How Does VoIP Work? The Complete Guide to VoIP in 2019 | Nextiva
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How Does VoIP Work? The Complete Guide to VoIP

VoIP, also known as Voice over Internet Protocol, is one of 2018’s most rapidly growing voice communication solutions. But despite its popularity, many people are confused with how VoIP works.

How Does VoIP Work? A Short Explanation

VoIP functions much like any other data you send over the internet such as Slack messages or e-mail) in that it converts voice communication into data packets and sends it over an IP network. VoIP makes it unnecessary to have a traditional phone line installed in your business or residence, since you can make calls using your internet connection.

That’s the short answer, but obviously there’s a lot more that goes into a VoIP system that makes it an ideal solution for personal and business use.

One of the main benefits to using a VoIP system for your communications is that it cuts down on the number of providers and solutions you need.

Rather than having a separate phone company and internet company, VoIP makes it possible to combine your voice and internet communications into the same service. It’s also much easier than traditional voice communications to scale for growth or add new features that essential to your business needs.

Since VoIP runs over an IP network, all of your data is stored in the cloud and settings are accessible through a universal online dashboard or VoIP app. This dashboard allows users to access their data (contacts, phone numbers, client information), setup new call settings, and add new phone numbers, whether you’re traveling or in the office.

With all communications  in one place, it’s no wonder businesses have been rapidly adopting this new technology over the past few years.

Related: What Is a VoIP Number, How Does It Work and How Do I Get One?

How Does VoIP Work for Business?

We’ve given you the short explanation, but let’s break that down even further. From setup to how communication is funneled, we want to make sure you have a solid understanding of VoIP and it’s requirements. We’ll start with how VoIP uses an IP network to send data from one device to another.

In the diagram below, you’ll notice there’s no mention of Hosted PBX or any other kind of PBX (Private Branch Exchange) based system. That’s because in this scenario, VoIP runs across your business LAN (Local Area Network) and is sent to the servers owned by your VoIP provider.

how VoIP works diagram

The process starts with your devices, as illustrated in the above diagram. These SIP enabled devices are used to make calls over the VoIP network. From there, your VoIP system can connect to either SIP or PSTN (Public Switched Telephone Network) enabled devices.

But first, it needs to travel through the router connected to your business LAN network.

The router plays a huge part in how your receive and make calls. With an analog phone system, your phone is plugged into a hardwired copper line and likely funneled through a server located in your office. VoIP is different than landlines because it doesn’t use phone lines at all. Instead it uses an internet connection which connects via a router–allonsite. Pretty much everything from there happens in the cloud. This negates the need for building an on-site server closet or other expensive infrastructure.

The router connects to whatever internet solution you have in place and accesses the IP network provided by your Internet Service Provider (ISP). From there, your VoIP solution can begin accessing any number of devices and utilizing them for communications.

The amazing thing about how VoIP works is the flexibility you have to use nearly any device you want. Whether you’re using a softphone (software that allows you to turn tablets, computers, and mobile devices into a phone) on your computer or forwarding your calls to your cell phone via the online dashboard or app, you can access your phone line from any device anywhere in the world.

VoIP’s ability to give users remote access to their office line is one of the many reasons its popularity is soaring. With so many companies converting to non-traditional work schedules and the popularity  of remote travel, this is the first time users are able to stay connected with ease to in-office communication.

SIP TRUNKING

If your organization chooses to maintain an on-premise PBX, SIP (Session Initiated Protocol) Trunks are another piece of the VoIP puzzle that are important to understand. The diagram below outlines how SIP Trunking might work for your business. It acts as the direct line to your VoIP service provider instead of running on the same internet connection as the rest of your business data.

sip trunking diagram

Why would a business need SIP trunking? In most cases, SIP trunking allows all  voice communication to travel over a dedicated line. A dedicated line means that only your voice data would run across it, saving your main LAN network for other workflow uses like email, instant messaging, file uploading and downloading.

You’ll see in the diagram that, similar to the VoIP scenario, SIP trunks gather information from the PSTN at the service provider location. It is funneled in much the same way until it reaches the business location and is hardwired into a server (likely where PBX is set-up). Like old school analog circuit-switches, the “trunk” in SIP Trunking acts as a switch that helps to control and funnel data.

So why are businesses interested in SIP Trunks? The biggest benefit comes if you already have a hardwired telephone system on site. SIP Trunking allows you to combine old analog phone systems and new VoIP solutions to eliminate redundancy.

What can you expect once your VoIP system is up and running?

