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How does VoIP work?

The problem with talking about VoIP

VoIP is one of those technologies we’ve all been hearing and reading about for so many years now. It’s gotten to the point that you rarely see a discussion of how VoIP works or even what it is anymore. So let’s take a few steps back, walk through the very basics, and answer the question: how does VoIP work?

What does VoIP mean?

VoIP stands for Voice over Internet Protocol. As the name suggests, it is a set of technologies designed to transmit voice communications (in other words, phone calls) over the internet. This is why you also see VoIP phone service described as internet phone service sometimes. The easiest way to think of VoIP is that it’s what lets you place and receive phone calls using an internet connection rather than over a traditional phone line.

How does VoIP work for business?

By using VoIP, your company can turn the internet service you are already paying for into the backbone of a robust business phone system that costs far less than a traditional telecommunications solution.

VoIP service also gives your team more flexibility than you have with a standard phone system. With VoIP, your employees can take and make calls anywhere using their business numbers from their office phones, desktop computers, laptops, even from their personal smartphones.

ou can even leverage VoIP to unify your company’s other communication protocols—text messaging, online faxing, video conferencing, etc.—onto a single platform. This means you won’t need to support several different tools and pay separate vendors to address your needs.

So how does VoIP work?

A comprehensive discussion of the technical details of VoIP can get very complicated, so here’s an explanation for us non-techies.

VoIP takes a standard analog phone call—the type most homes and businesses still make today over the Public Switched Telephone Network (PSTN)—and converts that analog call into digital packets. Then, rather than traveling over the standard phone network, those packets are transmitted across the internet to the other parties on the call. Voice packets of a VoIP calls travel over the internet just like any other type of digital data, such as an email message or a file being uploaded to your favorite cloud storage app.

What does a VoIP system do?

A VoIP phone system allows you to integrate more of your company’s business communications into a single solution, rather than leaving you to manage many different communication tools and vendors—which don’t always work well together.

VoIP systems let you free your staff from being tied to their desks because their office phone numbers will no longer be limited to any particular phone. For example, with the RingCentral desktop app, you can give your team the ability to make business calls on their desktop or laptop using nothing but an internet connection, a microphone and speaker setup or headset, and the RingCentral app itself.

In addition to full softphone capability, the RingCentral desktop app gives your staff a single interface for other communication services they likely use every day—such as team messaging and collaboration, file sharing, task management, and online meetings.

With the RingCentral mobile app, your team can also enjoy all of this unified communications functionality—VoIP phone calls, texting, conferencing, online meetings, even team messaging and collaboration—from a single app on their smartphones.

In other words, a VoIP system acts as a full-scale cloud PBX (or even more than that in the case of RingCentral), allowing your team to easily manage calls and other communications features, including auto attendants with recorded greetings, advanced call routing and forwarding services, virtual voicemail, and even online faxing.

What are the advantages and disadvantages of VoIP?

For small and midsize businesses, VoIP phone services can offer many benefits over their traditional counterparts. For example:

VoIP improves mobility for remote and on-the-go employees.

One of the most common reasons small companies choose VoIP phones is that these businesses are extremely mobile—they tend to have remote teams, employees who might need to work from home, and reps who spend most of their time out in the field.

VoIP phones (including other devices equipped with softphone capability) are ideal for these organizations because they allow employees to work from anywhere while still using their business phone numbers.

VoIP makes businesses’ communication systems more flexible and scalable.

Another major advantage of VoIP is that it gives businesses far more flexibility than traditional business phone systems. For example, because VoIP phones don’t require copper wires or other phone hardware, businesses can more easily add phone service lines or extensions as their teams grow.

VoIP also offers flexibility and scalability when a business changes locations or expands and opens new offices. With traditional analog phone services, developments such as these would necessitate acquiring and installing more wires and business phone hardware. With VoIP phone service, setting up a new office location is simple and can all be managed in the cloud.

VoIP’s any-device, anywhere communication services improve business productivity.

Businesses also find that a VoIP service helps boost company productivity significantly. Just think about this: sales reps who need to be out in the field can spend their time meeting with prospects and clients without worrying about missing important phone calls on their business numbers because (as we’ve already mentioned before) they’ll be able to take those calls from wherever they are.

Some VoIP phone services, such as RingCentral Office®, can also help you increase productivity in other ways. For example, RingCentral lets your employees integrate their VoIP phone service with the productivity apps they use every day—such as Microsoft Office 365 and Google apps.

