What Is VoIP?

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VoIP, short for voice over internet protocol, is a phone system that lets you make calls over the internet instead of a traditional landline or cellphone connection. It’s often cheaper than the traditional phone network and more flexible, since you can use VoIP wherever you have internet access.


  • VoIP is often cheaper than a traditional phone system, since it doesn’t require dedicated hardware or wiring

  • You can usually use a VoIP system anywhere you have a good internet connection, even if you have weak cell service and no wired phone service

  • VoIP systems often include features that aren’t part of traditional phone service, including integration with computer software and videoconferencing


  • VoIP sound quality can vary more than landlines, which use a dedicated network connection with fixed bandwidth for each call

  • VoIP systems can be less reliable than traditional landlines during power outages and other emergencies

  • Certain older systems like fax machines and alarm systems can be more difficult to integrate into VoIP networks

VoIP-based business phone systems route phone calls over the internet instead of the traditional telephone network, as the Federal Communications Commission explains. That means VoIP services can be cheaper and more flexible than a traditional landline phone system. They can often be used anywhere there’s a good internet connection, and it’s easy to add additional phones or change where a phone number goes without having to rewire your office. You can also use additional software-based tools like smartphone apps to connect to VoIP service to make calls, send texts, or check voicemail. Many VoIP plans also include additional features that don’t come with traditional phone lines, like integration with common business software and videoconferencing services.

VoIP services can vary more in sound quality than traditional landline phone systems, although VoIP quality is often quite high. They can also be less reliable in an emergency if you lose your internet connection or power to your internet router. Adapters connect traditional office phones to a VoIP network, but some devices such as fax machines and alarm systems can still have trouble switching to VoIP. Find out more at our Best VoIP Business Phone Systems page.

  • Private Branch Exchange (PBX): A PBX system routes calls within your business so that callers can dial phones by extension, and employees can share outside lines for external calls
  • IP PBX and IP-enabled PBX: An IP PBX routes calls using internet protocol rather than traditional analog landlines. It’s often a cloud-based system at a VoIP provider.
  • Cloud-hosted IP PBX: Many VoIP providers use a cloud-hosted IP PBX, where call routing is handled by provider software instead of a physical device at a business’s office.
  • Cloud VoIP or Cloud-Based Telephone Service: Cloud VoIP is digital phone service that’s managed by software at the phone provider, not by any kind of physical device at your business.

Businesses using traditional, circuit-switched landline connections often had a device called a private branch exchange (PBX) that routed calls between extensions and let users share outside lines for outgoing calls. In traditional analog phone systems, physical phone lines would run from each desk phone into the PBX located somewhere in the company’s facilities. VoIP business phone systems often handle those functions with an IP-based PBX, which can also provide features like voicemail and caller menus, all using internet protocol connections to phones routed through the same mix of wired and wireless connections as other internet services. While an IP PBX can be physically located in a business’s offices, it’s often a cloud-hosted system run out of a VoIP provider’s office. With a cloud VoIP service, a business typically doesn’t need to maintain a server or even know how one operates. Cloud-based VoIP telephone services often can make it easier to connect to your phone system from anywhere with an internet connection, making and receiving calls on any IP-enabled phone or smartphone with the right app installed, although they do make companies dependent on provider systems they don’t control.

As the U.S. General Services Administration explains, Unified Communications as a Service (UCaaS) refers to a cloud offering that combines multiple types of business communications, such as voice calling, instant messaging, videoconferencing, fax, or email. Different UCaaS systems include different sets of services like videoconferencing and digital fax. A modern VoIP solution is often effectively part of a UCaaS system. Some providers offer cheaper packages that just include business phone services and perhaps a few other things.

The advantage of UCaaS is that it includes all of these services through one provider. Plus, it’s often accessible on desktop and mobile systems through that company’s VoIP apps, so you don’t have to shop around for multiple vendors for the different communications services. UCaaS can also help replace clunky hardware, like fax machines and even potentially desk phones, with apps for smartphone and desktop devices. Still, companies don’t necessarily have to use all the offerings from their UCaaS provider; it’s possible to use a third-party vendor for, say, internal instant messaging or videoconferencing with clients if it better suits your business needs.

