In the 90s, the results were frequently subpar because of inadequate broadband connections and the high computer specs required to manage the first VoIP calls. Fortunately, VoIP phone calls have improved over time, and now they meet or surpass conventional landlines’ quality.
Types of VoIP calling
Once we have settled the origins of VoIP phone services and the tech that powers them, we can look at the hardware you need to place a VoIP call. Hundreds of devices can do that, but most of them fall within three categories:
- Computers and mobile devices. These are the main gateway to making VoIP phone calls. This category includes desktop computers, laptops, tablets, and smartphones. As long as they feature a speaker and a microphone (or a headset connection), you will probably be able to manage.
- Dedicated VoIP telephones. This type of hardware is great for anyone lacking computer skills, as you can connect them directly to a computer and place a phone call without any technical expertise.
- Analog phone adapters. Even an old analog phone can place VoIP calls, as a simple adapter will transform the signal into a digital format.
In the future, IoT devices will bring VoIP phone services to all sorts of devices, including fridges, smart speakers, or even coffee machines, so that list will become almost endless.
Differences between consumer and business VoIP phone services
Before delving into complex business VoIP solutions, we will look at consumer VoIP phone services and their features. Skype, launched in 2003, would be one of the most widely known VoIP computer solutions. Initially, it only allowed voice calls, but it soon integrated video calling, file sharing, and other features. The next step would be the first VoIP phone apps, also called mobile VoIP.
This next stage in the evolution of VoIP would prove critical. By then, a large mass of users started using their smartphones to place network telephone calls that bypassed (mainly cost-wise) telecom operators’ restrictions. At first, in the early stages of the 2G and 3G era, some telecom companies even tried to charge special rates over VoIP data to prevent the loss of revenue. That strategy soon failed, and apps like WhatsApp became the favored solution to place voice calls.
And understandably so, as VoIP offers plenty of advantages, including free calls and the use of multiple devices, from laptops, smartphones, tablets, or desktop computers. So, which are the main features currently offered by consumer VoIP phone services? They usually allow for:
- Free voice and video calls
- Direct Inbound Dialing (DID)
- SMS messaging
- File sharing
- Multiple callers
- Address book
So far, so good. But what additional features do business VoIP phone services bring to the table? Why are SMEs and large enterprises switching over to VoIP platforms?
Traditional call centers required large numbers of landlines and complex routing analog systems such as switchboards to handle phone calls. It is hardly surprising that businesses also quickly transitioned to the new generation of VoIP phone services.
Just like customer VoIP, business versions are software solutions but with far richer feature sets to cover the needs of companies, from small and middle enterprises to large corporations.
Firstly, business or enterprise VoIP provides deeper setup options, as the requirements for companies can vary greatly. But the differences with consumer VoIP do not end there. These would be some of the features found in business solutions that are lacking or less developed than their consumer counterparts:
- Regarding call management, they add music on hold, auto-receptionist, call recording, or automatic voicemail transcription to the mix.
- ACD Queues, which are custom queues to route calls based on predefined rules.
Emergency 911 services, toll-free number registration, and the ability to call numbers in the 900 area code.
- CRM integration. Calls are just one part of the equation as companies need to streamline their marketing and customer services, segment users, and track customer satisfaction. So third-party integrations are crucial.
- Bring Your Own Device (BYOD). Workers can use their own devices with corporate accounts and services.
- Security features, with access privileges and an administrator dashboard.
- Higher quality voice calls, thanks to lower compression codecs.
- Conferencing. Conference rooms with an unlimited number of users.
- Improved customer support compared to consumer solutions.
- Faxing, both for sending and receiving.
Beyond the basic features, pricing models vary greatly too. While consumer VoIP usually relies on freemium models, business VoIP can offer rates ranging between less than $100 per month and hundreds of dollars according to the number of users, lines, and additional features.
