Note (September 2026): This article previously said VoIP calling is completely free with no fees and that 911 operators cannot locate VoIP callers; paid VoIP plans can carry charges, and US rules have required 911 support for interconnected VoIP since 2005.
A VoIP phone system (Voice over Internet Protocol) makes phone calls over an internet connection instead of a traditional phone line. It converts your voice into digital data packets, sends them across an IP network using protocols such as SIP and RTP, and turns them back into sound. You can use a softphone app, an IP desk phone or an ordinary phone with an adapter.
Key Takeaways
- VoIP turns speech into data packets and sends them over IP networks; SIP sets up the call and RTP carries the audio.
- You can call from a softphone app, an IP phone or a regular phone plugged into an analog telephone adapter (ATA).
- Call quality depends on latency, jitter and packet loss more than raw internet speed.
- App-to-app calls are usually free, but calls to phone numbers and business plans generally cost money.
- VoIP needs power and internet to work, and you must keep your registered 911 address current.
Over the past few decades there has been an enormous wave of new technologies and technological advances. Many people use these technologies every day and never spare a thought for the time when this product or service did not exist.
What Is VoIP Phone Systems and How It Works
Yes, it is often hard to fathom a time before many of the technologies that we take for granted existed, but regardless we as a society have much to be thankful for.
On the other side of this, however, is an entire group of people that do not yet understand or therefore utilize many of the advances in technology that are currently available.
One such technology is VoIP phone systems. For the remainder of this article you will be learning all about these phone systems, how they work, and how to utilize them.
What exactly is a VoIP phone service system? VoIP stands for Voice over Internet Protocol (IP) network. A VoIP system converts the caller’s voice into digital data, splits it into small packets, and sends those packets over an IP network such as the internet, where they are reassembled into sound at the other end.
These data packets can travel through public internet or private internet IP addresses. VoIP systems can be used to call landlines and cell phones as well make computer-to-computer calls. Simply put, VoIP lets a computer, a smartphone app, an IP desk phone or an ordinary phone connected through an adapter work as a telephone.
The next question that must be answered regarding VoIP systems is, what equipment is required? This type of phone system is fairly easy to use and does not require a great deal of specialized equipment. The first thing you will need is a high-speed broadband connection.
This is because your calls are taking place entirely through the internet. Because of this, the more bandwidth you have, the better your call clarity will be. The type of connection matters less than its quality: a stable broadband link with low latency, low jitter and little packet loss, the three main causes of poor VoIP call quality, will give the clearest calls.
It is vital to have a strong and reliable connection so as to avoid dropped calls and poor quality. There are two options for actually making calls through a VoIP system. You can either use the computer microphone and speakers or you can use a physical phone by utilizing an Analog Telephone Adapter (ATA).
Another option is an Internet Protocol (IP) phone. IP phones are often referred to as a VoIP phone because they are so often used with VoIP systems. These phones work much like traditional desk phones, but they connect directly to the data network instead of a telephone line. They plug in using an Ethernet cable and then they are ready to go.
The next topic of discussion is the benefits of using a VoIP phone system. One of the biggest benefits of using VoIP is the price reduction from traditional phone plans. For example, many VoIP plans include domestic long-distance calling in the monthly price, and app-to-app calls over the internet usually carry no per-minute charge, although calls to ordinary phone numbers, especially international ones, may still be billed depending on the plan.
This is because VoIP carries calls as data over the internet instead of over a dedicated telephone circuit. Despite this, many of the major telephone companies are now offering their own VoIP calling plans. Consider, though, that paid VoIP plans can still carry service charges, taxes or regulatory fees, so check the full monthly price before signing up.
At minimum, you need an internet connection and a device with a microphone and a speaker, such as a computer, a smartphone or a headset. With those, app-to-app calls cost nothing beyond your internet bill, while calls to landlines and mobile numbers usually need a paid VoIP plan or calling credit.
Who can use a VoIP system and where is it best utilized? Literally anyone can use and utilize a VoIP phone system, but where is it the most useful? There really is no “right” answer to this question because this technology has so many potential applications for both individuals and businesses.
