What Is a VoIP Phone & How Does It Work?

August 10, 2022 | 7 min read

what is a voip phone

In this article we will explain VoIP (voice over internet protocol) phones, how it works, what equipment you might need, and how to choose the phone that is best for your business. 

Whether this is your first business phone purchase or if you’ve used one before, you’ll learn what you need to know to make informed decisions about VoIP. 

What’s included:

  1. What is a VoIP phone? An easy definition
  2. What is the difference between VoIP phones versus traditional phones?
  3. How does a VoIP phone work? 
  4. Benefits of a VoIP phone system
  5. Types of VoIP phone equipment
  6. What type of VoIP phones does my business need?

What is a VoIP Phone?

what is a VoIP phone? a VoIP phone operates using an internet connection instead of copper hard wires. A VoIP phone can go with you anywhere you have an internet connection

A VoIP phone is any phone that makes and receives calls using the internet. Instead of a traditional “hard wired” phone that uses direct connect copper wires to provide telephone service, a VoIP phone gives you greater mobility, interoperability, and connectivity.

What is the difference between VoIP phones versus traditional phones?

The biggest difference between a VoIP phone and traditional landline telephone is that a landline phone is hardwired into a physical location using copper wires. A VoIP phone, on the other hand, makes and receives calls over the internet and is not bound to a specific location, i.e. you can use that phone number from anywhere you have internet access.

Because of this, there are two big differences in functionality between VoIP phones and traditional phones. The first is that a voip phone will work no matter where you are. As long as you have an internet connection, you’ll be able to make and receive calls without being tied to one place. 

And the second difference is that you technically don’t even need a physical phone to make calls. You can make a call from an app on your computer.

FunctionalityVoIP phonesLandline phones
Phone calls (PSTN)YesYes
Nationwide long-distanceIncludedOptional
User-to-user callsYesPBX required
Caller IDYesYes
Call WaitingYesYes
Ease of setup★★★★★★★★
Requires internetYes, 100 Kbps per lineNo
WirelessWi-Fi, DECT, and Bluetooth headsets availableDECT and Bluetooth headsets available
Reliability during internet/ power outagesCalls can be routed to another number or voicemail.Calls drop or are routed to voicemail.
TechnologyIP telephony (SIP, TLS, and SRTP)Analog voice signals
Call quality★★★★★★★★★
Setup cost$0$110 per jack
Monthly cost$20–35$35
Advanced features
Auto attendantIncludedPBX required
Phone number privacyIncludedVaries
Phone number changesIncluded$27
Phone extensions & hunt groupsIncludedPBX required
ConferencingIncludedThree-Way Calling
Call routingIncluded$9.95/mo
Call queuingAdd-onAdd-on
Remote work capableYes, softphone appsCall forwarding
Call encryptionYes (TLS & SRTP)No
International dialingMX: $0.16/minUK: $0.01/minJP: $0.05/minMX: $1.97/minUK: $1.21/minJP: $1.62/min
Business voicemailIncluded$13.95/mo
Integrations (CRM, text messaging, surveys)YesNo
Sources: VoIP information based on Nextiva’s business phone plans. Analog information is based on business rates published in ILEC tariffs for Arizona. Updated on January 20, 2021.
Want to learn about VoIP? Upgrading your phone system?
Get your free copy of Cloud Phone Systems for Dummies.

How does a VoIP Phone Work

In the past, phones were wired to an on-premises Private Branch Exchange (PBX). This bulky machine would handle all routing and ensure each call reached its proper destination. VoIP phone features far exceed those available on old PBX systems.

Since VoIP phones work by processing telephone calls from the internet, or the cloud, the technology employs existing computer network cabling or Wi-Fi to access telephone networks.

In the past, phones were wired to an on-premises Private Branch Exchange (PBX). This bulky machine would handle all routing and ensure each call reached its proper destination. VoIP phone features far exceed those available on old PBX systems.

Now, with modern technology, VoIP phones work by converting analog voice signals into digital signals over your broadband internet connection. The easy way to say it? VoIP uses the internet to make and receive calls rather than traditional landlines. 

All you need is internet service, a VoIP-compatible phone, and a VoIP service provider to place and connect the calls. 

Check out how Tony breaks it down in this video. 

VoIP technology uses existing computer network cabling or Wi-Fi to access telephone networks.

No more wires or boxes  needed to use your VoIP business phone service! Now you can take a call from anywhere you have internet — even from an app on your computer — and your phone number can stay the same as before, so there is no expense in changing it.

So whichever telephone device your company chooses, you can connect it to the VoIP phone system simply and easily. Just plug the phones in and have your tech team configure the system in a way that best suits your particular needs.

“Many medium and large enterprises already have significant investments in PBX systems and are reluctant to eliminate systems that have worked well for many years to switch entirely to a software-based phone service. The good news is that many cloud phone service providers have a feature called SIP trunks that allows you to connect your PBX system to a VoIP network.”