Differences between business VoIP and traditional phone services
Having clarified the differences between consumer and business VoIP, it is time to compare the latter with the traditional phone service approach. What is the difference between them? As in many other areas, call centers have gradually shifted from a hardware approach to a software-centric model, mainly in the cloud. To sum up, we could describe them like this:
- Traditional phone services use hardware switchboards and physical landlines. Switchboards, also known as PBX (Private Branch Exchange), can be on-premise or hosted. The former can be bought and installed on the premises while the latter can be rented from a third party. This means that on-premise systems have higher upfront costs and hosted ones usually have monthly rental fees.
- VoIP phone services are software-based, so all phone numbers are virtual, and switchboard access is usually granted through a web interface. This technology is known as virtual PBX and provides a more affordable and flexible solution. The market is evolving toward that type of solution.
Types of business VoIP phone service providers
Twenty years ago, there was a neat divide between traditional phone companies and VoIP phone services providers. The first focused on analog phone lines, while the second was purely data-based. Today, the VoIP landscape is much more complex, with plenty of overlap between the actors. A rough classification would be something along these lines:
- Traditional phone companies. As the copper landline era enters its twilight years, many conventional telecom operators have entered the VoIP arena, desperate to bolster their revenue. Think Ford gas guzzlers going electric.
- Hybrid providers. They combine on-premise and VoIP services.
- Phone manufacturers. As cellphones become a low-profit-margin commodity, traditional hardware manufacturers seek to enter the growing VoIP market.
- Pure service providers. Companies built from the ground up as VoIP phone service providers with a software-centric approach. These native VoIP companies route all calls over the Internet, thereby reducing complexity and costs. They often offer many other services too.
Applications of VoIP for businesses
Much has happened in the VoIP arena since the launch of the first business solutions at the dawn of the 21st century. Nowadays, VoIP solutions can cover many different needs of an organization regardless of its size. However, these would be the main applications for business VoIP phone services:
- Internal communications tool. Keeping employees connected through simple and intuitive software is key to the success of any business. More than ever, teams are spread throughout different offices and countries, as even the smallest startup already works with an international talent pool. Also, new work from home trends require seamless internal communication tools.
- Sales and telemarketing. The ease of use and CRM integration mean that VoIP phone services are the preferred tool for telemarketing purposes. This technology allows tracking leads and prospects throughout the marketing funnel and improving conversion rates.
- Customer support and contact center activities. VoIP phone services allow managing all inbound calls, assigning them to suitable agents, and keeping records of every interaction. However, customers are going beyond voice calls and use a more comprehensive range of channels than ever to solve their queries and problems. The good news is that VoIP phone services meet those requirements by covering webchats, e-mail, SMS and social media, among other channels.
- Integrated platforms. According to figures from Statista, in 2022, 9,932 marketing technology solutions were available worldwide. And that is just the MarTech space. So, with an increasing number of tools and channels, integration is the name of the game. Business VoIP phone services offer high integration levels, with voice and video calls, messaging, and integration with CRMs in a single platform and dashboard.
Benefits of a business VoIP phone service
Now that you have a clearer idea about VoIP phone services and their features, you may ask yourself why to switch over. Are you too big or too small to use VoIP? What are the exact benefits for your company?
Depending on the size and sector of your business, you can benefit in different ways.
- Many startups and small companies can be cash-strapped, so a VoIP solution with little or no upfront costs allows them to start operating immediately. They only need to make a monthly payment per user, and when the business begins to take off, they can upgrade their VoIP solution. VoIP solutions also level the playing field for SMEs competing with large corporations by equipping the former with cutting-edge tech.
- Medium-size businesses will already have legacy hardware and CRM systems in use, so VoIP phone services provide them with the flexibility and scalability they need for a smooth transition to Internet telephony.
- Large enterprises must manage many channels and keep track of thousands or millions of phone calls and other interactions. Robust VoIP phone services can precisely do that.
- Seasonal companies like tour operators or snow removal services have peak demand seasons. Instead of adding or subtracting landlines, they can purchase additional user licenses for a short time. (VoIP services allow them to enable new numbers or agents when needed and just for the required period of time avoiding to pay for lifetime or yearly licenses)
- Companies operating in different countries and markets need to place international calls, which can quickly add to their overheads. They also must keep their international teams in contact with robust and powerful communication tools.
