Voice over IP: What it is and why businesses use it
Voice communications through the internet—formerly known as IP telephony
First, what exactly is Voice over IP?
Voice over IP (internet protocol), aka VoIP, is the technology that lets you make voice calls using broadband connections. This means that unlike with phone calls, you don’t need a public-switched telephone network (PSTN) to make a call. To make and receive calls over the internet, you can use any VoIP-enabled device, a computer with VoIP software, or even a landline phone connected to an analog telephone adapter (ATA).
As the name suggests, it is designed to transmit voice communications (in other words, phone calls) over the internet.
Why is voice over IP so important?
To say that VoIP technology has changed the way that people and businesses communicate would definitely not be an understatement.
For one, calls aren’t restricted to a single device anymore as people can now choose to use IP phones, computers, or mobile devices. That’s because VoIP allows different forms of communication—voice calls, SMS, video calls, conference calls, etc.—to take place on a single IP network. Not only that, businesses can also get rid of their clunky, on-premises PBXs (think of those old desk phones that every office used to have) too.
So ultimately, what do these things mean for businesses?
The advantages of VoIP
Cost Savings
You don’t need to pay all the costs that come with traditional phone companies. Basically, it saves you money. Potentially, lots of it.
Direct cost savings can come from:
- Lower hardware expenses: Every company knows how expensive it is to set up a traditional phone system. You’ll need to pay for, among other things, the dedicated copper wiring (which carries the voice communications) and the on-premises PBX system (which connects the landline phones in your office to one another). With VoIP, you could do away with all that hardware.
- Lower operational expenses: When a call is routed through a public-switched telephone network (aka. A traditional phone network that uses copper wires), a dedicated circuit is opened between the caller and the recipient, and it should remain open until the call ends. Otherwise, you'll hear delays on the call—this is probably something you’ve experienced on long-distance and international calls, because it’s harder to keep the circuits open when voice signals take longer to reach their recipient. (This is also why phone companies charge for calls like this on a per-minute basis.) Because VoIP relies on the internet, you won’t get this issue. You aren’t charged by the minute either, which saves you even more money, especially if you make lots of long-distance and international calls. (VoIP providers charge on a subscription basis, with plans that cater to specific needs.)
- Lower recurring expenses: Ongoing expenses like repair and maintenance fees can easily overwhelm your budget. But not if you get a hosted VoIP service, which typically rolls these costs into reasonably priced monthly subscription plans that fit your needs. You can sometimes even get additional features like call waiting and an auto attendant at no extra cost.
Now, let’s look at indirect cost savings:
- A remote work setup: With advanced functionality like conference calling and video conferencing, voice over IP makes it easier and more efficient to work remotely, which cuts down the costs of your office and utility bills.
- Repurposed human resources: Some advanced VoIP features can even cover repetitive tasks for you so that you can focus on actually valuable work. For instance, you might be thinking of hiring someone to handle phone calls (which translates to money spent on additional salary and benefits) or maybe giving the work to an existing employee, (which would probably require you to give them a raise). With the auto attendant feature, you won’t need a receptionist at all. That’s a load of savings every month.
Scalability
Your VoIP system grows with you, letting you easily add and delete phone lines or extensions any time. Again, you don’t have to pay anything extra to do this. Bonus!
Super-portability
VoIP allows you to make and receive calls from anywhere using any device (and using the same number) as long as there is an internet connection. It follows you wherever you go, and you’ll still be able to use its features without a hitch. Having remote teams or letting people work from home is pretty much impossible with traditional telephone systems, in which your number is assigned to a specific line.
The Disadvantages of VoIP
Call quality
As long as you have an adequate internet connection, routers and cables, you can easily avoid issues like lost audio and latency (delays).
Emergency Support
Because VoIP calling happens over the internet, it’s almost impossible to trace the locations of callers.
- Fixed - the service is associated with the account user's address and can’t be obtained by anyone outside of the country. RingCentral is a good example of a fixed VoIP provider.
- Non-fixed - doesn't need to be associated with a physical location and is therefore easily obtainable by anyone from outside the country.
