How does VoIP work?

What you need to know about Voice over Internet Protocol


How does VoIP work?

What you need to know about Voice over Internet Protocol


How does VoIP work?

What you need to know about Voice over Internet Protocol


How does VoIP work?

What you need to know about Voice over Internet Protocol


If you’re looking into getting a new business phone system, you may have heard the term “VoIP.” But what is it, exactly? And how does it work?

“VoIP” stands for voice over internet protocol. It’s a set of technologies that let you make and receive calls over the internet, allowing you to break free from your desk phone and traditional phone networks.

It can sound complicated and technical at times, but don’t be intimidated! We’re here to help you go over everything you need to know about voice over IP and how to implement it for your business. More specifically, we’ll discuss:

How VoIP works: the basics

VoIP gives you the ability to make calls anywhere, anytime. All you’ll need to use it is an internet-enabled device with a microphone and a speaker, VoIP software, and an internet connection. That means you can make VoIP calls from a mobile phone or your computer.

Because it doesn’t use traditional phone lines, you won't have to rely on copper wiring to make a call. Instead, you'll be using fiber optic cables.

Here's how VoIP processes your phone calls:

  1. It captures analog audio signals (your voice)
  2. Then, it converts your voice into digital data packets
  3. It moves data through your Local Area Network (LAN) switch and router
  4. From there, it sends the packets to your VoIP provider, which helps distribute them to their destination
  5. Finally, it converts digital signals back to your voice

All of this is accomplished in real-time, with little to no lag (as long as you have decent internet connectivity).

How to use voice over internet protocol for business

If you’re reading this, you’re probably thinking about using VoIP for your business. This is one of the most popular uses of VoIP technology, and it's the ideal phone solution for any business - regardless of size. It can provide a reliable and low-cost phone service for you and your team.

With VoIP service, your business can take advantage of:

  • Easy scalability: Whether you’re a small business or large enterprise, you can add or remove lines with ease as your needs change. This means you don’t have to pay for lines you don’t need.
  • Advanced call features: VoIP phone systems for business are typically set up like PBXs, which means capabilities outside of just making phone calls. This includes things like auto-attendants, smart call routing, call recording, queuing, call forwarding, and more.
  • Remote working: If you're using cloud-hosted VoIP services, your employees won't have to rely on clunky and expensive hardware. All they'll need is a computer or smartphone and an internet connection.
  • Lower costs: Long distance and international calls don't cost as much when you make them over the internet. As an added bonus, you won't have to pay for expensive hardware and installation fees.

You should select a VoIP service provider with transparent plans that offer voice and video conferencing, at the very least. What would be better, though, is to invest in unified communications that not only offers VoIP solutions, but team messaging as well as small business and enterprise integrations.

How does voice over IP work at home?

The great thing about VoIP is that it works the same way at home as it does at the office. While you can invest in a VoIP desk phone for your home office, it isn’t necessary. Softphones are just as effective. You and your team can use mobile phones or computers to make and receive calls from anywhere.

When you’re using a softphone, you’ll be able to:

  • Answer and make calls using your business number, regardless of the device you're using
  • Use business call features
  • Switch between devices easily

All you need to do is make sure your home has high-speed, reliable internet access. Insufficient bandwidth means you'll have to deal with problems like latency.

If you have the enough bandwidth, all you need is your device and the app or software from your VoIP provider to use your business VoIP number.

How is VoIP different from traditional phone systems?

How is VoIP different from traditional phone systems?

How is VoIP different from traditional phone systems?

How is VoIP different from traditional phone systems?

How VoIP works is very different from the way traditional phone systems work. We’ve already discussed the basics of how VoIP sends digital voice data, so let’s take a look at how using traditional phones works.

Traditional telephony uses “circuit switching” technology for connecting calls. This has been around for over 100 years. Remember the old movies where they show a lot of people manually plugging and unplugging lines from switchboards? This is how the Public Switched Telephone Network (PSTN) used to connect people to each other.

While we still use that network today, things have changed - the connection process is now automated. But it’s not really the most efficient or cost-effective way to make voice calls anymore.

Now contrast this with VoIP's “packet switching” approach. This works much better because packets are compressed to save more information and can take many paths to a specified destination. It also requires less equipment.