In broader terms, there are many reasons to adopt business VoIP phone services, but these are the primary immediate advantages:
- Easier to set up and manage. Business VoIP does not need onsite dedicated IT experts to work. The initial setup is also less cumbersome than with physical PBXs, and it offers a less steep learning curve. Adding new users is also more accessible, which takes us to the next point.
- More scalable. It is a scalable solution that can grow with an organization, from small to medium and large enterprises. Any supervisor can add new users and explain the basics quickly. Even better: more seasoned staff will already be acquainted with the platform if you decide to upgrade your VoIP plans. So, less training costs too.
- Business VoIP is cost-efficient. VoIP solutions can offer thousands of international outbound calls for a fraction of the cost of regular landline calls. On top of that, voice and video calls between employees of the same organization will be virtually free, both on the local and international levels. VoIP solutions are usually priced per user per month. This pricing model provides increased granularity when managing costs. Last but not least, in many countries, VoIP phone services carry fewer taxes than regular phone lines.
- Future-proof. As traditional landlines and hardware PBXs are on their way out, a business can easily find itself lagging with outdated equipment. Unlike hardware-based solutions, business VoIP can be easily updated without any large investments.
- Flexibility and mobility. With features like Bring Your Own Device (BYOD), employees can use a VoIP platform from anywhere with an Internet connection. No need for phones o landlines. This is especially helpful for remote workers and companies with international teams.
- Increased productivity. Business VoIP goes beyond the performance of a call center, as it also streamlines the communication within a company and provides an exchange hub for files, documents, and internal messaging. Users can also hold virtual meetings with several co-workers at the same time.
- Improved security and reliability. Traditional landlines are vulnerable to eavesdropping. Conversely, VoIP services benefit from all the security features of the digital world, including encrypted calls. With dispersed and redundant data centers, the possibility of outages is also reduced.
- All the features you expect from regular phone lines. Embracing this technology does not mean giving up on standard features such as call transfer, call forwarding, or auto-attendant phone menus.
- It makes life easier for contact center supervisors. Today, customer experience is one of the pillars of a successful organization. However, as the complexity of contact channels grows, contact center supervisors need access to reporting and analytics around the clock. A single dashboard with every channel and interaction can help them to step up their game.
- Omnichannel. Integrating a wide range of channels seamlessly across different departments is critical for a modern organization. And to achieve it you need to be able to capture every interaction, whether phone calls, e-mails, or webchats, in a single platform. This is known as the omnichannel approach. You can read about it in more detail in the next heading.
Business VoIP phone services in the omnichannel era
As you can see, there are many reasons for businesses to take the VoIP plunge, but there is one that clearly stands above the rest and deserves a separate heading. Like cellphones started as voice call devices and ended up being used as cameras and calendars, messaging and gaming devices, compasses, and more, VoIP has become a communications hub. It is where voice calls, messaging, CRM management, and even faxing meet.
The omnichannel approach means that any agent in your company can use a range of interlinked communication channels. For example, a webchat can be followed up by a phone call, an SMS, or an e-mail. Then another agent can take it where the last one left it, as all communications are recorded and classified within a CRM. Voice-to-text tools also allow to store conversations and search for specific ones easily.
Omnichannel is bound to be the future of marketing and customer support with an ever-increasing number of devices and platforms, including social media, favored by users. Companies cannot limit their contact channels to a phone number and e-mail on their website. Instead, they need to actively search for new ways to engage with their customers and leads.
With its digital-first approach, VoIP offers the most seamless integration between text, voice, and video. And in an age where “76% of customers now say it’s easier than ever to take their business elsewhere”, as a recent Salesforce report warned, it is more important than ever to get all your bases covered for a flawless customer experience (CX).