Cloud Phone Systems for Dummies

Sometimes, instead of entirely switching to a VoIP phone system, businesses prefer to convert an existing PBX system to a cloud-based system. This transition is facilitated by a business phone provider using Session Internet Protocol (or SIP trunking) to transmit calls over IP networks. 

SIP trunking is used to create, modify, and terminate multi-party sessions that contain one or more media streams.

Learn more about whether SIP trunking is right for your business…

What are the benefits of a VoIP phone system?

benefits of a VoIP phone include easy installation, virtual phone numbers, simple integration, and more

Many of the features of a VoIP phone service speak for themselves:

  • Easy installation and setup on existing internet connections.
  • Virtual phone numbers that follow you and your employees. 
  • Use your existing Internet connection. Other business phones require dedicated copper wiring separate from the computer network connection.
  • Link to user accounts or to phone numbers. They allow you to switch between simultaneous calls on a given account.
  • Simple integration with other software applications, like Microsoft Teams
  • Advanced voicemail features like visual voicemail, transcriptions, or email delivery.
  • Automatic software updates
  • Easy and cost-effective to scale as your business grows. 
  • Higher quality audio range (twice that of traditional).
  • Can be set up for PoE. That means they get power over their Ethernet network cable instead of a traditional power adapter. This results in fewer transformers having to be plugged into power strips around the office.

Types of VoIP Phone Equipment

There are two main types of VoIP – hard phones and softphones. You may need only one type to suit your needs or your business may operate best when you combine a few different types.

nextiva softphone

VoIP hard phones are physical phones that you can see, touch, and feel. Soft phones, on the other hand, are basically software apps that you use on a computer or mobile device to accept and make calls. 

If you choose Nextiva as your VoIP provider, you will get a softphone (also known as our app that you can use to make calls from your computer or a mobile device) included in your package. Nextiva also offers a variety of hard phone types to choose from. 

To make the decision process easy, Nextiva has assembled a chart showing the most popular phones on the market. All of these models have been tested and reviewed, and each has benchmarked to the highest industry standards.

Remember, though, that there are countless other models available (some with either more advanced features or additional lines). Here’s a more comprehensive list of the best business VoIP phones.


VoIP phones comparison chart

A conference phone differs from a desktop phone in that it is optimized for both hearing and sending the best quality audio in a group setting (like a conference room table) because it has  omni-directional microphone configuration.

However, there isn’t a big functional difference between a desktop phone and a conference phone. If you learn how to use one, you can easily use the other.

The models shown below are among the most popular in the market. Each comes with standard features like speakerphones and speed dialing. For information on additional features and capabilities, refer to the chart below.

VoIP conference phone comparison table

What type of VoIP phones does my business need?

In the end, you cannot go wrong with any of these popular devices. You’ll notice that each of these offers the features that you would expect from a phone system.
Here are the primary requirements to consider before choosing a device:

  1. Look at the brands. Are there names you trust more than others? Think about longevity and past performance.
    • Poly is the global leader when it comes to productive and effective engagement with colleagues, partners, customers, and prospects. You can’t look at a serious VoIP solution without including their product line in your decision-making process.
    • Cisco is the big name in business networks and internet infrastructure and another lead player in the VoIP hardware realm.
    • Panasonic is one of the world’s leading innovators in VoIP phone business systems. Their reputation for making quality electronic devices goes back decades.
    • VTech is the world’s largest manufacturer of cordless phones and well known for its electronic educational toys.
  2. Look for the number of line appearances. How many lines does each device in your business need to be able to handle? Some team members will need many more than two lines.
  3. Do use headsets? What type of connector do they have? An RJ-9 is a familiar type of connector for telephones, but are less popular. Today’s headsets use USB for connectivity. If you need Bluetooth, then make sure your device supports it. Some devices require a USB-to-Bluetooth dongle that might not be included.
  4. Ready for Power over Ethernet (PoE)? Most devices now support for PoE, but ensure that you have the power adapters since most employees that work from home do not have PoE-capable network equipment.
  5. Don’t forget about reliability. Does the phone receive regular security updates? VoIP phones that receive these updates tend to provide much more reliable VoIP phone service than devices that need firmware delivered by hand. (Hint: Many, many internet-connected devices never get updated.)

Conclusion

There are many choices when buying and configuring your business VoIP service. Making sure you have the best VoIP provider, phones, and features, gives you more confidence to run your business.

It doesn’t have to be hard. In fact, setting up a virtual phone system is so easy, you can set it up yourself.

The good news is that you are not alone in this journey, and there are professionals to guide you along the way. Let Nextiva’s VoIP specialists help you select the perfect phone system for your company. Also, check out what our customers say about our VoIP phone service.

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Cameron Johnson

ABOUT THE AUTHOR

Cameron Johnson

Cameron Johnson is a market segment leader at Nextiva. Along with his well-researched contributions to the Nextiva 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.

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