What is VoIP and How VoIP Works (Explained)

Digital technology is disrupting anything and everything you can think of. In the coming years (some predict as early as 2025), almost everything will be powered by electricity and controlled digitally especially telephones. So the question What is VoIP and How VoIP Works ? If you still haven’t noticed yet, the way we communicate over the telephone is silently being digitized. And the thing that will become the norm is VoIP or Voice over Internet Protocol.

Whether you’re looking to adopt VoIP for your business or simply want more information on it, this article is for you. Learn what is VoIP , how VoIP works (in depth), the different types, cost, and how you can get started with it.

What is VOIP? A Brief Introduction

what is voip

VoIP, which is an abbreviation for Voice for Internet Protocol, is the standard and the technology that facilitates the transfer of voice via the internet. More specifically, VoIP is the set of tools and technologies that convert the analog voice to a digital signal that is then transferred through the internet. If you’ve ever talked to someone using the internet, thank VoIP for making that happen.

Companies use different sorts of terminologies to refer to VoIP. You may hear terms like IP telephony, internet telephony, broadband telephony, or broadband phone — they mean the same thing (although technical differences remain).

As opposed to analog, which is based on circuit switches, digital is based on packet switching. It uses packets to transmit information. There are several benefits to it, the best of which is it enhances the voice quality. So provided an adequate network strength, you can talk with a studio-like clarity level.

In the future, packet-switching technology will eventually replace every circuit-switched network. That’s because they make sense both in terms of quality and economics.

Types of VOIP Calls

VoIP doesn’t refer to a single calling method. In fact, three services are in use today. These are:

  1. ATA
  2. IP Phones
  3. Computer-to-Computer

Let’s look at each one in greater detail.

1. ATA

Types of IP Calls

ATA stands for Analog Telephone Adaptor and is the easiest way to experience VoIP service if you’re currently using a standard telephone. With the adaptor, you can connect the telephone to a computer and make calls over the internet.

In this case, ATA works as an analog-to-digital converter. It takes your voice, which is an analog signal, then converts it to digital data.

Many telecom companies have already started bundling ATA features within their broadband service. So you can plug the cable into your PC or laptop and start making VoIP calls.

In other cases, you’d have to purchase an analog telephone adaptor, install the software, and enable additional services before you can make the calls. The adaptors cost as low as $30.

2. VoIP Phones

IP networking phones

There are specialized phones that allow you to make VoIP calls without the need for an adapter. These are known as IP phones or VoIP phones. The phones are equipped with an RJ-45 Ethernet connector instead of the standard RJ-11 phone connector found in traditional telephones. Moreover, they have control protocols like SIP, SCCP (Skinny Client Control Protocol), and other proprietary protocols that make VoIP calls possible.

The VoIP phones connect directly to the router without the need for additional hardware or software. The newer “Wi-fi phones” connect to a wi-fi hot spot to place VoIP calls.

3. Computer to Computer Voice Networking (VoIP)

VOICE Networking calls

The third type of VoIP service is what most people visualize – phone calls from one computer to another. Companies like Skype and Google Duo have popularized this method of voice calling.

In most cases, calls are entirely free, and you only need to pay for the mobile/Wi-fi data.

As opposed to the other two methods, you don’t need any specialized hardware. Just install the software, grab a headphone, connect to the internet, and you’re good to go.

VoIP Protocols

As already mentioned, VoIP is a set of protocols to connect two devices on a call. Protocols are nothing but a standardized set of rules to ensure everyone is on the same page while communicating across the internet.

The common protocols are H.323, SIP, and RTP or Real-time Transport Protocol.

H.323 and SIP (Session Initiation Protocol) are two of the most common protocols for establishing VoIP calls. Of the two, SIP is the most popular one among users.

SIP provides the following to establish the call:

  • User location
  • Availability
  • Capabilities
  • Session setup
  • Session management

If your hardware has SIP, then you don’t have to worry about interoperability when switching VoIP service providers. RTP provides the real-time streams necessary for internet connection. It is sensitive to delays and packet loss.

How VoIP Works?

how voip works

If you’re requesting a VoIP connection for your business or personal needs, you may want to know what goes behind the scenes.