Considerations before adopting business VoIP phone services
Only large and medium enterprises used to enjoy the resources required for a traditional call center. Today, VoIP can provide complete phone services to any business regardless of size. A small office and a large corporation both stand to benefit from the technology.
There are, however, some considerations to be made before going full VoIP. Which are the basic requirements for a business solution? You should check out the following items:
- Enough bandwidth and stable connections. How many calls do you place and receive every month? Are you a heavy video call user? Most advanced economies provide stable internet connections. Nevertheless, you should ensure that your bandwidth meets the VoIP requirements and that all your employees, irrespective of location, can access stable connections. As a ballpark estimate, each voice call requires 85-100 kbps and video calls up to 2 Mbps. That should not be an issue with modern connections, but make sure you get your math right first.
- User requirements. How many users will your network require? Are you going to use your business VoIP phone services mainly as an internal communication tool or as a full-blown call center? Reviewing your previous phone bills can give you some clues.
- Budget and ROI. As with any purchase decision, you must assess the actual savings and preferred pricing model. As mentioned earlier, the most frequent one is per user per month.
- What features do you need? As you will probably have realized after reading this article, current business VoIP phone services provide a slew of features, some more critical than others. What are your needs beyond extension dialing, auto-attendant, and ring group routing rules? Do you use a specific CRM? Is it compatible with your preferred VoIP solution? Run through your current cloud solutions and make sure you can integrate them seamlessly.
- Specific VoIP hardware. Will you work with headsets and smartphone apps, or will some employees benefit from VoIP phones? Should you purchase IP adapters for existing handsets? Usually, no extra hardware is needed, but you should check with your vendor just in case.
- Number portability and migration. Make sure that any VoIP solution can port your numbers quickly. Better safe than sorry.
- What is happening with your old PSTN? As you transition to a VoIP model, you may want to keep one PSTN line as a backup in case of power outages. A backup plan is always a good idea, no matter how robust a system is.
- Usability. VoIP phone services will enhance your customer experience, but they should also offer a smooth employee experience. Before choosing your VoIP solution, ensure that your employees are comfortable with the user interface and that supervisors can easily manage the admin dashboard.
What the future holds in store for business VoIP
The transition to VoIP is happening at breakneck speed, both in the consumer and business spaces. So, more than if, the demise of physical landlines is a question of when. For instance, in countries like the United Kingdom, established telecom operators like Virgin or BT are planning to carry all voice calls over to fiber optics by 2025.
There are other technologies also accelerating this trend in different ways:
- 5G. Faster connectivity, low latency, and millions of devices per square mile mean that VoIP will become the standard for voice calls. Most VoIP providers are already working with this technology.
- Cloud computing. As mentioned earlier, cloud software is one of the pillars of business VoIP. However, cloud storage is gradually transitioning into cloud computing, which means that almost any device, regardless of its computing power, will potentially be able to make (and receive) VoIP calls.
- IoT. This takes us to the Internet of Things, where millions of connected devices, like coffee machines or fridges, will be able to send and receive information, including voice calls. VoIP will thus become an integral part of smart homes and offices.
- AR glasses & VR Headsets. With the arrival of the Metaverse, devices like augmented reality glasses or virtual reality headsets will become a common sight. And VoIP phone calls are likely to play a critical role in that next-gen hardware.
- Artificial intelligence. AI is a disruptive force that is radically transforming education, healthcare, agriculture, marketing, and other sectors. VoIP is no different, and in the coming years, it will allow deep analytics of voice calls, including speech recognition and sentiment identification, or even order management systems by tracking the caller ID and monitoring the delivery status of a product.
Besides the tech side of things, there are also social considerations. As work from home or hybrid jobs become more commonplace, the ability to carry out video and voice calls regardless of place and device, combining them with other features like messaging, will only boost the use of VoIP platforms.
All things taken into account, it looks like most if not all voice calls will be routed over VoIP by the end of the decade when copper will have had its day. By then, landlines will look like museum material, as outdated as phone booths and dial phones. So, returning to the initial question of this article – are VoIP phone services the right call for your business? –the answer is a resounding yes.