Voice over Internet Protocol (VoIP) is a category of telephony hardware and software that uses the Internet to transmit data. With VoIP, phone calls, faxes, SMS messages, voice messages and other types of data are sent in packets using IP. This is in contrast with the traditional circuit transmissions of the Public Switched Telephone Network (PSTN).

Compared to traditional phone services, VoIP technology gives users more robust features and improved performance in professional and personal settings alike. Business or enterprise VoIP services are commonly used by organizations that have call centers, remote employees, high call volumes, or a simple preference for VoIP’s low cost and improved reliability. VoIP phones have become popular in private homes as well, especially as landlines have become obsolete.

How does VoIP work?

VoIP is made possible through a process called packet switching. With this method, the voice data from a sender is broken up into smaller chunks (called packets) that are then offloaded to a router. The packets are then forwarded to the recipient’s router before ultimately arriving at the recipient’s device. Once they’ve all been received, the recipient’s device uses the instructions contained in each packet to restore the whole message to its original form.

The process of compressing and decompressing the data for transmission involves a number of various audio and video codecs. The specific codec to be used depends on the type and size of the data as well as the primary goal of the transmission (speed, bandwidth conservation, quality, etc.). Some of the common codec examples include G.711, G.722, G.729, Speex, and Siren among many others.

To orchestrate the transmission process between all of the hardware and software components, VoIP uses a range of protocols including Session Initiation Protocol (SIP), Real-time Transport Protocol (RTP), H.323, and Extensible Messaging and Presence Protocol (XMPP).

Benefits of VoIP

As mentioned above, VoIP offers a number of compelling advantages over traditional phone systems. These include:

  • Lower costs: Regardless of how many lines are needed, VoIP usually requires lower upfront and ongoing maintenance costs than traditional phone systems.
  • Better scalability: Most VoIP service providers allow customers to add or remove users and lines when necessary, meaning customers only pay for exactly what they need.
  • Mobility: The ability to work from anywhere with an Internet connection is an inherent advantage of VoIP.
  • Improved call quality: Although this hasn’t always been the case, VoIP services offer crisp and clear sound quality with minimal latency issues, drops, or delays.

Prominent VoIP providers include:

  • RingCentral
  • Ooma
  • Nextiva
  • Grasshopper
  • 8×8
  • Mitel
  • Vonage
  • GoToConnect

UPDATED: This article was updated April 5, 2021 by Web Webster.

Vangie Beal
Vangie Beal is a freelance business and technology writer covering Internet technologies and online business since the late '90s.

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