There is a ton of information available regarding Voice Over IP (VoIP) phone systems but it can often be full of jargon and difficult to understand for the layperson. Since choosing the right Business VoIP provider, plan and equipment can be difficult if you’re not knowledgeable on the subject, we’ve researched and written a fully comprehensive guide.
You’ll discover new terminology and learn a few acronyms along the way such as “VoIP,” which is short for Voice over Internet Protocol. We’ll also stay away from vague explanations many technology vendors use that may be confusing. Keep an eye out for words with an asterisk* — you can hover for the definition! Once you’ve read through this guide, you’ll be ready to make an informed decision when it’s time to replace your outdated phone systems or switch to VoIP technology.
What are Business VoIP Phone Systems?
What VoIP Features Do You Need?
Which VoIP Hosting Option is the Best?
How Much Do VoIP Phone Systems Cost?
How Can a VoIP Phone System Help My Small Business?
How is a VoIP Phone System Set Up?
Glossary of VoIP Terminology
Chapter 01 What are Business VoIP Phone Systems?
A Business VoIP phone system delivers calls or data packets as an Internet service. VoIP technology uses a digital signal to convert phone calls, allowing anyone to make calls directly from a VoIP phone, laptop or desktop or any other device that is data-driven.
It is essential to know the specific technical terms that are used to describe a VoIP phone system and will be used in this guide. When we introduce a new technical term in this buyer’s guide, we’ll also provide a brief definition marked with an asterisk.
To start, the two most commonly used technical terms that describe a VoIP phone system are ‘IP PBX,’ and ‘VoIP PBX.’ These two terms are often confused, but have very different meanings.
So, let’s break down the terminology:
- IP = Internet Protocol. A method of transporting phone calls or data packets across your LAN (Local Area Network) or a WAN (Wide Area Network).
- VoIP = Voice over Internet Protocol. A phone system that manages your connection to your telephone service provider and directs your call control functionality through internet protocol technology.
- PBX = Private Branch Exchange. A telecommunications system that manages your telephone and fax machine’s call control functionality while simultaneously maintaining your connection to the PSTN (Publicly Switched Telephone Network).
- PSTN = Public Switched Telephone Network. The traditional circuit-switched telephone network, which began in the late 1880s, that uses copper wires to carry analog voice data.
Therefore, ‘IP PBX’ stands for ‘Internet Protocol + Private Branch Exchange’ and ‘VoIP PBX’ stands for ‘Voice over Internet Protocol + Private Branch Exchange.’
Chapter 02 What VoIP Features Do You need?
Depending on the VoIP Phone System you select, it will typically come packed with features. At first, you may not use all of them, but over time (and the more familiar you become with your VoIP phone offering) you’ll start bringing those features online.
Below are the most common functions you’ll find in a VoIP phone system:
- Phone Calls (Outgoing and Incoming Calls)
- Call Reporting
- Auto Attendant
- Conference Calling
- Video Conferencing
- Mobile Applications
- Integrated Messaging
- Application Integration
- Call Park, Call Pick-up
- Web-based Management
- Direct Inward Dialing (DID)
- Analytics & Monitoring Tools
- Notifications & Screen Pops
- Remote or Virtual Extensions
- In-Queue Music & Messaging
- Call Queues and Call Routing
- Voicemail & Voicemail to Email
- Call Monitoring & Call Recording
- Call Forwarding, Three-way Calling
- Caller ID, Call Transfers, Call Waiting
As you can see, a VoIP phone system’s essential features cover just about everything a business or organization needs.
VoIP Phone Systems
Currently you can find six VoIP Phone Systems on the market. We’re not referring to brands, but rather functionality. As you note each system, consider what you and your company may need now and in the future.
- Hosted PBX system
- On-Premise PBX system
- Hybrid Phone system
- Proprietary VoIP Phone system
- Open Source VoIP Phone system
- Open Source-based VoIP Phone system
What is a Hosted PBX?