The absolute basic is VoIP converts analog signals to digital signals and then transmits the packets via the internet. To make this possible, there are five essential components, which are:

  • Computer and Hardware
  • Switch
  • Router
  • Cable Modem
  • Internet Connection

A computer or hardware (which can be a smartphone, mic) captures the audio. The Codec (coder-decoder) then converts the analog signal to digital packets. Then packets are forwarded to a network switch, which sends them over to a router. Finally, the packets reach the VoIP service provider who establishes the call.

Not to mention that all of this requires a continuous and stable internet connection.

Before the call can take place, users must register themselves on the VoIP network. The information and credentials of each user, which are collected during the registration process, are stored in a database.

When a caller requests to get in touch with another user, the network uses the credentials and SIP information to forward the call to that particular user. Once the call is established, it starts a session. The session ends when one of the participants ends the call.

Types of VoIP Networks

If you’re a regular user who just wants to make VoIP calls, then a computer of ATA is all you need. But if you want VoIP capabilities for your entire business unit, you need to consider different types of VoIP networks. The three main types are:

1. Hosted VoIP

For most businesses, Hosted VoIP is the best way to realize a unified business communication experience. This network involves the use of many devices along with a cloud infrastructure. Because of the cloud component, this approach is also referred to as Cloud PBX or Cloud Phone System.

For the end-user (who, in this case, are the employees), the entire operation is rather simple. A user places a call using the handset or online system. The IP phone packets then travel through the switch and router before being redirected over to the VoIP service provider. The VoIP company establishes the call and begins the session.

Cloud PBX takes the complexity out of the equation. You just provide the hardware like desktop IP phone or desktop analog phone with ATA or desktop computer with a softphone. The VoIP company takes care of the rest.

But for businesses with a more sophisticated phone system, they’d have to carry out some additional tasks.

2. SIP Trunking for PBX

In some cases, especially with large corporations, it’s nearly impossible to abandon all the telephones employees have been using for years. For those companies, SIP trunking is the ideal solution.

SIP is the application-layer control protocol that helps establish, maintain, and terminate calls between two VoIP devices. Trunking here refers to laying a virtual phone line that is then used by multiple numbers of users to make calls over the internet.

SIP capabilities aren’t limited to voice calls. You can make video calls and send text messages, emails using this connection. In other words, SIP trunking enables unified communications systems. So you’ll have it easy to synchronize different communication channels in real-time.

3. Mobile Devices

You can offer VoIP capabilities to your staff members directly on their phones. With the rise in remote workforce and ground staff members, this becomes even more important.

All you’d need to do is install the VoIP app on their phones. The app is usually provided by the VoIP provider itself. Such a system would require a strong cellular or Wi-Fi connection. So you’d have to focus on the network congestion bandwidth utilization. Depending on your specific business needs, you should adopt the relevant VoIP network.

Benefits of VoIP

There are several benefits of adopting VoIP technology. Here are some of the main ones:


  • Lower Cost – VoIP is far cheaper than traditional broadband lines. It doesn’t matter whether you call nationally or internationally, you pay significantly lower.
  • Unlimited Calling – There’s no limit as to how many minutes or hours you can talk to for each day. Call as many phone numbers or VoIP devices as you want without having to worry about bills.
  • Unified Communication – You can have voice calls, video calls, text, fax, all under one roof. VoIP makes it possible to have a unified communication experience.
  • Auto Attendants – You can greet customers and direct them to the right person to talk to. With VoIP service providers, set up auto attendants to build a great first impression.
  • High Quality – Not only does the cost of calls go down, but with VoIP, the quality goes up.
  • Conference Lines – Set up meetings instantly with your team members with dedicated conference lines. Conduct the meeting in a high-quality environment with VoIP.
  • Call Queuing – Put the calls in a queue when the lines are busy. Callers are made to wait for an agent to get free. This prevents disconnected and unanswered calls.
  • CRM Integration – You can also integrate the data gathered from VoIP into your CRM. This can enhance productivity for your organization.


Because of these benefits (and many more to come), VoIP is likely to become the norm.

Avatar for Hitesh Jethva
Hitesh Jethva

I am a fan of open source technology and have more than 10 years of experience working with Linux and Open Source technologies. I am one of the Linux technical writers for Cloud Infrastructure Services.

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