Your Full Guide to Understanding Voice over IP (VoIP)

June 3, 2020


Communication is a core service.

Business relies on communication. Governments need it. Healthcare cannot do without communications. People need it at a personal level. Drums, pigeons, and smoke signals were communication tools in the distant past.

Modern communications kicked off with the invention of the telegraph by Samuel Morse in the 1840s. The next major milestone in communications was the invention of the telephone by Alexander Graham Bell in or around 1876. The analog phone lasted well into the 20th century until the internet arrived on the scene in the 1970s, and Danny Cohen gave a demonstration of packet voice in 1973. The early 1990s saw testing of IP telephony for commercial use and the first IP phone was released in 1995.

Voice over IP or VoIP went from strength to strength and PSTN retreated. Today, VoIP is taken for granted and powers chat, fax, voice, and video. But what is VoIP? Keep reading to find out.

What is VoIP and how does it work?

VoIP is the abbreviated form of Voice over Internet Protocol. The technology is digital and converts voice signals into IP packets that are transmitted over the internet. Today’s VoIP technology handles multimedia too in addition to other forms of communications such as fax, voice messaging, and SMS over public internet networks.

This is how it works: a caller can make a call using PSTN in which case analog signal goes to the ATA converter and it is converted to digital IP packets that are then transmitted over the internet using SIP technology. SIP trunking is the digital equivalent of analogue exchange to transmit digital voice data.

If you are curious about how VoIP works, here are the essentials: VoIP digitizes signals using IP phone or ATA box, transmits over ethernet to the router and over the internet, possibly through a VoIP service provider who uses SIP trunking along with class 4/5 softswitches. Voice (or multimedia) signals are converted to IP packets with distinctive headers and the packets travel over the open internet, and then are reassembled and converted back again.

In the early stages, VoIP, as the acronym suggests, was for voice transmission. Today, VoIP service providers and networks handle multimedia traffic, fax, messaging, SMS, and provide services such as VoIP video chat or browser VoIP call. 

voip guideSource

Fixed VoIP vs. non-fixed VoIP

VoIP services proliferated in recent times and led to widespread use. Service providers started offering two types of services. One is the fixed VoIP and the second is non-fixed VoIP.

Fixed VoIP

Think of fixed VoIP as a replacement for landline traditional PSTN phones. However, it does have more functionality. The fixed VoIP is linked with a physical address and are regulated. If you move from one address to another you can update the address.

The service provider may offer free calls and chargeable calls and tax is charged on your bill. You can use a fixed IP phone to make and receive calls. It is also possible to use the service through a mobile app, which is something you may not be able to do with PSTN phones. Other features include international calling at low rates and voicemail.

Advantages of fixed VoIP

  • Residential and commercial users can use this type of service to replace traditional phone lines.
  • You get features like 911 emergency dialing and real-time alerts if such a call is placed from your phone.
  • It is decidedly more cost-effective compared to PSTN lines, especially for long distance and international calls.
  • There is respectability, reputation and authenticity associated with fixed VoIP numbers.
  • The downside is that fixed VoIP is not free.

Non-fixed VoIP

There are millions of people who use Google Voice and Skype. These are two prime examples of non-fixed VoIP services. The distinguishing characteristic is that users can just sign up and subscribe without the need to provide a physical address.

While fixed VoIP falls under the ambit of various laws such as TCPA, non-fixed VoIP may not be so highly regulated. That makes it easy for anyone in any location to sign up and use it for nefarious purposes. However, the fact that a user in one country may sign up and give an address of another country makes it ideal for small businesses that wish to maintain a local presence. Non-fixed VoIP are also termed as virtual phone numbers.

Advantages of non-fixed VoIP

  • Anyone in any part of the world can sign up and use non-fixed VoIP for free, at least the basic services. Such services are great for conferencing or collaboration between remote teams at a very low cost. Individuals prefer this type of VoIP service since it is virtually free; they pay only for internet usage and can make international calls.
  • The downside is that the features are limited. Call quality may suffer.
  • Non-fixed VoIP does not enjoy the same status of respectability and reputation that fixed VoIP does.
  • Since it is difficult to trace, users may engage in dubious activity.
  • You may not be able to make 911 like emergency calls because non-fixed VoIP is not linked to a location.

What is a VoIP number used for?

Unlike PSTN landlines where the phone number is tied to the physical location, VoIP number is free of such restriction since it is assigned to a user. The user simply needs an internet connection and a desktop, laptop, smartphone or landline with ATA converter to use the virtual VoIP number.

Another technical term for this is direct inward dialing. The user can make use of the number to make or receive calls regardless of location. Further, VoIP is great for sending out text message, fax, voicemail and even video. VoIP numbers are quite useful.

Area code

There are plenty of other features due to which businesses are fast switching over to VoIP numbers. One good reason is that businesses can establish a local presence without the need to maintain a local office. Users have the option of area code choice and thus reduce cost of calls or give the appearance of being local to a particular region.