Hosted PBX, or hosted VoIP, is where the VoIP service provider is responsible for housing the IP-PBX and controlling the technology that provides the services to an IP Telephony system.
What is an On-Premise PBX?
An On-Premise PBX or IP-PBX phone system is similar to a traditional PBX system that is set up at the company’s location and usually found in a computer equipment room or phone closet.
What is a Hybrid Phone System?
A Hybrid Phone System is an upgrade option for businesses or organizations that are migrating to a VoIP phone system but do not want to invest in re-wiring/re-cabling or replacing their TDM* PBX.
What is a Proprietary VoIP Phone System?
A Proprietary VoIP Phone System is an underlying operating system and PBX software known as closed “black box” technology: you have no access to system source code or insight into how the underlying system works.
What is an Open Source VoIP Phone System?
An Open Source VoIP Phone System is an underlying operating system and PBX software that’s free and available to the public. You, the user, have full access and control over the source and how the system works.
What is an Open ‘Source-Based’ VoIP Phone System?
An Open ‘Source-Based’ VoIP phone system is an underlying operating system and PBX software that is 1) open source at the core, but 2) with proprietary code built on top.
Now that you’ve reviewed the six VoIP systems, you should have a clear understanding of the different types of operations available on the market.
As you begin assessing what your company needs in terms of communication software, consider these few starter questions to ask your team:
- Do we need control and the power of an affordable business phone system?
- Do we need a low monthly payment and the simplicity of a hosted PBX solution?
- Our business is growing—can we get flexibility with a hybrid VoIP solution?
- Do we prefer to manage the business phone system currently installed at our physical location?
- Are we looking for a full-featured UC* solution but want the ease of management from a hosted PBX solution?
Understanding the fundamentals of VoIP headsets is key to choosing the right product. There are three critical features of a VoIP headset you must consider when selecting the proper product:
An earpiece delivers the return audio of the wearer’s conversation. There are four primary wearing styles of earpieces: over-the-ear, earbuds, behind-the-neck and custom-molded.
A microphone captures the wearer’s audio. There are two primary options for the standard voice tube: those that feature basic sound with no noise cancellation and those that provide noise cancellation to minimize background noise.
The connection cord allows the wearer to attach their headset to the VoIP device. There are many different types of connection cords due to various kinds of headset jacks. The four most common connection cords are 2.5mm, 3.5mm, USB and Micro-USB.
Each part listed above is essential because they help to determine the style, quality, and compatibility of the headset that you’re hoping to purchase.
VoIP Headsets and Phone Compatibility
When you’re using a headset and phone system from the same manufacturer, there’s rarely a question of compatibility. But when you need to replace or update a headset from a different brand, you need to know if your choice is compatible with your Android or iPhone smartphones.
Ask yourself these questions to determine compatibility:
- Will my new headset work with my landline or analog phone?
- Will a new wireless headset work with my old smartphone?
- Will our old headsets work with our new VoIP phones?
- Can I use one manufacturer’s headset on another phone they didn’t make?
- What headset brand works with our new VoIP phones?
When you look at your phone you will find connection ports, typically on the back or either side of the phone. There should also be an icon in the shape of a headset above that slot. If the figure is there, that phone is compatible with headsets that have a matching plug-in connector.
On the off chance there is no headset port, a standard landline phone will have a corded handset receiver that unplugs the headset should still work as long as it has the right connector for that plug-in port.
Along with a fully functional VoIP phone system there is another powerful tool that will move your IP system up to a whole new level when deployed. This is known as IP paging — an alert system that can be added to your VoIP system.
In many hospitals, medical and dental offices, schools and universities, factories, car dealerships and retail locations, you’ll find IP paging systems installed. If you’ve heard someone getting paged at a store or over a loudspeaker, that is likely an IP paging alert system in use.
The power of IP paging allows you to target your messages. You can broadcast messages across your organization to alert your entire team or to specific speakers, rooms or even a single phone.
There are two IP paging methods used:
- Unicast IP paging, or Unicast paging, is delivered on a one-to-one basis.