Required Internet Connection
VoIP carries voice calls (as well as texts, faxes, video chats, and other types of data) across the internet. This means that for your VoIP phone service to function, you will need a reliable, high-bandwidth Internet connection.
Data Security
You’ve probably seen some news about major corporations’ emails being hacked, so you likely have an idea that data traversing the internet is not necessarily secure.
If you choose the wrong provider, your company’s data will definitely suffer from a lack of security.
How does voice over IP work?
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.
When you speak into the microphone of your device, you generate analog voice signals, which are converted into packets of data (aka “compression”). These VoIP packets are transmitted over the internet and converted back to analog voice signals (or “decompression”) for the person on the other end to understand. The process of compression and decompression is made possible by special algorithms called codecs (COder-DECoder).
VoIP technology is made up of different protocols (think of them as rules built into your software) working together to deliver voice and multimedia communications (like when you’re video-chatting with someone!) over an IP network. These work simultaneously in real-time and do different things, like:
Session initiation protocol (SIP): Real-time convos
Session initiation protocol is responsible for starting, establishing, and ending real-time conversations between two or more people, whether on a two-way or multi-party call. This is possible through “SIP trunking,” which is a service that’s usually offered by an internet telephony service provider (ITSP).
The ITSP uses a SIP trunk to connect one or multiple channels to your private branch exchange phone system (or PBX), so you don’t need a physical connection to a telephone company—and you can make calls over the internet. Think of a SIP trunk as the virtual version of a traditional phone line (it's installed over your internet connection rather than through wires).
Real-time transport protocol (RTP)
Real-time transport protocol is responsible for carrying every media stream—which, again, in the VoIP world exists as a “digital voice data packet”—back and forth during a call. This is also what makes it possible for you to watch your favorite Netflix and YouTube shows.
Other VoIP Protocols: Transmission Control Protocol (TCP) & User Datagram Protocol (UDP)
It relies on other VoIP protocols too, like transmission control protocol (TCP) for accuracy and user datagram protocol (UDP) for speed. Oh, and RTP has a secure version too: secure real-time transport protocol (SRTP).
How do you make a VoIP phone call?
VoIP-to-VoIP calls
When you make a call, the audio data is encapsulated or compressed into small data packets. These packets travel through different networks until they reach their destination (the IP phone or computer of the person being called), where the packets are “unpacked” back into audio form. This goes back and forth in real time.
One great thing about VoIP is that there’s no one way to make a call. Legacy phone systems only let you communicate from phone to phone. On the other hand, VoIP lets you call from:
Computer to computer
The process is pretty simple:
- Download a VoIP-enabled program and install it on your computer.
- Create an account.
That’s all you need to make a computer-to-computer call, which is free (as long as the person you’re calling is also using the same application). This setup is great for personal use but could be a problem for businesses as it typically lacks security protocols and falls short when it comes to sound quality and integrating with other tools.
Computer to phone
Here’s how you do it:
- Have your VoIP provider enable out-of-network calls (not free, but still cheaper than services from traditional phone companies).
- Connect to a landline phone using a computer running a VoIP-enabled program.
And that’s it! Businesses that regularly make calls to areas without a strong internet connection would benefit most from a computer-to-phone option.
Mobile apps
This option is great for remote workers:
- Download a mobile version of a VoIP-enabled program and install it on your device. Create an account.
If you have field or remote workers, it’s probably more convenient (and will make things run more smoothly) if you have mobile apps.
Landline phones connected to an ATA
How to do it:
- Plug your phone cable into the ATA.
- Start making VoIP calls by picking up the handset and dialing.
Some companies use an ATA to get a feel for VoIP first before going all in.
VoIP to PSTN (and vice-versa)
When you make a call through IP to a landline, the digital audio goes through the same process as a VoIP-to-VoIP call. The difference is that the unencapsulated audio data passes through what’s called a VoIP gateway, which in turn converts digital audio to analog.
VoIP phone system: Application of VoIP to Business
What is a VoIP phone system?