This means your staff is enabled to work on their tasks and projects more efficiently, without having to constantly switch between different tools and platforms from different vendors—RingCentral supports all of these communication and productivity services with a unified platform.

VoIP systems allow businesses to minimize phone costs.

Finally, the catalyst that brings most small businesses to the point of considering VoIP phone service in the first place is the fact that it can result in a significant reduction in a company’s communication costs.

Analog business phone systems often include high recurring service fees and high per-minute costs for long-distance and international phone calls.

VoIP, by contrast, has far lower ongoing costs, usually allows businesses to call long distance at local rates, and often includes other services, such as online faxing and video calls.

Of course, it can also have its drawbacks—particularly for firms that do not deploy it correctly or don’t select the right provider. For example:

VoIP requires an internet connection.

VoIP transmits voice calls (and other forms of communication, such as video and texts) via Internet Protocol. This means that for your VoIP phone service to function, you will need a reliable, high-bandwidth internet connection.

Assuming your office has high-speed and reliable internet service, this likely won’t be an issue. But because this is one way in which VoIP service can be limited, it’s still worth keeping in mind as a potential drawback.

It should also be noted that VoIP providers who serve companies generally include fail-safe solutions in the event that your internet connection is compromised for whatever reason. For example, RingCentral provides their customers with a mobile app that allows users to leverage their cell phone carrier’s network to continue communicating through their business numbers.

Not every VoIP vendor offers data security.

As you’ve no doubt learned from past sensational news headlines about major corporations’ emails being hacked, data traversing the internet is not necessarily secure.

A potential drawback of VoIP service, if you choose the wrong provider, is lack of security for your company’s data.

This can raise all sorts of questions for a small business that’s considering switching their communications to VoIP protocol. Could our voice calls be overheard by eavesdroppers? Could other data we send over our VoIP system—like texts or faxes—be intercepted? Will our VoIP communications comply with our industry’s data privacy laws?

These are all important questions to ask before switching to VoIP. The simplest and most effective answer, though, is to choose a VoIP provider with proven security and compliance expertise.

Learn how to use VoIP

Do you need special phones for VoIP?

In a manner of speaking, VoIP has flexibility in the sense that, if used as part of a cloud PBX service, it can route calls to almost any device you choose: a standard desktop phone, a dedicated VoIP desk phone, or even a smartphone or computer. But if you’re not relying on call routing or answering rules, it’s very important that you ensure your devices are configured to work with your provider’s service.

Dedicated VoIP phones (also called IP phones).

A VoIP phone looks like a standard desktop business phone but with an Ethernet connector and/or Wi-Fi capability rather than having a connector to a standard phone port. This makes it so that it can be connected to a router in your home or office. But it must be noted that these phones need to be configured to work with your VoIP service. For example, see what types of VoIP desk phones work with RingCentral.

VoIP service can also work with a smartphone, which we’ll explain next.

How does VoIP work with a mobile phone?

You can use VoIP software installed on your mobile phone to turn that device into your VoIP phone. This means you can use your personal mobile phone, for example, to place or receive calls (or even text messages) using your business phone number simply by activating your VoIP provider’s app on that mobile phone. To callers on the other end, it will always appear that you are on your “business phone” because that is the number they will see.

How does VoIP work with a computer?

VoIP works with computers (desktops, laptops, tablets) similar to the way it works with mobile phones. With your VoIP provider’s software installed, you can turn a computer into a phone for the purposes of taking and making calls using your VoIP business phone number. To place or receive a VoIP call on your computer, you can use the VoIP program’s phone keypad and other features alongside either the computer’s built-in microphone or a headset.

What happens to our existing business numbers when we switch to a VoIP service?

When you switch from your existing phone provider to VoIP service like RingCentral, you can “port” your existing numbers over to your new service, no matter how many phone numbers your business has. You can keep your local numbers, toll-free numbers, landline and wireless numbers, and even international numbers in many countries.

In other words, when you upgrade to a VoIP business phone system, you do not need to lose the business phone numbers your employees, customers, vendors, and partners are accustomed to using.

Here’s how we port your business numbers to your new VoIP service.