- Multicast IP paging allows for sending pages to multiple phones.
Within each paging method there are two types of paging deliveries — desktop paging and overhead paging.
When you add IP paging to a VoIP phone system and data networks, you have what’s commonly called IP convergence*, which allows paging from a desktop or overhead from your phone system.
VoIP Gateway equipment is a powerful technical device that should be considered when setting up your VoIP phone system.
What is a VoIP Gateway?
VoIP gateways are hardware devices used for converting Time-Division Multiplexing telephony traffic. They convert the Publicly Switched Telephone Network (PSTN) traffic into digital IP packets. That process gets the packs ready for transport over an IP network. Basically, VoIP gateways convert the signals so that they can be read by other softphones.
A VoIP gateway is also used to convert digital IP packets into TDM telephony traffic, which gets the packages prepared for transport across the PSTN network.
How does a VoIP gateway work?
VoIP gateways operate as bridges between an IP network and the PSTN. Depending on where the voice traffic originates, the gateway converts it into a form ready for receipt by the destination network. That network might be IP or TDM.
Should the voice traffic start from the PSTN, the VoIP gateway converts the analog voice signal over to a digital signal. The digital signal gets compressed using a codec* and then is broken down into a series of packets. Those packets are then moved across the IP network using a signaling protocol.
In the event the voice traffic started from an IP network, the digital packets get decompressed by the gateway into a digital signal. That signal is converted into an analog signal and sent across the PSTN.
Session Border Controllers
Session border controllers (SBC) are network devices used to protect SIP-based* VoIP networks. The SBC provides call control, interoperability, voice optimization and security. The device, known as a “Back-to-Back User Agent” is capable of supporting businesses, regardless of their size, and adding protection to build a safe and valuable VoIP communication solution.
Even though it uses the IP for convenience, the IP telephony network is still very susceptible to security breaches and call theft. With advanced methods of examining and managing network traffic available, an SBC network device will help protect against attacks. Besides the security measures, businesses have the option of connecting to multiple carriers and choosing the call route based on call cost.
Finally, session border controllers use sophisticated call-processing algorithms to improve voice quality.
Just like it sounds, Wireless VoIP is a VoIP phone that eliminates the constraints of wires or cables.You’ll remember that VoIP phones have built-in IP technology and transport protocols: when used together with a VoIP phone system or service, these permit you to send and receive local and long distance calls.
The same applies to wireless VoIP phones, but with one big exception: the Ethernet port on the wireless telephone is not required or forced to connect to your computer or your Local Area Network to get VoIP phone service.
So, what you have is a Wireless VoIP Phone with a built-in WiFi or a Digital Enhanced Cordless Telecommunications (DECT) transceiver unit. That transceiver unit connects to a base station or an access point. With this unit connected you can move freely around your office, even while on a call. Should you be at a wireless hotspot, you can still receive outgoing and incoming calls.
Wireless VoIP allows you and your employees to:
Move freely throughout the office and continuously maintain availability and quality of service
Step away from the desk to help customers on the sales floor or in the warehouse
Decrease response time to questions or events while increasing productivity and efficiency
VoIP adapters are simple and easy-to-use devices that enable you to use a VoIP service from an outdated analog phone or Plain Old Telephone Service (POTS) line. VoIP adapters convert analog voice signals into digital IP packets. Then the packages are transported over an IP network. VoIP adapters can also convert digital IP packs in analog voice streams as well.
To get your analog telephone connected, a standard VoIP adapter is used and connected to an FXS* port. Then, with the use of an Ethernet cable through an RJ45 port*, the adapter is then connected to your Local Area Network. Some VoIP adapters may also feature an FXO* port option in the event you need to connect to the Publicly Switched Telephone Network.
VoIP adapters can also be a bridge between an IP network and analog station device, like desktop phones or the PSTN. Depending on where the voice traffic starts, the VoIP adapter will convert it. Once converted to its proper form, the destination network or device will receive it.