Here’s a breakdown of how VoIP systems and traditional telephones differ:

Feature VoIP Traditional
Method Packet switching Circuit switching
Medium Internet Copper wires
Equipment Virtually none: you can use your cell phone, computer, or buy an adapter to keep using your traditional desk phone.Expensive equipment: You need dedicated desk phones, a server with a PBX (Private Branch Exchange), and lots of wires to make calls.

What’s needed for a VoIP phone system to work?

What’s needed for a VoIP phone system to work?

What’s needed for a VoIP phone system to work?

What’s needed for a VoIP phone system to work?

Again - whether you’re using your VoIP service at home, in the office, or anywhere else, there are some things you'll need to make it work:

  • A modem and router (which should already part of your existing internet setup)
  • An internet-enabled device with a speaker and microphone
  • The appropriate VoIP software from your provider
  • Reliable internet service

But apart from simply having these, there are additional considerations.

For instance, you need to decide what types of phones to use and what internet equipment you'll need. More often than not, you won’t have to buy a new modem or router. As for devices...

VoIP device options

Your old desk phones

If you're switching to VoIP from a traditional landline service, there isn’t any real need to purchase new phones. If you find that your older hardware is not designed to be used with SIP trunking, all you need to do is invest in an analog telephone adapter (ATA).

This adapter allows you to use your analog phone with IP telephony. An ATA provides the dial tone, ring generator, and other signaling technology to the phone. It also includes an ethernet port for the internet connection.

IP Phones

If you’re a fairly new business or are open to investing in new desk phones, you can also use IP phones. An IP phone looks exactly like a traditional office phone (although they can be wireless too). These phones are made specifically for internet calls and involve little setup. All you need to do is connect it to the internet and plug it into a power source.

IP phones can be convenient for businesses that still want to use a handset. It allows you to check voicemail, easily transfer or route calls, or display caller ID directly on the phone.


For companies that do a lot of remote working, a softphone may work best for you. It allows the most flexibility in terms of when and where you can take calls. A softphone is an app or software that you download on your computer or phone.

The software allows you to make and receive calls through the application using your business number. For example, your team may prefer to make calls over a computer with a headset.

Internet Equipment

You’re probably already equipped with everything you need to connect to the internet. But you still need to make sure your equipment is up to the task of making high-quality calls. Check your modem and router to ensure they're in good condition.

Another thing to consider is the state of your ethernet cables. If your cables are old, they may not deliver the best connectivity for your cloud phone system. Check with your IP team and make sure your IP network can handle internet telephony.

Optional: Session initiation protocol (SIP)

SIP is a system of coding rules originally designed to enable real-time multimedia communication sessions between various participants. SIP allows you to complete real-time communications over the internet, supporting voice and video conferencing.

(When you use a softphone, it often connects to your IP network using SIP.)

Businesses can use SIP with VoIP to get the most out of their communication systems. SIP allows organizations to take advantage of unified communications over one platform.

Using UC allows you to communicate more efficiently and effectively with your team and customers.

How to make a call using voice over IP phones

How to make a call using voice over IP phones

How to make a call using voice over IP phones

How to make a call using voice over IP phones

You can make a call using VoIP just as you would with a traditional telephone if you're using an IP phone. There’s no need for any extra steps. Just pick up the handset and dial.

Of course, making a call through your computer or mobile device requires a couple of extra steps.

Making a call using a computer

When you use your computer to make calls, what you'll you need is a microphone, speakers, a sound card, and a reliable WiFi or ethernet connection. Most VoIP service providers have a client-based application that you can download as well as a web-based application. Just make sure you’re signed in to your account, and you’re ready to make calls. Calls will go from your IP address to your customer’s phone.

Making calls using a mobile device

Mobile applications allow your team to make calls from anywhere using a business number. These are generally available on both Android and iOS devices.

Fun fact: 8x8’s mobile app allows you to work more efficiently. From the app, you can control your availability and retain your last contact searches.

What are the benefits of VoIP phones?

Switching from a traditional phone to a VoIP solution can be a bit daunting. However, there are some advantages to using VoIP.

Let’s explore some of these.


It doesn't matter if you’re a one-person operation or a large corporation. VoIP helps your bottom line.

With traditional phone systems, you generally have a higher monthly cost per line. It’s also expensive to add lines because of the need for special wiring and equipment. And on top of all that, you have to pay more for long-distance and international calling.

With VoIP:

  • You only pay for the lines you need
  • There are no extra installation costs for new lines
  • Long-distance VoIP calling costs nothing
  • International calls are affordable
  • The per-line cost is typically lower than a traditional phone company

These are just your most direct cost savings when it comes to VoIP.

