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What is VoIP? A complete guide for 2024

VoIP phone service background

Communication is the lifeblood of any organization’s daily operations, and voice calls remain the cornerstone of any size business.

You’ve probably heard it said that VoIP technology is not secure and that you should stick with traditional landlines. The reality is that most traditional landline providers already use VoIP technology in their network to deliver their phone service.

You may find this technology foreign to you, and all the information you’ve searched online can be overwhelming.

That’s why we’ve put together this comprehensive guide to VoIP to help you get the most out of it. If you’re new to the technology, fear not. This article will clarify VoIP and why it’s the best phone system for your business. So, let’s get down to business.

What is VoIP

VoIP, or Voice over Internet Protocol, technology allows users to make voice calls over the Internet instead of using traditional copper landlines. Essentially, VoIP converts the voice signal into data packets transmitted over the Internet network until they reach the recipient, where they are converted back into voice signals.

This approach offers several advantages over traditional telephone systems, such as landlines.

In recent years, many telephone companies around the world have migrated their networks to VoIP, demonstrating the growing popularity and adoption of this technology.

How does VoIP work

To understand how VoIP works, exploring the steps and processes involved in establishing calls using this technology is necessary.

The VoIP call establishment process involves digitizing, transmitting, routing, and reassembling voice data packets over the Internet network.

The following is a comprehensive technical description of these processes:

1. Call initiation 

Voice-to-data conversion

When a user initiates a VoIP call, the device (such as an IP phone or VoIP application on a mobile device or computer) converts the analog voice signal into digital data. This process is known as voice digitization or encoding and uses audio compression algorithms to reduce data size and optimize bandwidth efficiency.

Creating the data packet

Digital voice data is divided into small packets for network transmission. Each packet includes header information that identifies the source and destination of the call, as well as encoded audio data.

2. Transmission of data packets

Internet Protocol (IP)

Voice data packets are transmitted over the network using the Internet Protocol (IP), the standard protocol for data communication on the Internet. Packets travel through a series of routers and switches on the network, following the most efficient route to their destination.

3. Routing and Packet Forwarding

Dynamic routing

VoIP data packets may follow different routes to their destination during transmission, depending on network conditions, congestion, and other factors. Routers and switches in the network use dynamic routing algorithms to determine the most efficient route for each packet in real-time.

Packet reassembly

At the destination, VoIP data packets are reassembled in the correct order and decoded to restore the original voice signal. This process involves removing header information and reconverting the digital data into analog audio signals.

4. Receiving and terminating the call

Data-to-speech conversion

Once the entire VoIP data packet stream has been received and decoded, the receiving device converts the digital audio signals back to analog voice signals. This process is known as voice playback or decoding.

Delivery to the recipient

Finally, the analog voice signal is delivered to the recipient of the call through the speaker or handset of the receiving device, enabling two-way communication between the parties involved in the VoIP call.

Differences between VoIP and traditional phone lines

The differences between VoIP (Voice over Internet Protocol) and traditional phone lines, such as landlines or the Public Switched Telephone Network (PSTN), are significant and encompass various technical, operational, and functional aspects.

While traditional phone lines offer established reliability and service quality, VoIP provides greater flexibility, functionality, and lower costs, making it an attractive option for many businesses and users.

However, the choice between VoIP and traditional phone lines depends on each user’s specific needs and factors, such as internet connection quality and available infrastructure.

Here’s a detailed analysis of these differences:

Technological infrastructure:

  • VoIP: Utilizes the internet infrastructure to transmit voice data through digital packets over IP networks. It requires a broadband internet connection and can be integrated with other data and communication services on the same network.
  • Traditional phone lines Depend on the physical infrastructure of copper landlines and circuit switches. The voice signal is transmitted analogically through dedicated copper cables and requires a separate infrastructure from the data network.

Costs and fees:

  • VoIP: Generally offers lower costs than traditional phone line tariffs, especially for long-distance and international calls. Calls within the VoIP network are usually free or at a meager price.
  • Traditional phone lines: Call rates depend on the service provider and can be significantly higher for long-distance or international calls. They may also include monthly fixed rates or additional service charges such as caller ID or call forwarding.

Flexibility and scalability:

  • VoIP: offers greater flexibility and scalability. It can easily add additional lines and advanced features without the need for additional hardware installation. It also allows user mobility, as calls can be made from any internet-connected device.
  • Traditional phone lines: Often require additional physical installations to add new lines or features, which can be costly and time-consuming. Additionally, user mobility is limited to the physical location of the phone line.