According to the FCC’s Local Number Portability (LNP) rules, you are legally entitled to keep your phone number when you switch phone providers. So when you migrate to RingCentral’s VoIP service, we will help you port your numbers into your new VoIP system. Here’s an overview of that simple process.

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    Step 1

    Log in to your RingCentral account online, and submit a transfer request.

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    Step 2

    You will be asked a few questions, such as whether your existing numbers are still active with your phone provider. You will also be asked to upload your most recent phone bill. This process shouldn’t take more than a few minutes.

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    Step 3

    RingCentral will send your transfer request to your current phone provider.

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    Step 4

    RingCentral will issue your company temporary phone numbers to use until the transfer is complete. In the meantime, you can set up your personal greetings, answering rules, and other settings for your RingCentral account.

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    Step 5

    RingCentral will notify you by email as soon as your transfer is complete. At that point, your transferred numbers will be ready to use with RingCentral.

One important thing to note: porting times vary, but a good rule of thumb is to assume it will take 7 business days for landlines if you are currently with a major phone provider, 10 to 15 business days for landlines if you are with a smaller carrier, and about 5 business days for most wireless numbers.

VoIP phone service FAQs

(Because there are no dumb questions.)

VoIP service setup questions

Do you need internet for VoIP?

All you’ll need to enable VoIP service at your company is a high-speed internet connection and a VoIP-enabled device.


Again, this device does not need to be a phone, but can instead be a computer, tablet, or any internet-enabled device, as long as you have the software installed to facilitate VoIP calls.

Can we use our existing landline phones with RingCentral’s VoIP service?

It’s possible. RingCentral’s VoIP service will work with your desktop phones if you use an analog telephone router, like the Cisco SPA-122 ATA, to convert your phone’s signal in order to transmit your voice calls over the internet. But we recommend buying or renting an IP phone that’s already configured to work with the service.

VoIP cost questions

How much does VoIP cost per month?

With RingCentral’s VoIP service, you have the option of paying monthly or annually, and the annual rate will save your business as much as 33%. For details on how much VoIP costs per month (and per year) with us, visit our VoIP Plans and Pricing page.

Will we have to pay setup or activation fees when we switch to VoIP?

Not if you sign up with RingCentral. There are no setup or activation fees with our service. In fact, you can even try RingCentral’s VoIP service for free for 30 days.

What type of contract will we have to sign for RingCentral VoIP service?

You won’t have to sign up for any long-term commitment with RingCentral. Our service is based on a monthly, pay-as-you-go plan, and you can cancel anytime without penalty.


That said, you have the option to sign up for a yearly contract that could cut costs for you—if you’re interested in this, you can ask our sales team about it

Can we lease RingCentral VoIP phones instead of buying them?

You can. If you are a RingCentral Office customer who’s signed up in the US, you may qualify for a lease (as opposed to buying) our desk and conference phones. See our RingCentral Phone Lease Program and Rental Agreement for details.

VoIP functionality questions

Can you fax with VoIP?

Yes. With the RingCentral Office VoIP service, you can manage all of your inbound faxes by internet fax (which we will convert to PDF and then send to your email inbox). But you can also use your traditional fax machine to send faxes with VoIP using your RingCentral service. To do so, you just need to connect your fax machine to a VoIP ATA and then connect the ATA to your internet router.


Note: Sending faxes the traditional way using your RingCentral service will require you to buy one RingCentral Office line for the fax machine itself.

In addition to voice calls, what other features will we get with RingCentral’s VoIP service?

RingCentral Office integrates many of the communication services your company probably uses every day into a seamless, unified solution.


This includes online faxing, unlimited voice calls, online meetings, video conferencing, business SMS and MMS messaging, an auto attendant with professionally recorded greetings, multiple extensions (which your company can use both for individual employees and for department voicemail inboxes), advanced call routing, and other sophisticated business phone features.

Which RingCentral VoIP phones are Cisco Presence-capable?

The following VoIP phones are Presence-capable: Cisco SPA508G, Cisco SPA514G, Cisco SPA525G2, Cisco 303, Polycom IP 650, Polycom VVX 311, Polycom VVX 411, and Polycom VVX 501.


You can learn more about these devices on our VoIP phones page.

Do all RingCentral VoIP phones support HD voice?

All Polycom and Cisco desk phones (except Polycom IP321) and conference phones support HD voice capability. In addition, RingCentral for desktop (softphone) and RingCentral mobile apps also support HD voice.

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