While VoIP is responsible for basic phone functions, most VoIP providers add PBX capabilities to the equation in order to provide businesses with a system that can manage all their incoming calls. This solution is commonly referred to as VoIP phone systems.
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.
Features of a VoIP phone system
Most small- and medium-sized businesses believe that they do not need a professional business phone system. More often than not, they think their operations are too small for such an investment.
However, a professional VoIP phone system might just be what they need to take their business to the next level. By getting a VoIP phone system, your business gets the following:
- A virtual telephone number that users can access even outside the office
- An auto attendant that promptly answers all phone calls and routes them to the right person or department (no more missed calls!)
- A system that reduces the need to pay for expensive mobile phone plans because workers can use VoIP to make calls instead
- Advanced communications features that can increase efficiency and productivity
- Advanced team collaboration tools like online meetings, team messaging
RingCentral: The Best VoIP Provider
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.
RingCentral MVP™* plans for your small business
PAY ANNUALLY AND SAVE UP TO 33%
Standard
- No limit on number of users
- Business phone numbers in over 100 countries
- Unlimited internet fax
- Unlimited audio conferencing
- Video meetings with up to 100 participants
- Up to 24-hour meeting duration
- Quality-of-service reports
-
Popular integrations including
Microsoft 365, Google Workspace, Slack,
and more - 24/7 support
Premium
Message, Video, Phone, Open API
- Automatic call recording
- Single Sign-on
- Multi-site admin and management
- Up to 8-digit extensions with site codes
- Hot desking
- Advanced call handling including whisper, barge, and more
- Video meetings with up to 200 participants
- Real-time analytics
- Popular CRM integrations with Salesforce, Zendesk, and more
- Industry-specific integrations with Canvas, Smarsh, and more
- Developer platform and custom integrations
Compare plans
|
Most popular
Not available
Essentials
Buy now
Try free
|
Standard
Buy now
Try free
Contact sales
View Demo
|
Best value
Premium
Buy now
Try free
Contact sales
View Demo
|
UltimateContact sales Contact sales View Demo |
|
|---|---|---|---|---|
|
Pricing
|
Annually: $19.99/user/mo
Monthly: $29.99/user/mo |
Annually: $27.99/user/mo
Monthly: $37.99/user/mo |
Annually: $34.99/user/mo
Monthly: $44.99/user/mo |
Annually: $49.99/user/mo
Monthly: $59.99/user/mo |
Business phone or toll-free numbers
One phone number for calling, team messaging,
and video
meetings access.
Each user gets a dedicated phone number at no additional cost. Essentials
edition doesn't include video meetings.
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Toll-free
minutes
Inbound Toll-free
minutes
Included minute allotment varies by tier. Toll-free minutes
are pooled across the account, regardless of number of lines. Additional minutes available for purchase.
Learn
more
Included minute allotment varies by tier. Toll-free minutes
are pooled across the account, regardless of number of lines. Additional minutes available for purchase.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Unlimited calls within the US/Canada**
Unlimited calling/phone calls within the US
and CA. Plus, choose from affordable and convenient international calling plans
that fit your business. Terms and conditions may apply.
Learn more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Enhanced Business SMS
Designed to meet latest carrier requirements and improve deliverability. Included SMS allotment
varies by tier. Additional SMS available for purchase. Available upon request.
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Voicemail-to-text
Automatically convert voicemail messages into text form so users can screen
messages easily and respond to the most important call first.
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Visual voicemail and voicemail-to-email
Access voicemail messages from your desk and
mobile phones, email, desktop app, and online account.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Team messaging
Collaborate more effectively with colleagues,
clients, and contractors with team messaging, task assignment, calendar sharing,
and more. Also, utilize out-of-the-box integrations with Jira, Asana, Box,
Google Drive, OneDrive, and more.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Document sharing
Access
documents and files stored on your computer or your Google Drive, Box, OneDrive,
and Dropbox accounts and easily share them with your team members.
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Call management and phone system
administration Sophisticated call management, enabling you
to configure your phone system across the entire company, regardless of location
or device. Optimize communication with custom admin and user configurations
online or using the mobile app.