Additional features and services:

  • VoIP: offers a wide range of additional features and services, such as unified messaging, conference calling, call recording, IVR (interactive voice response), and intelligent call routing. It also supports integration with business applications and collaboration tools.
  • Traditional phone lines: May have limited features compared to VoIP and may require additional hardware for advanced services. Integration options with other business applications and systems may also be more limited.

Sound quality and reliability:

  • VoIP: Sound quality may vary depending on the internet connection quality and network congestion, but technological improvements have allowed for audio quality comparable to or even superior to traditional phone lines in many cases. However, reliability may be affected by internet connection issues or service interruptions.
  • Traditional phone lines: generally have consistent and reliable sound quality but may be affected by physical infrastructure problems such as cable cuts or switch failures. Overall, they are less susceptible to network connection issues compared to VoIP.

Environmental responsibility:

Resource consumption reduction: VoIP can reduce resource consumption and a company’s carbon footprint by eliminating the need for heavy physical infrastructures such as copper cables and switching equipment.

Considerations for Switching from Traditional Phone Lines to VoIP

Several symptoms and situations may indicate that a company needs to switch its phone system to VoIP to improve its efficiency and competitiveness.

If your company experiences any of these symptoms, it may be time to consider switching your phone system to VoIP and taking advantage of this technology’s benefits. You will improve your operational efficiency and increase your competitiveness.

  1. High call costs and hefty phone bills: If the company spends too much on long-distance or international call fees with the traditional phone service provider, switching to VoIP can significantly reduce these costs.
  2. Limitations in functionalities and lack of advanced features: If the current phone system lacks features such as IVR (interactive voice response), unified messaging, call recording, conference calling, and more, migrating to VoIP can provide access to a broader range of functionalities.
  3. Limited scalability: If the company is experiencing growth and the current phone system cannot quickly adapt to adding new lines or users, VoIP offers greater scalability and flexibility to grow alongside the company.
  4. Need for mobility: Remote work or off-site: If employees need the ability to make and receive calls from remote locations or while on the move, VoIP enables mobility by allowing calls from any internet-connected device.
  5. Obsolete infrastructure: Old and costly phone systems to maintain: If the current phone system is outdated, requires expensive maintenance, or is nearing the end of its lifespan, migrating to VoIP can provide a more modern and cost-effective solution.
  6. Difficulty integrating with other business applications: If the company seeks to integrate its phone system with other business applications such as CRM or sales management systems, VoIP offers greater flexibility and integration capabilities.                                                                          Note: VoIPstudio provides access and support for APIs so your customers can interact with different platforms. Additionally, VoIPstudio offers native integrations with the most common CRMs.
  7. Poor or inconsistent audio quality: If users experience audio quality issues such as echo, delays, or frequent call drops, VoIP can provide more consistent and improved service quality.
  8. Need to increase efficiency and productivity: If the company aims to enhance communication efficiency and collaboration among employees, VoIP offers advanced tools such as unified messaging and conference calling to help achieve these objectives.

Equipment needed to set up VoIP

Setting up VoIP requires relatively minimal equipment compared to traditional phone systems, but it is crucial to ensure you have the following components:

  1. Internet connection: VoIP requires a high-speed and reliable internet connection. This connection can be broadband, fiber optic, or similar.
  2. VoIP-compatible phones: You will need VoIP-compatible telephones, also known as IP phones, to make and receive VoIP calls. These phones connect directly to your internet network rather than traditional phone lines.
  3. Analog Telephone Adapter (ATA): If you wish to continue using your existing analog phones with the VoIP system, you will need an Analog Telephone Adapter (ATA). This device converts analog signals from traditional phones into digital signals compatible with VoIP networks.
  4. Router or switch: A router or switch is required to connect your VoIP phones to your internet network. This device manages data traffic between your VoIP phones and the Internet.
  5. VoIP server or service provider: With the technical expertise and necessary resources, you can set up your own VoIP server. Alternatively, you can subscribe to a VoIP service provider that offers hosted VoIP services.
  6. Power supply and backup: Ensure your VoIP equipment has a reliable power supply. Consider using battery backups or uninterruptible power supplies (UPS) to prevent interruptions in case of power outages.
  7. Headsets or phones: Depending on your preferences and requirements, you may also want to invest in headsets or phones for your VoIP phones to improve comfort and usability during calls.
  8. Mobile app: To use VoIP on your smartphone, you must download a VoIP app from your device’s app store. Once you have downloaded the app, you can sign up for an account or log in if you already have one. Then, you can make and receive voice calls through the app using an internet connection, either via Wi-Fi or mobile data.