Is a VoIP-Based Business Phone System Secure?

Modern VoIP technology enables a VoIP business phone system to be secure. As the Department of Homeland Security points out, there are some risks to VoIP communications that don’t exist with traditional landlines because calls are routed over the public internet, where there’s more chance of eavesdropping. There’s also the risk that VoIP software, either running on a business’s devices or on the VoIP provider servers, could be hacked through flaws in the software or stolen passwords.

For these reasons, VoIP providers generally encrypt calls so that they’re difficult for outsiders to eavesdrop on, even if they gain access to your network or internet routers that the call traffic passes through. As with other internet services, it’s also a good idea to use secure passwords for your VoIP accounts and make sure to keep computers and phones where VoIP software is running up to date and equipped with security software. That can help make sure they aren’t compromised by hackers who want to use your account to make calls, steal your payment information, or eavesdrop on you. You can also talk to your VoIP provider or ones you’re considering about what security measures they have in place.

How Much Does a VoIP-Based Business Phone System Cost?

VoIP systems are often cheaper per user than the landline equivalent in terms of monthly service costs. There may be an initial outlay if you need new phones or adaptors to make existing phones work with a VoIP system, although you can often use smartphone or desktop apps without additional cost. You may also need to train employees to use a new system. Prices can vary based on additional services you need, including international calling, faxing, videoconferencing, and integration with other business software. Less expensive plans are often available from providers offering basic services such as calling, texting, and voicemail.

Are VoIP-Based Business Phone Systems Hard to Install?

VoIP systems are often fairly easy to install. Many phone providers offer plug-and-play phones that simply need to be connected to your office or home internet service to make and receive calls. Remote workers can often simply connect their desk phones to their home internet via Wi-Fi to use the same phone number they would use at work. Many VoIP providers also offer smartphone and desktop apps that can make calls, receive voicemail, and send texts as soon as they’re installed on a compatible computer or phone without the need for extra hardware. If you’re using existing telephone equipment like desk or conference room phones, you may need to buy adaptors to make them compatible with your VoIP network.

For larger setups, VoIP providers often provide customer support, installation assistance, and employee training to help get you up and running. That can include onsite visits from technicians to help install phones and get the system working with customer relationship management tools or other software, you currently use. Sales personnel can also advise you on what level of service and what types of devices might be useful to your company.

What Equipment Does a VoIP-Based System Require?

VoIP-based systems usually work with digitally enabled desk phones that can often be acquired from your VoIP provider. If you would rather use traditional landline phones, this is frequently possible with adaptors. Cell phone and desktop apps can also let you connect to your VoIP system through your smartphone or laptop with what are sometimes called softphone apps, so you may not need to buy any new equipment at all. You generally won’t need traditional phone cables or in-office switching equipment used to connect analog landline phones.

Are VoIP-Based Business Phone Systems Hard to Use?

VoIP-based business phone systems can be at least as easy to use as traditional phones. They also offer more flexibility, often letting you connect with either a desk phone or a desktop or mobile app to make VoIP calls. Many VoIP providers offer online documentation, as well as customer service at least during business hours and often around the clock. Some companies will provide onsite training or help you develop training for your employees to get them used to any quirks of a new business phone system. It’s often possible to use existing phones you’re already familiar with.

Are VoIP-Based Business Phone Systems Good for Companies with Remote Workers?

VoIP-based business phones can be good for remote workers. It’s often possible to use the same physical internet connected phone in the office or at home, and many plans offer call forwarding to route calls to wherever phone employees happen to be. Auto attendant services can route callers to an employee wherever they are. Internet-based mobile phone apps let workers sign in to make and receive calls from their smartphones. Many plans also include video conferencing to let you connect with workers or customers even if you’re not able to be in the same office.

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