Chapter 03 Which VoIP Hosting Option is the Best?
Your VoIP phone system relies heavily on your IP network infrastructure to control users’ data transmissions. So, before looking at VoIP features you will have to choose how you want the IP network hosted.
As mentioned, there are three hosting options:
On-Premise VoIP (On-Site VoIP)
On-Premise VoIP systems are custom-built primarily for large companies, organizations and government agencies. These business or government types purchase in-house VoIP infrastructure rather than subscribing to an offsite VoIP service.
- On-Premise VoIP systems are custom-built primarily for large companies, organizations and government agencies. These business or government types purchase in-house VoIP infrastructure rather than subscribing to an offsite VoIP service.
- The downside is the high upfront costs associated with installing the equipment onsite and setting up the secure IP network. Buying and setting up VoIP network servers are expensive.
Hosted VoIP (Cloud VoIP)
When choosing an off-site hosted solution you will need to pay a recurring subscription (often on a tiered pricing model) to the VoIP provider. They, in turn, will organize all of your critical network infrastructure on their global data centers.
- The scalability of hosted VoIP is its biggest draw, letting you change your subscription type to match your day-to-day business priorities.
- Hosted VoIP is remote worker-friendly, and VoIP providers will offer a mobile app your employees can install on their smartphones. Because the service runs on third-party servers, you can make and receive calls wherever you are in the world.
- Your supplier will decide which features to include or remove from each subscription tier, based on your needs, which also leaves system improvements to their discretion. The tiered subscription model removes substantial upfront costs, but note fees could increase as your company grows.
Hybrid VoIP combines many of the ‘pros’ of on-site and hosted VoIP. A typical example of a hybrid solution would be connecting a non-VoIP-enabled PBX phone system to a VoIP providers network via gateway servers.
One of the most remarkable benefits when using a hybrid PBX is that if you suffer a VoIP service outage, you can still make calls using the standard PSTN.
It’s the best of both worlds!
Chapter 04 How Much Do VoIP Phone Systems Cost?
When calculating how much Voice Over IP (VoIP) systems cost, you will notice there is no set price that any VoIP provider can display initially. The reason for that is that each business has unique phone system needs.
Here are seven pricing factors you should ask the provider about before you purchase a system:
- VoIP Cost Per Month
- Hosting & Setup Fees
- Number of Users
- Level of Subscription
- Phone Equipment
- Extra Equipment
VoIP Cost Per Month
When trying to find out an overall cost of a VoIP phone system, you will notice pricing starts around $25 per user for a hosted set-up and increases from there. There are many reasons why pricing fluctuates: the number of users, the total number of devices, or the hosted plan selected.
Hosting & Setup Fees
When deciding where to host a VoIP phone system, you’ll want to know the provider’s tiered subscription fees. Note that hosted VoIP systems rarely have setup costs.
Number of Users
VoIP providers charge monthly rates based on the number of users or employees at a business. As an example, Nextiva bills at $30 for every 1–4 users, but if you have 100+ users, the price drops to $20 per user.
Level of Subscription
VoIP providers typically offer several tiered packages. Using Nextiva as an example, they have three packages: “Office Pro,” “Office Pro Plus” and the fully loaded “Office Enterprise” — each has a set monthly price and no setup fees.
Compatible VoIP phones have dropped dramatically in price and they usually start around $70-$80, but depending on the features the price can spring up to hundreds of dollars.
With new VoIP phone systems, most of the equipment is included with the exception of additional headsets and adapters. You can usually buy a new headset for around $40-$50. If you need to add an analog telephone adapter, they’re $60-$70 dollars.
VoIP relies on a sturdy, robust and fast broadband connection, so an internet service that delivers a minimum of 10 Mbps should give you an uninterrupted VoIP experience. However, as your company grows, you may need to increase broadband services.
Chapter 05 How Can a VoIP Phone System Help My Small Business?
Regardless of your company’s size, VoIP phone systems have become the standard for today’s successful businesses. VoIP has made it possible for small, medium and large-scale companies to see enormous growth in consumer satisfaction by using the robust features offered with VoIP phone systems.