VoIP apps also typically offer various additional features, such as text messaging, video calls, group calls, and file sharing. It allows you to communicate in multiple ways using your smartphone and an internet connection.

Advantages of VoIP

1- Cost-effectiveness: VoIP calls are often cheaper than traditional calls, especially for long-distance and international calls, as they utilize internet infrastructure instead of conventional phone lines.

2- Flexibility and scalability: VoIP allows for easy addition or reduction of phone lines according to the changing needs of the business. VoIP system features and functionalities can be easily adapted and expanded based on business requirements.

3- Advanced features: VoIP systems offer a wide range of advanced features, such as voicemail, caller ID, conference calling, call forwarding, and IVR (interactive voice response), among others, which are not typically available in traditional phone systems or may come with an additional cost.

4- Mobility: VoIP enables users to make and receive calls from anywhere with an internet connection, whether from an IP phone, a computer, or even a mobile device. It provides greater flexibility and mobility for remote or mobile workers.

5- Integration with other applications: VoIP systems can easily integrate with other business applications such as customer relationship management (CRM) systems, email, instant messaging, and collaboration tools, enabling smoother and more efficient communication within the company.

Disadvantages of VoIP

1- Dependence on Internet connection: The quality of VoIP calls is directly related to the quality and stability of the Internet connection. Network interruptions or issues can affect the quality of VoIP calls, resulting in dropped calls or poor audio quality.

2- Bandwidth requirements: VoIP calls consume internet bandwidth, which can impact the performance of other bandwidth-intensive applications such as web browsing, video streaming, or large file downloads. This may require careful bandwidth management to ensure optimal application performance.

3- Compatibility with existing equipment: When migrating to VoIP, upgrading or replacing existing telephony equipment may be necessary to make it compatible with VoIP technology. This can incur additional costs and require time and effort for implementation.

4- Security: VoIP systems are subject to security risks such as hacker attacks, telephone fraud, and eavesdropping. To protect VoIP communications’ privacy and security, it is important to implement appropriate security measures such as data encryption and firewalls.

Security is becoming an increasingly important factor every day. VoIPstudio offers:

  • Encrypted communications in the web control panel and voice communications generated from the applications.
  • Double-factor access control and compliance with data storage regulations that comply with GDPR.
  • Data storage centers that pass ISO 27001 security certifications.

5- Quality of Service: Although the quality of VoIP calls has significantly improved in recent years, issues such as speech delays, echo, packet loss, and jitter may still be experienced. These issues may be more pronounced in congested networks or networks with low-quality internet service.

Features of VoIP for businesses

The features of VoIP for businesses may vary depending on the service provider and the specific needs of each organization. However, some standard features offered by VoIP systems for businesses include:

Voice calls

VoIP enables voice calls over the Internet using protocols such as SIP (Session Initiation Protocol) or H.323. These calls can be local, national, or international and are typically more cost-effective than traditional calls.

Video conferencing

VoIP systems often include video conferencing and virtual meetings capability, allowing employees to communicate face-to-face regardless of their geographic location. It fosters collaboration and effective communication among distributed teams.

Instant messaging

Some VoIP systems incorporate instant messaging features, allowing users to send text messages, share files, and collaborate in real-time during calls and video conferences.


VoIP systems typically include voicemail services, which allow users to receive and manage voicemail messages through email or a web interface. This facilitates message management and ensures that users do not miss any important communication.

Caller ID

VoIP systems often offer caller ID functionality, which displays information about the caller’s phone number or name on the recipient’s screen before answering the call. It helps users identify and prioritize incoming calls.

Call transfer

VoIP allows users to quickly transfer calls to other users or departments without interrupting the communication. It helps direct calls to the appropriate person and ensures efficient customer service.

IVR (Interactive Voice Response)

VoIP systems may include customizable IVR systems that guide callers through a menu of options using voice commands or keypad presses. It facilitates the automation of everyday tasks and improves operational efficiency.

Integration with business applications

VoIP systems integrate with other business applications, such as customer relationship management (CRM), email, and calendars. It allows users to access relevant information during calls and enhance productivity.

Call recording

Some VoIP systems allow users to record calls for training purposes, regulatory compliance, or quality analysis. It provides a valuable reference for reviewing and improving communication with customers and colleagues.

Scalability and flexibility

VoIP systems are highly scalable and quickly adapt to a business’s growth. Administrators can add or remove lines and features as needed without making costly changes to the physical infrastructure.