However, listed here are some of the ways that VoIP systems are currently being utilized. VoIP can cut costs: a household may be able to replace a traditional landline plan with a cheaper VoIP plan or with app calling, although the 911 and power-outage limits described below should be weighed first.
This is also a fantastic tool for anyone that is currently working from home and needs to be able to make a lot of calls on a regular basis. Businesses have been utilizing these systems for quite some time.
VoIP allows employees to connect to the phone system from anywhere in the business’ facility that has access to the network.
The last topic of discussion is the downside of VoIP systems. These systems are very dependent on bandwidth, if something causes an interruption or causes the bandwidth to decrease, the system will not be able to work correctly. Another downside to VoIP is its need for continuous power and internet.
Again, if there is an interruption of either, the system will fail. A major limitation of VoIP phone systems has been emergency (911) calling. The 911 centers are designed so as to be able to locate a caller if they cannot speak during the call to give an address.
In the United States, the FCC ordered interconnected VoIP services to begin providing 911 service in May 2005, and many services still send the operator the address you registered with the provider. If you have moved or are using the system away from that registered address and have not updated it, emergency services may be sent to the wrong place when you cannot speak, so update your 911 address with the provider whenever you move.
VoIP systems are not in any way difficult to set up or use. They can provide low-cost phone service without much additional equipment, but compare the full monthly price, including taxes and fees, before choosing a plan.
These systems are not infallible and have a down side like everything else. Regardless, there are a great many perks to using a VoIP system and they are especially great for businesses.
If you have a small business, this is a great way to get a portable and cost effective phone system up and running in your place of business without the hassle or having to spend an arm and a leg.
If you think a VoIP system is right for you, compare providers on call quality, 911 support, number porting and total monthly cost before signing up; setup itself is usually quick.
How Does a VoIP Call Work, Step by Step?
A VoIP call works by turning speech into data packets, sending them across an IP network and turning them back into sound. The typical sequence is:
- Signaling: the phone or app uses a signaling protocol, most often SIP (Session Initiation Protocol, developed by the IETF), to set up, manage and end the call. H.323 is an older signaling standard.
- Encoding: a codec compresses the voice into digital data.
- Transport: the audio travels in packets using RTP (Real-time Transport Protocol); SRTP is the encrypted version.
- Decoding: the receiving device buffers the packets, puts them in order and plays them back as speech.
- Gateway (if needed): when you call a landline or mobile number, the provider hands the call to the traditional telephone network.
Which VoIP Codecs Are Common?
A codec decides how much bandwidth each call uses and how good it sounds. According to Wikipedia’s Voice over IP article, common speech codecs include:
| Codec | Bitrate | Notes |
|---|---|---|
| G.711 (μ-law and A-law) | 64 kbit/s | Classic telephone-quality codec |
| G.729 | 8 kbit/s each way | Low-bandwidth codec |
| G.722 | Varies | Wideband codec |
| Opus | Varies | Used by WhatsApp |
| SILK | Varies | Used by Skype |
These bitrates cover the audio only; packet headers add some overhead on top, so a real call uses more bandwidth than the codec figure.
What Equipment Do You Need for VoIP?
VoIP needs an internet connection plus one of three kinds of endpoint:
| Option | What it is | Best for |
|---|---|---|
| Softphone | Calling software on a computer or smartphone | Remote workers and people who already use a headset |
| Analog telephone adapter (ATA) | A box that connects an ordinary phone to a VoIP service | Households keeping their existing handsets |
| IP phone | A dedicated VoIP desk phone connected by Ethernet or Wi-Fi | Offices and reception desks |
What Affects VoIP Call Quality?
VoIP call quality depends mainly on three network problems named in Wikipedia’s Voice over IP article: latency, packet loss and jitter.
- Latency is the delay before audio arrives. Satellite circuits typically add 400-600 ms, which makes natural conversation difficult.
- Jitter is variation in packet delay. Devices use a playout buffer to smooth it, which adds a little extra delay.
- Packet loss means missing pieces of audio, heard as gaps or garbled sound.
Unlike the old circuit-switched phone network, which simply refuses new calls when it is full, a congested data network lets voice quality degrade. Practical fixes include using a wired connection for desk phones, avoiding large downloads during calls and enabling quality-of-service (QoS) settings on the router if it offers them. For more tips, see this guide on ways to increase your internet speed.