Make calls from anywhere

With VoIP, you can make calls from anywhere. As long as you're equipped with a strong internet or data connection, you can communicate with your team and customers with good audio quality.

And if your VoIP service is bundled with virtual PBX capabilities, you can also use advanced call features. You can be in the comfort of your own home and still route calls to other team members or check your voicemail.

The accessibility of VoIP means that your employees can have more flexibility in their lives. They can stay home, run to the store, or travel - all while still being able to take business calls using their business telephone number.


Remember: using VoIP lets you add or remove lines with a few clicks. Given that there’s no need for additional equipment, you can have as many phone lines as you need at any given time.

This allows you to accommodate:

  • Organic business growth
  • Spikes in calls (like during the holidays)
  • Opening a new office
  • Downsizing for off-seasons

Advanced calling features

With business VoIP, a phone is not just a phone. Some of the greatest advantages of VoIP come from its advanced calling features. If you also take advantage of SIP, the list of features grows even longer. Some of the features included in your telephone service are:

  • Caller ID

Caller ID has been around for a while, but it is an important feature for businesses. With a virtual PBX supported by VoIP, caller ID can be even more advanced - it can be used to route calls from important contacts to the appropriate employee.

  • Conference calling

You aren’t limited to one-on-one conversations with VoIP - plus you can keep a record of your meetings with call logs and call recording.

  • Call transfer

Call transfer allows you to forward a call to another member of your team.

  • Auto Attendant

Auto attendants answer the initial call, so you don’t have to. It provides your customers with self-service solutions and then gives them options to talk to a member of your team. It ensures the call gets to where it’s supposed to without the need for manual interference.

  • Ring Groups

Ring groups distribute calls based on a pre-specified set of rules. You can manage who gets calls to specific numbers and extensions, as well as set rules for how they get distributed throughout your workforce. This leads to more efficient call management.

  • Voicemail

VoIP allows you to check your voicemail from anywhere. It also often comes with advanced features like text-based alerts or voicemail transcription.

What to look for in a VoIP provider

What to look for in a VoIP provider

What to look for in a VoIP provider

What to look for in a VoIP provider

There are a lot of different VoIP providers to choose from today. So how exactly do you decide which one to go with?

These are some factors to think about when you’re choosing a provider.

1. Compatibility

Make sure you look at how the provider fits with your unified communications strategy. Ideally, you'll want a solution that plays well with your existing infrastructure. That being said, it’ll be more cost-effective to equip yourself with all the business communication solutions you need from a single provider. It also allows for more efficient and effective communication in your team.

2. Mobile application

A mobile app is important when it comes to VoIP. It allows your team to answer and make calls via their personal cell phone. The VoIP app also must be reliable and user-friendly. Your team shouldn’t have to be tech experts to use VoIP on their mobile device.

3. Cost and Features

It’s not as simple as choosing the least expensive option or the option with the most features. Consider price against features. The provider should have the features you want while offering excellent functionality for a price you can afford. This is a balancing act of cost vs. value.

You should also consider the transparency of pricing. Any company you work with should be up-front about how much their services cost.


VoIP makes business calling easy and comes with the features you need for modern business telephony. It requires virtually no equipment and can scale with your business.

If you’re looking for a provider, look no further than 8x8. It doesn't just bring together the most advanced and reliable services - it also fits perfectly with a future-proof UC strategy. Learn more about our VoIP-based solutions and get in touch with a member of our sales team today.

Frequently Asked Questions (FAQs)

  • Can I use a VoIP phone as a regular phone?

In many ways, yes! If you choose an IP phone, it can work just like a normal phone and can connect with a traditional landline number. If you didn’t know you were making a call over the internet, you would just assume it was a traditional phone. You may also be impressed with all its extra features.

  • Can I keep my old phone number?

Of course! It's relatively easy to port your old number with VoIP services. If you want, you can also choose a custom phone number. As long as the number is already yours or is available, your VoIP service provider can help you with number porting.

8x8 assists in transferring your previous number to your current 8x8 service. You can submit a request from directly within your Configuration Manager or Account Manager.

  • Can I keep my current business phones?

Yes! As long as you get an ATA, you will be able to keep your landlines. The VoIP adapter connects your current business phones to the internet. If you're switching from one VoIP solution to another, you can also reconfigure your existing IP phones to support the new service. Just ask your new provider to help you with this process.