First off, you can expect to save money.

Once you have a VoIP system up and running, the benefits to your business are undeniable. The savings alone are reason enough to make the switch. Businesses have already saved themselves up to 60% a month by switching over to VoIP.

What types of features does VoIP offer?

The answer: many!

Phone Features

In addition to some serious cost savings, numerous phone features are another huge reason so many companies are switching to VoIP. Nextiva, for example, offers a host of popular features that can help with productivity and business growth. Some of them you may have heard of, but some are new additions.

Lets run through an abbreviated list:

Call Forwarding — Call forwarding allows users to forward phone numbers to any device. From their cellphones to their laptops, call forwarding makes it easy to route calls to another destination should the user be out of the office for an extend period of time. It’s at the top of many must-have lists.

Call Parking — Call parking is another popular feature among businesses. It gives the user the ability to place a call on hold, move to another location, and pick the call back up on another phone or device.

Voicemail to Email Messaging — A feature that’s steadily growing in popularity is voicemail to email messaging. This is a transcription service that listens to your voicemail, transcribes it and then sends it directly to your email. This works great for users who might not be able to access their voicemail immediately, but want to stay in the know.

Auto Attendant — Auto Attendant works great for smaller companies that may not have the resources for a receptionist to direct calls. It’s an automated message that greets callers and offers them an option menu. If you run a company with various departments, it makes it easier for your customers to access the right person.

These are just the tip of the iceberg when it comes to Nextiva’s VoIP offerings. Check out these features and more at this link.

VoIP Technology

Now that you have a basic understanding of how VoIP works and its benefits, let’s dive a little deeper into the innovative technology that makes this all possible. In this section we’ll go through five main components: codecs, packet switching, IP phones, softphones, and ATA adapters.

Codecs

The majority of people have never even heard of a Codec, but it’s an essential piece to the VoIP puzzle. So, what is a codec?

A codec is a piece of software (or hardware depending on the device) built into your modem or accessed through an adapter. Its sole responsibility is to convert your voice into data. As you speak, your voice travels over the IP network where the Codec decodes your voice, turns it into data that gets sent through the network, and then converts it back to audio when it reaches the end destination.

Obviously, the codec is the main reason we’re able to speak in real time to the person on the other end of the line. Codec takes in several thousand voice samples the span of just a millisecond. These samples are responsible for the clarity you hear with when speaking to someone on the phone. If the codec is running on a sluggish network or doesn’t work properly, users experience that all-too-familiar cutting out sound on the other end of the line.

Packet Switching

Once the codec converts your voice into data, that data then gets divided into hundreds, if not thousands, of smaller pieces called data packets. These packets are transmitted to their end destination in a matter of milliseconds before being reassembled in their proper order.

To prevent ‘traffic jams’ with these packets, each packet may take a different path to get to the intended destination. This process of sending packets across networks (via the most efficient route at the time) is called packet switching.

Packet Switching Diagram

Packing switching and codecs work in conjunction with one another. Both of these need to be working properly to make successful VoIP calls.

IP Phones

By now, most people have probably spoken on an IP phone (shown below), whether know they did or not. As businesses continue to switch over to VoIP, they’re also taking advantage of the additional features that come with IP phones.

Polycom VoIP Phone

So what is the main difference between a traditional phone and an IP phone? An IP phone, much like a VoIP network, is connected to the internet via WiFi or ethernet. Rather than accessing data and making a call through a hardwired telephone line, IP phones request and send information via the connected IP network.

IP networks (and IP addresses) are provided by your VoIP or PBX providers. Another bonus to IP phones? All of the bells and whistles that make VoIP so popular are easily accessible when you’re using an IP phone.

Types of IP Phones

Like traditional phones, IP phones come in many different variations to meet the needs of different businesses. Depending on your price point, phones can come with a ton features or remain simple like the office phones of our past.

A typical IP Phone for business, like those made by Poly, come with features like HD Voice, noise-cancelling technology, small backlit LCD screens, and normal features such as call waiting, call transfer, or conferencing. These phones come in at a relatively low price point.

If you’re looking for more added features, there are phones that function a little bit more like tablets, with a host of features that make accessing the benefits of your IP phone even easier.

VoIP PhoneFor instance, something like the Cisco 8861 (shown to the right) comes with added features such as Wi-Fi, Bluetooth, and Intelligent Modules that provide up to 118 lines and feature keys. These all come on a bright, easily managed color display. This type of phone is more like working off a tablet or smartphone than a traditional telephone.