Call management features include:
*Not available with Essentials.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Mobile apps for iOS and Android
Whether you're an Apple or Android user, you can use your smartphones and
tablets to make and receive calls, join and host meetings,
team message coworkers and partners, send and receive faxes and texts, set up
and join conferences, and configure phone system settings, notifications, and
voicemail.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
High-definition (HD) voice
To consistently deliver the highest HD quality possible, RingCentral utilizes
the Opus Interactive codec for audio and video, as well as the G.722 codec for
audio.
Learn more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Call log reports
Get a complete record of all your inbound and
outbound calls and faxes. View the name of the caller, the number or extension
dialed, as well as the time, date, and duration of the call.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Phone rental options: desk and
conference phones Rent any desk phone or conference phone for a
low monthly price.
Contact sales for details and pricing.
Learn
more
|
Included in plan
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Add Video Pro and Video Pro+ users
Administrators can add Video Pro and Video
Pro+ users from within MVP.
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Unlimited internet fax
Send and receive faxes from your computer, mobile device, Microsoft Outlook,
cloud storage providers (such as Dropbox), and more.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Unlimited audio conferencing
Host an
unlimited number of audio conference calls, with up to 1,000 attendees per
conference. Each user gets unique host and participant access codes.
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Video meetings and participants
Hold video meetings with screen sharing,
in-meeting public and private chat capabilities—anytime, anywhere, on any
device.
Maximum
number of participants varies by the video platform:
Premium with RingCentral Video (up to 200) Standard with RingCentral Video (up to 100) |
Available as an add-on
|
Up to 100 people
per video meeting
|
Up to 200 people
per video meeting
|
Up to 200 people
per video meeting
|
|
High-definition (HD) video
RingCentral delivers crystal-clear HD quality video and voice.
Learn more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Quality-of-service reports
Gain the ability to proactively review
overall RingCentral system health and diagnose quality issues impacting users. A
holistic overview of quality measured by location, endpoint, codec, ISP, and
more enables
easier monitoring and faster troubleshooting.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Popular integrations including Microsoft 365,
Google Workspace, Slack, and more
RingCentral offers the largest ecosystem of integration apps in the
communications and collaboration space to maximize productivity and efficiency.
Get integrations for bots, AI, analytics, archiving, automation, productivity,
and more.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
24/7 support
Unlimited chat and phone support.
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Multi-level auto attendant
Answer callers automatically with customized
greetings, and ensure every call is directed to the right employee or
department.
Learn
more
Auto-attendant is a virtual receptionist
service that greets your callers and routes them to employees, departments, or
to any phone in the world (i.e. an employee's mobile phone, an office deskphone,
or a virtual phone on the RingCentral app).
With the multi-level auto attendant feature, you can create rules to handle
incoming calls for multiple office locations or language selections. For
example:
“Press 1 for our New York office. 2 for Chicago office. 3 for Los Angeles
office.” OR
“Press 1 for English. Marque 2 para Español.”
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Professional implementation
Get the most out of RingCentral with a
portfolio of professional and personalized services, ranging from planning,
designing, and implementation to project management, ongoing support, and
consulting.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Call recording
Automatic call recording: Set your
RingCentral phone system to automatically record inbound and outbound calls for
individual users or inbound calls for departments.
On-demand call recording: Allows Users to
manually record phone calls anytime using an IP Phone provisioned with
RingCentral, Forwarding Number, or RingCentral Phone for Mobile.
Learn
more
|
Available as an add-on
|
On-demand
|
Automatic
|
Automatic
|
|
Compatible with RingCentral Rooms™ (add-on)
Turn any space into a conference room.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Compatible with RingCentral Room Connector (add-on)
Room Connector allows room conferencing systems on legacy hardware with SIP-based endpoints (third party endpoints) to connect and access video meetings on RingCentral.
Learn
more
|
Available as an add-on
|
Included in plan
|
Included in plan
|
Included in plan
|
|
Single Sign-on
Users can log in to RingCentral automatically with their corporate credentials.
Reduce the IT cost of assisting in password recovery and benefit from a central
authentication point that securely accesses your RingCentral service from any
device.