VoIP vs Traditional Landline: How Do They Compare?
| Feature | VoIP | Traditional landline |
|---|---|---|
| Network | Packet-switched IP data network | Circuit-switched telephone network |
| Power | Usually needs mains power for the modem, router and phone | Copper-line phones are powered by the telephone line |
| Portability | Works anywhere with internet access | Tied to one address |
| Emergency location | Often based on the address you register | Tied to the line’s fixed address |
| Busy network | Quality degrades under congestion | New calls are refused instead |
Is VoIP Safe for Emergency Calls?
VoIP can reach 911, but callers need to take two precautions. First, keep the emergency address registered with the provider current: Wikipedia’s Enhanced 9-1-1 article notes that VoIP E911 relies on lookup tables, so subscribers must keep their emergency address up to date. Second, plan for power cuts, because VoIP equipment typically depends on mains electricity; some providers supply battery-backed power units that keep service running for up to several hours.
In the United States, the FCC’s May 2005 order required interconnected VoIP providers to route 911 calls, tell customers about 911 limitations and obtain their acknowledgment. Section 506 of the RAY BAUM’S Act later set “dispatchable location” requirements (a street address plus details such as floor or room) for 911 calls from fixed telephone services, interconnected VoIP and multi-line telephone systems, with a January 6, 2021 deadline for wired devices and one extra year for wireless devices. Under Kari’s Law, new or upgraded multi-line telephone systems after February 17, 2020 must let users dial 911 directly, without first dialing a prefix such as “9”.
Is the Old Phone Network Being Switched Off?
In the United Kingdom, yes. According to BT Business, the UK’s analog PSTN telephone network switches off on 31 January 2027, so landlines and other services that use it must move to a digital (All IP) service such as VoIP before then. Households with telecare alarms or without a reliable mobile signal should ask their provider about battery backup and compatible equipment.
How to Choose a VoIP Phone System
- Number porting: check that you can keep your existing phone number.
- Emergency calling: confirm 911 (or local emergency) support and how you update your registered address.
- Total cost: compare the monthly price including taxes, fees and international rates.
- Features: businesses may need call queues, auto-attendant menus, call recording or CRM integration; see these call management tools for small business teams.
- Security: prefer services that encrypt calls (for example with SRTP), use strong account passwords and keep your Wi-Fi network secure.
- Resellers: some VoIP brands resell another company’s network; learn how VoIP resellers work before you sign a contract.
Home workers setting up a VoIP line may also find this home office setup guide for remote workers useful.
A Short History of VoIP
- 1974: the first real-time voice conversation over ARPANET, using 2.4 kbit/s compression.
- 1995: VocalTec released its commercial Internet Phone software.
- 1996: the ITU-T began developing the H.323 standard.
- 1999: the first SIP specification, RFC 2543, was released.
Frequently Asked Questions
What does VoIP stand for?
VoIP stands for Voice over Internet Protocol: technology that carries voice calls as data packets over IP networks such as the internet instead of over the traditional circuit-switched phone network.
Is VoIP free?
VoIP is free only in some cases. App-to-app calls usually cost nothing beyond your internet service, but calls to landlines and mobile numbers generally need a paid plan or credit, and paid plans can add taxes and fees.
Does VoIP work during a power cut?
VoIP usually stops working during a power cut unless the modem, router and phone have backup power, because the equipment depends on mains electricity. A charged mobile phone or a battery backup unit is a sensible fallback.
Can I call 911 with VoIP?
Yes. In the United States, interconnected VoIP services have been required to provide 911 since the FCC’s 2005 order. Keep your registered emergency address current, especially after moving.
Can I keep my phone number when switching to VoIP?
Many VoIP providers support number porting, but availability depends on the provider and your location, so confirm it before cancelling your old service.
How much internet speed does a VoIP call need?
A single call needs little bandwidth: G.711 audio runs at 64 kbit/s and G.729 at 8 kbit/s, plus packet overhead. A stable connection with low latency and jitter matters more than raw speed.
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