Lastly, IP Phones come in many different conference phone options, with built in wireless microphones and speakers that make it easy to communicate in a conference setting while still providing users with all the benefits of the VoIP network.

Consult with your VoIP provider to determine your best and most affordable options. However, if a business has already invested in phones and it’s not financially viable to switch over to brand new IP Phones, there are still options out there.

Analog Telephone Adapters (ATA)

ATA’s may be the answer.

VoIP ata adapter

An Analog Telephone Adapter (ATA) typically comes in the form of a box (similar to a modem) that businesses lease from their service provider. This box connects to a modem or a router and performs the function of a typical IP Phone by converting voice into data and sending it out over the internet rather than through the analog system.

Using an ATA also gives users access to some (but not all) of the features and benefits of IP Phones. This is another scenario where it’s best to consult with your VoIP provider to determine what options work best for your business.

VoIP Softphones

Another way to use your VoIP service is through a piece of computer software called a Softphone. A Softphone is a program or app that makes it possible to make calls from other devices besides a phone (i.e. desktops, laptops, and tablets).

In fact, you may have used a softphone in the past without even knowing it. If you’ve ever made a call via Skype or Google Voice/Hangouts, then you’ve made a ‘softphone’ call. All it takes is having the program on your desktop and plugging in a functioning headset.

There are many benefits to using a softphone–cost savings is one of the most obvious. The use of a softphone enables businesses to use a VoIP solution without having to invest in the cost of new IP Phones. Typically, each VoIP provider creates their own program that businesses will then download to their desktops.

The program is intuitive in nature, with a keypad and access to contacts that acts similarly to a mobile phone (so most of us already know how to use it when we look at it the first time). Nextiva, for example, has its own softphone program called the Nextiva App.

The Nextiva Softphone App

Nextiva’s Softphone setup process is easy. All it takes is clicking a download link and following the installation instructions to get the app up and running. You’ll use a username and password provided by your business or directly through Nextiva.

Nextiva VoIP App

Once you’ve finished the setup process, your VoIP phone system is ready to go. Through the app, you can access the full suite of Unified Communication features like Instant Messaging from user to user, Voice Calling, Call Settings, Active Call Distribution, Visual Voicemail, and Desktop Sharing — and that’s just to name a few.

The Nextiva App gives you the ability to manage settings like volume, presence, call forwarding and hide number. You can even access your communication history, making it easier to call someone back or look up the phone number of a missed call.

Visual Voicemail means you can access your voicemail right from your desktop. Just a few clicks of your mouse make it possible to listen to your voicemail message and call someone back. Gone are the frustrating days of trying to remember a pin or password.

A softphone like the Nextiva App gives you all of the benefits of an IP Phone without the costly expense of buying new phones. When it comes to softphones, any business has the potential to save money and access a whole suite of VoIP benefits.

What could be better than that?

Thinking about Nextiva? Our customers are thinking out loud here >>

VoIP Requirements

Thinking about setting up VoIP service in your business? What is required and how can you make sure your business is prepared?

Bandwidth

To get VoIP set up in your businesses, you first need a reliable internet connection with an Internet Service Provider (ISP). The standard bandwidth required for VoIP is .1 mbps per device, but it’s important to talk to your VoIP provider about what bandwidth suits the needs of your business. Depending on the type of data and features you’ll be utilizing, you might need more bandwidth than the standard. You can check your bandwidth with our VoIP speed test tool.

Devices

Another important factor is ensuring you have the right devices in place. You must have a SIP device on an individual phone level, a router that allows you to connect your phones to the IP network, and any other necessary equipment like ATA’s or softphone installations.

A VoIP Provider

The last thing you need is the right VoIP provider. Partnering with the right provider will ensure not only a flawless setup, but, with a provider like Nextiva, you’re guaranteed a customer service team that is passionate about delivering solutions that best fit your business.

The reason so many business choose Nextiva is because of our easily scalable solutions, low cost business phone service, and impressive cloud-based Unified Communications platform.

Want to learn more about Nextiva? You can read all about our VoIP solution here.

About the author

Cameron Johnson is a market segment leader at Nextiva. Along with his articles on Nextiva's blog, Cameron has written for a variety of publications including Inc. and Business.com. Cameron was recently recognized as Utah's Marketer of the Year.
 

Contact an Amazing Service
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(800) 799-0600

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Contact an Amazing Service
Sales Expert
(800) 799-0600

See how Nextiva will transform
the way you communicate.