Small and startup businesses
VoIP technology enables your broadband internet connection to convert that connection into a phone line allowing VoIP phone systems to operate at a reduced rate.
When your business grows in size, it's crucial that your employees remain organized in their respective specializations.
While organizing your employees remains essential for productivity, being able to gather and interpret information is also vital.
Have a virtual office environment anywhere you go. Since VoIP is digital, all that’s needed is an internet connection and a data-driven device.
Monitoring and recording calls are not only great ways to train new employees, but they also help protect a business against fraud.
Whatever the size of your operation, VoIP phone systems have solutions that are tailor-made to fit your needs. With the variety of VoIP technologies offered, no business is too small or too large.
VoIP Systems Reliability
When considering the move to a VoIP system for the first time, business owners want to know the reliability of the technology. Just like anything, VoIP technology does have its pros and cons.
Pros – The Advantages of VoIP
When comparing IP Telephony versus traditional phone services, VoIP is less expensive. Instead of paying ongoing fixed phone carriage fees, the voice signal uses the IP connection to deliver your call over the internet for free or, in rare instances, at a reduced per call rate.
With VoIP, you take your system with you. You can hook up your system anywhere with an internet connection and you’re up and running in a matter of minutes. Plus, you won’t need to get a new phone number — phone numbers are transferable.
No Extra Charge for Features
VoIP services offer many robust features at no extra charge. These include video conferencing, call waiting, long distance calls, caller ID and call forwarding. With landline phones, these are add-on services and an added expense to the business.
Traditional Phone and Fax Support
When you make the transition to VoIP, you won’t need new phone equipment at first. Providers often have devices that will convert old telephone and fax machine signals into digital packets to transport over the internet.
- Low Cost
- No Extra Charge for Features
- Traditional Phone and Fax Support
- High Internet Bandwidth Needed
- Location Hidden from Emergency Calls
- Continuous Power Supply and Internet Connection Needed
Cons – The Disadvantages of VoIP
High Internet Bandwidth Needed
If your VoIP system doesn’t have sufficient bandwidth or your business is in a rural area, call quality can be impacted. Voice quality can be affected and response lagging or delays can take place. If you have problems maintaining a connection or trouble connecting to your Internet service provider’s servers you will need to check your network speed, especially during high usage times.
Location Hidden from Emergency Calls
When the 911 system started, VoIP did not exist. That emergency system was set up to work on a fixed location phone line, used by traditional phone systems, not an IP connection. If you’re making an emergency call from a VoIP phone system, you may run into problems because the dispatch cannot automatically locate you on their screens.
To prevent this from happening to you, find a VoIP provider that can enable the Enhanced 911 (E911) service for your virtual system.
Continuous Power Supply and Internet Connection Needed
Without continuous power, the VoIP phone systems will not operate. If you lose power and don’t have a backup power source, VoIP phones will not work. The same applies to a continuous internet connection: if the internet goes down, your VoIP phone line will not operate even if you have power.
Chapter 06 How is a VoIP Phone System Set Up?
Now you’re ready to move forward and transition over to a VoIP phone system. To start, there is a simple five-step process you and your provider will go through before setting up a new system. We’ve supplied a general set of guidelines below to familiarize yourself with the process.
With the Needs Assessment documented, you’ll move to the Local Area Network Assessment next. When a VoIP Phone system uses your LAN, you must check the existing network to determine if a virtual phone might cause any additional strain on the network. The information uncovered here is a critical step in the process.
Just as thoroughly as the needs and LANetwork assessments, the inspection of your internet connectivity will need assessing. Since you’re going to use the VoIP phone system to make calls, you have to make sure your internet connection has the necessary bandwidth to support the system because VoIP calling brings additional traffic.