Use as toll-free number

VoIP numbers can be set up as toll-free numbers by small businesses and individual entrepreneurs to receive toll-free calls. This raises their credibility and trust factor with clients. The toll-free number can be routed to another number. Incoming calls can ring multiple devices and user can pick up using the most convenient device like a smartphone or desktop.


An executive in an organization or an individual entrepreneur may travel frequently. In this case the landline is of little use. VoIP numbers not being tied to a landline or location allow flexibility of receiving calls on any device in any location provided there is a fast internet connection. It improves accessibility and gives a positive impression.

The same number can be used to transmit fax, voicemail and text. You could engage in video chat and conferencing, too.

6 core VoIP features to familiarize yourself with

Compared to the old PSTN landline, VoIP is like a Swiss army knife and offers quite a few functionalities in addition to those described above. If you want to get the most out of your VoIP setup, whether it is IP PBX or call center software it is a good idea to know about VoIP features and what purpose they serve.

Call forwarding

In the simplest terms, call forwarding can be described as a facility to divert incoming calls to one number to another alternate number if the originally called number is busy, dead, not responding or otherwise inaccessible.

You may also intentionally configure calls to be forwarded such as after office hours or when you are traveling or when you activate DND. The number to which you forward incoming calls may be located in the same country or in any country. Calls may be forward to another VoIP number, a landline or a mobile phone.

Call transferring

Call transferring is one more compelling answer to the question why switch to VoIP. You can simply press a button on an IP phone to transfer an incoming call to voicemail or to another phone. The caller does not have to call that number. They are simply put on hold, and their call is routed. If it is a softphone, you can use the software.

This is ideal in larger enterprises or call centers where calls need to be transferred from one employee to another. It comes in handy when a caller dials a wrong extension and needs to be redirected to the right department or to a remote employee.

Call transfers may be of different types:

  • Blind transfer when a person who picks up the call simply transfers it to another person without informing the individual about the caller and the issue.
  • An attended transfer is one in which the individual who transfers the call makes sure that the caller and the target connect.
  • Attended transfer with hold is another type in which one employee may transfer the call to another but before doing so informs the recipient about the issue in hand.

Call recording

VoIP telephony systems such as IP PBX or call center software include a call recording feature. Administrators may configure the system to automatically record each conversation, whether it is an inbound or outbound call. Then again, it may be optional in which case the agent may hit the record button to record the ongoing conversation. Call records may be used as evidence or to review employee performance or for quality improvement.

Call screening

Call screening is one of the desirable VoIP features that can save you a lot of headache and time. Call screening allows you to block specific numbers. You can even create lists of approved numbers from where calls are acceptable and numbers that go into the blocked call list. One can set up screening to block entire area codes.

Activate this feature and you can see the caller’s ID before the call is connected. You can accept or reject the call or you can simply fit it into the screening list to automatically reject that call. If you are busy you can activate this call screening feature to work with a recorded message.


If you keep answering the phone you will not get any work done. The solution is to use voicemail. If you are out of office and the phone rings, the caller can be put through to voicemail. Voicemail feature services two purposes. One is to answer an incoming call, and the second is to send a message to a user’s mailbox.

You can retrieve inbound voice messages in much the same way you listen to the answer phone or you can configure the VoIP phone system to send it to your email address. You do not lose a single call. Caller is kept happy. You can check mail or your voicemail and respond fast to urgent message. Voicemail may be distributed within your team.

Caller ID

This is a pretty standard feature and it is free in VoIP. Whenever you receive inbound calls, your computer screen (if you are using softphone software), or the IP phone, displays the name and phone number of the caller. The ISP verifies the number. You can configure your VoIP system to create whitelists and blacklists that will enable calls to come through or be rejected.

Tip: Want to start using VoIP today? Check out how to set up VoIP in 7 easy steps.


This is just skimming the surface of all that VoIP is capable of for business (or even personal) communications and as a tool to help growth. VoIP is the present and future. With 5G around the corner and IoT the possibilities increase. You can have a remote work ecosystem. You can broadcast SMS and voice or you can engage in video conferences.

You can have auto attendants and you have IVR. Even the Swiss Army knife appears limited in versatility compared to what VoIP can achieve. Now is the time to switch to VoIP if you have not already done so. 

Find the best VoIP provider for your needs – only on G2. 

Your Full Guide to Understanding Voice over IP (VoIP) Learn everything you need to know about Voice over Internet Protocol, or VoIP, and why it can be beneficial for your business uses.
Bhagirath Sindhav Bhagirath Sindhav is a Digital Marketing Executive at Ecosmob Technologies Pvt. Ltd. He has been in this field for 3 years and is curious about technology updates and loves to pen down his thoughts about the same. He has also prepared a link-building strategy following SEO tactics.

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