VoIP systems can incorporate advanced security measures to protect business communications. It may include end-to-end encryption to protect call privacy, firewalls to prevent unauthorized intrusions into the network, user authentication to ensure that only authorized personnel can access the system, and fraud detection to prevent hacker attacks.

Unified Communications (UC)

VoIP systems are often part of unified communications solutions, which integrate various communication tools into a centralized platform. In addition to voice calls, video conferencing, and instant messaging, UC solutions may include email, document collaboration, shared calendars, project management tools, and more. These solutions provide employees with a cohesive and streamlined communication experience, increasing productivity and collaboration within the company.

How much does VoIP cost?

VoIP telephony provides a more cost-effective and adaptable option than conventional calls; however, understanding its costs is crucial for making well-informed decisions about its implementation.

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Billing models in VoIP services

VoIP providers worldwide can connect outbound calls with traditional telephone operators or other Internet Service Providers (ISPs) based on call quality and costs. It allows them to offer tailored rates to their customers for each type of call. Consequently, call costs may vary depending on the number from which the call is made, presenting the following scenarios:

  • Outbound calls with local numbers within the country are being called. For example, if we make calls to destinations in Spain from a Spanish number, the cost will be local and more economical.
  • Outbound calls with numbers from the same tariff zone are being called. For example, an EEA tariff will apply if we call Spain from another country in the European Economic Area (EEA). Similarly, if we call from Spain to another country in the EEA, the corresponding tariff for this area will apply.
  • Outbound calls with international numbers, in which case the international call rate will apply.

It’s important to note that VoIP telephony is a global service accessed via the Internet and allows calls to be made from anywhere in the world with the desired number.

Most common usage plans in VoIP providers

  • Per-minute rates: Some providers offer call-minute packages with a list of destinations. Additionally, they allow calls to other destinations not included in the plan, with a per-minute rate that may vary depending on the call destination (local, national, or international).
  • Subscription rates: Other providers offer monthly subscription plans that allow unlimited calls to specific destinations for a fixed fee. It’s essential to review the conditions and terms of use when subscribing to such a plan, as they are usually limited to specific destinations or types of use.
  • Pay-as-you-go: Some providers allow you to pay only for the minutes or services used, which may be more economical for occasional users.

Does your company need VoIP?

The answer is a resounding yes. VoIP technology has become an essential tool for most businesses and is no longer a luxury. Now that you know more about VoIP technology and how it can help your company, you can make the right decision for your business.

How much does VoIPstudio cost?

It’s crucial to analyze the features and configuration possibilities each VoIP provider offers before deciding. Also, consider the costs, as these services for the company usually entail a recurring expense that should be contained.

At VoIPstudio, we offer a virtual switchboard service with a high level of customization, integrations with third parties, and, notably, our fully functional computer and smartphone app.

All this is very affordable, starting from $4.99 per extension.

VoIP is a fully functional technology. But make sure that customer service and technical support are good.

The best way is to contrast experiences from other users. It is what our customers say about us.

Another piece of advice is to try before you buy. Check out why our 30-day free trial is different than others.


– What are the advantages of VoIP over traditional phone lines?

Some advantages of VoIP include lower costs, advanced features (such as video calls and conferences), flexibility to work from anywhere with an Internet connection, and integration with other communication systems.

– Do I need special equipment to use VoIP?

To use VoIP, you need a compatible device such as an IP phone, a softphone on your computer, or an app on your smartphone. You also need a stable Internet connection.

– Can I use VoIP to make international calls?

VoIP is a popular option for making international calls due to its lower rates than traditional phone companies.

– Is VoIP secure?

VoIP can be secure if proper security measures such as end-to-end encryption and user authentication are implemented. Choosing a reliable provider and keeping software updated to avoid vulnerabilities is essential.

– Can I keep my current phone number when switching to VoIP?

Many VoIP providers offer the option to port your existing phone number. However, it’s essential to verify the availability of this feature with your VoIP provider.

– What is the audio quality of VoIP calls?

The audio quality of VoIP calls can be as good as traditional calls and even better in some cases, as long as you have a high-speed and stable Internet connection.

– Can I use VoIP in my business?

VoIP is widely used in business environments due to its numerous advantages, such as reduced costs, advanced features, and scalability.

– What should I do if I experience issues with my VoIP service?

If you experience issues with your VoIP service, you can restart your equipment and check your Internet connection. If the problem persists, contact your VoIP provider for technical assistance.

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Thousands of businesses across the world trust VoIPstudio for all of their most vital business communications. Why not be the next?

Thousands of businesses across the world trust VoIPstudio for all of their most vital business communications. Why not be the next?

Start a free 30 day trial now, no credit card details are needed!