Installation, Support and Ongoing Maintenance
Now it’s decision time. Who will perform all the behind-the-scenes activities? Your team or the VoIP service provider? Many business owners are comfortable taking care of their system, from installing, support and maintaining a VoIP phone system in-house. Those who don’t want the responsibility can enlist the services of a business VoIP provider to take on that role.
System Selection, End Points, and Voice Service
With all assessments made and decisions about who will handle your system completed, you’ll move on to VoIP phone system selection. After you select your system, you will need to determine the actual VoIP phones you want to use. Most providers have a large selection to choose from. Finally, you will need to choose a provider and the type of voice services you will include in your plan.
Training and Onboarding My VoIP System with Your Team
With your Business VoIP phone system set up and fully operational, you can begin to explore the features included and get your team acquainted with them. Most components are easy to use and the web interface should be fairly simple to navigate.
Before you can begin using your VoIP system, there is one last piece of the puzzle that needs addressing. Will the provider offer training or onboarding for your Business VoIP phone system or will you need to provide these services?
Ask your VoIP provider about their onboarding process and training. With a new Business VoIP system in place, your team will need help getting to know the interface quickly.
Four concerns you’ll want to inquire about are:
- Online Support
- Number Porting
- Accounting and Billing Setup
Materials that are usually supplied include introductory materials, manuals and training guides, and sometimes virtual training for users and company administrators.
Most providers offer online support resources, similar to a company’s knowledge base or an expanded frequently asked questions section. There you should find videos and how-to guides covering everything system- and feature-related.
When a new customer wants to transfer their existing phone number(s) over to a new system, it's known as “porting.” This is handled by the provider. During that time, temporary numbers will be issued until the porting has been completed. Do note: it can take up to four weeks for the porting process to complete.
Account and Billing Setup
Providers typically accomplish this set up right away and provide online access to account details and billing.
Chapter 07 Glossary of VoIP Terminology
Voice over Internet Protocol
A phone system that manages your connection to your telephone service provider and directs your call control functionality through internet protocol technology.
Private Branch Exchange
A telecommunications system that manages your telephone and fax machine’s call control functionality while simultaneously maintaining your connection to the PSTN (Publicly Switched Telephone Network).
Publicly Switched Telephone Network
The traditional circuit-switched telephone network, which began in the late 1880s, that uses copper wires to carry analog voice data.
Hosted PBX or hosted VoIP is where the provider is responsible for housing the IP-PBX and controlling the technology that provides the services to the IP phone system.
On-premise PBX or IP-PBX phone system is similar to a traditional PBX system that is set up at the company’s location and usually found in a computer equipment room or phone closet.
Hybrid Phone System
A Hybrid Phone system is an upgrade option for businesses or organizations that are migrating to a VoIP phone system but do not want to invest in re-wiring/re-cabling or replacing their TDM* PBX.
A common method of receiving independent signals and transmitting over a common signal path.
VoIP Phone System
A Proprietary VoIP phone system is an underlying operating system and PBX software, known as closed “black box” technology: you have no access to system source code or insight into how the underlying system works.
Open Source VoIP Phone System
An Open Source VoIP Phone system is an underlying operating system and PBX software that’s free and available to the public, and you have full access and control over the source and how the system works.
Open ‘Source-Based’ VoIP Phone System
An Open ‘Source-Based’ VoIP Phone system is an underlying operating system and PBX software that is 1) open source at the core, but 2) with proprietary code built on top.
A phone system that integrates or unifies multiple communication methods within a business.
Using the Internet Protocol as the standard carrier for transmitting all information such as data, music, teleconferencing, television, video, and voice.
A computer program or device for encoding or decoding a signal or a digital data stream.
Session Initiation Protocol
SIP is a method of delivering telephone service through an IP connection.
This is the network port on a computer. This socket has many names. It is also known as the Ethernet port, the network adapter, the network jack or the RJ45 jack.
Foreign Exchange Subscriber Port
It is an interface that connects station devices such as your phones or PBX to a VoIP adapter.
Foreign Exchange Office Port
It is an interface that connects Plain Old Telephone Service (POTS) line to a VoIP adapter.