Learn
more
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Multi-site admin and management
Get the flexibility to manage and support
your branch offices based on their unique operational needs.
Learn
more
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Up to 8-digit extensions with site codes
Simplified intra-site dialing for large multi-site customers.
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Hot desking
Allows users to log in to shared phones to access their own RingCentral
extensions, voicemail and greetings, and other features.
Hot desking lets employees share office desk phones while keeping their separate
extensions, greetings and voicemail access.
It enables companies to save costs of desk phones while still letting their employees remain productive. |
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Advanced call handling including whisper, barge,
and more
Advanced call management controls (monitor,
whisper, barge, takeover) to allow authorized users to listen in on employee
calls with clients to monitor the conversation, provide coaching, and facilitate
discussion.
Other
features include overflow call queues, user groups, and role-based access
control with customized roles/permissions.
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Real-time analytics
Gain
real-time insights into your RingCentral system and gather business-relevant
data, alerts, and reporting metrics.
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Popular CRM integrations with Salesforce, Zendesk, and more
Bring the functions and features of
RingCentral MVP into your business apps such as Salesforce, Zendesk, Microsoft
Dynamics, ServiceNow, etc.
Learn more
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Industry-specific integrations with Canvas, Smarsh, and more
Bring the functions and features of
RingCentral MVP into your vertical's business apps such as Canvas, Smarsh, etc.
Learn more
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Developer platform and custom integrations
RingCentral APIs let you create your own
custom applications and seamlessly integrate business communications into your
key business processes, so you can automate workflows, drive efficiency, and
gain valuable
insight from communications data.
Visit
Developer Portal
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
Included in plan
|
|
Device status reports
Monitor
hard phone registration status globally and gain visibility into your devices'
history.
|
Available as an add-on
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
|
Device status alerts
Set up
automated monitoring rules and receive notifications when devices are offline.
|
Available as an add-on
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
|
Unlimited storage***
Store an unlimited* amount of documents, spreadsheets, presentation files,
contracts,
invoices, images, videos, and recordings.
*Retention period applies.
Store an unlimited* amount of content within your RingCentral app. This could be
documents, spreadsheets, presentation files, contracts, invoices, images, or
videos that you send as attachments within messages; or these could be the
recordings of your video meetings.
*Retention period applies. |
Available as an add-on
|
Available as an add-on
|
Available as an add-on
|
Included in plan
|
The search for the world’s easiest meetings platform is over.
Our opportunities for connection have increased 5x, and in a mere 14 months we’ve achieved ROI of 35% cost savings with RingCentral.
Since we replaced the landline phones across our locations with RingCentral, we’re already seeing a cost saving of 20%.
RingCentral has dramatically improved our efficiency and customer service. We’ve added 10% to our bottom line, easily, and reduced employee stress levels!
VoIP FAQs
- Desk IP phones: Connected directly to your router, these standard business VoIP phones look like regular landline telephones. The difference is that they typically have an LCD screen that displays programmable buttons, caller ID, and more. Some desk IP phones even give you the option to customize the background image!
- Wireless phones: These are just mobile handsets with the functionality of a desk IP phone. Wireless phones have built-in Wi-Fi so you can make calls wherever there’s a wireless broadband connection.
- Conference phones: You’ve seen these in big conference rooms. Conference phones let you call multiple people at once and have a big meeting even when the callers are scattered around the world.
- USB phones: A USB phone connects to the USB port on your computer, so you can make VoIP calls (as long as you have VoIP software installed).
- PSTN (circuit switching) - When person A calls person B, the network tries to find a connection from different circuits (sort of like paths or trails with gates). Once a connection is established, the conversation takes place and the circuit stays open until the call is finished.
- VoIP (packet switching) - When person A calls person B, person A’s voice signals are broken down into data packets (as explained above). Each packet contains the source and destination addresses (where the message comes from and where it’s going). This is important, since the packets may take different routes. When they arrive, the destination device (phone or computer) reassembles them into person A’s original voice signals. The same thing happens to person B’s voice signals as the conversation goes on.