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What Is VoIP?
Voice over Internet Protocol (VoIP) is a phone service that transmits audio data via an internet connection—instead of sending a signal over a traditional landline. VoIP is a more portable option as users can access their phone functionality from any location with an internet connection. These systems are commonly used for:
- Managing incoming and outgoing calls in call centers
- Participating in call and video conferencing
- Conducting distance learning sessions
- Providing telehealthcare services
- Calling associates, friends, or relatives who live in different countries
How Does VoIP Work?
VoIP works by converting a speaker's audio into data packets, then sending those over the internet to recipients anywhere in the world.
When a company signs up with a VoIP provider, its agents have access to a desktop or browser app that connects to the internet. As the agent speaks into the device's softphone—or virtual phone—the app transmits the audio data to the provider, usually based in the US. From there, the system sends the audio through an international chain of networks and servers to reach the recipient.
If an agent dials a VoIP number, the call is transmitted entirely over the internet. However, if they dial a mobile number, the VoIP data is converted into 4G or 5G mobile data before it reaches the endpoint. When the dialed number is a landline, this data is converted into a public switched telephone network (PSTN) audio signal.
What Is Business VoIP and How Can It Help Your Business?
Business VoIP solutions use the same audio transmission process as regular VoIP, which involves sending data packets over the internet. However, it's specifically tailored to meet the needs of your business.
Many companies prefer VoIP phone systems over traditional on-premises PBX systems since they have more benefits, like:
- Quick setup
- No hardware maintenance
- Scalability
- More communication channels
- Establishing a global business presence
- Internal collaboration options
- Better customer service
- Improved call quality
- Agent mobility
- Retaining a unified business identity with a remote workforce
Another reason VoIP is so attractive is that it lets agents collaborate more effectively, use AI support and workflow tools, and communicate with customers across multiple channels—all from one app on any device, anywhere they have internet or cell service.
How to Choose a VoIP Provider for Your Business
Before choosing a VoIP provider, compare how well each one caters to your business's needs. These steps will help you conduct a thorough comparison and identify the system that best suits your requirements.
- Consider your company's needs: Determine your budget, desired features, preferred communication channels, degree of collaboration required by agents, and the geographical areas where you frequently operate.
- Compare collaboration and multichannel features: Look at what communication channels are offered by each provider in our list. Pay attention to their pricing plans, collaboration features of video meetings and team chat, and additional agent-support tools such as live call transcription or speech coaching.
- Assess unlimited calling areas: Review your call logs and volume to determine the destinations your agents call most often. If they make frequent international calls, reach out to providers with cheap international rates or multi-country unlimited calling areas.
- Determine your desired geographical presence: Consider where your customers are, and decide if you want to expand your reach in those areas. Look for a service provider that offers DID virtual numbers in the regions where you want to establish a local presence.
- Compare routing and queueing capabilities: Assess the size of your call center, including the number of agents, supervisors, and departments you have. Determine if you need to route inbound calls to multiple departments—sales, marketing, billing, customer service, etc. Then, compare each provider's routing and queueing offerings, such as ring groups, auto attendant menus, skills-based routing, and live queue analytics for supervisors.
Important Features of VoIP You Must Know
The most important VoIP features include multiple communication channels, call routing, IVR and auto attendants, call queueing, analytics, call recording, and transcription. These help your agents and administrators get the most out of your company's system.
Communication Channels
Most VoIP companies focus on internet-based voice calling, while UCaaS platforms offer up to four virtual communication channels, namely phone, SMS, video conferencing, and team chat, as a single product. Phone refers to VoIP calls, SMS lets you send and receive text messages, video conferencing allows agents to engage in video meetings with customers, and team chat enables them to send one-on-one and web-chat messages.
Call Routing
Sometimes called automatic call distribution (ACD), routing is when you configure your phone system to send incoming calls to specific users in line with preset routing rules. For example, self-service IVR menus let customers direct themselves to the right user/department by choosing the option that best matches their needs. Skills-based routing (SBR), on the other hand, navigates customers based on the aptitudes a call requires, matching them to the agent with the best-fitting skillset.
Call Queueing
When inbound calls reach a busy agent, a call queue places the customer in a line, ordered according to when the calls were received. Agents can see the calls in their queue and choose which to pick up. Some systems also offer ring groups, allowing you to pool multiple agents to share queues and inbound call responsibility.
Analytics
Statistics and metrics about your phone system's performance, usage, and activity can give insights into queue activity, agent performance, and call quality. Analytics include reports, graphs, tables, charts, and data that can be sorted according to custom historical periods.
Call Recording
Call recording allows you to record calls for storage, audio sharing, and review. You can choose between auto-recording, where all calls are recorded, and on-demand recording, where only certain calls are recorded.
Transcription
Transcription, where AI systems convert audio from calls or voicemails into text or captions, lets these systems identify customer sentiment, compile call summaries, and offer live-agent coaching.
Call Management Features
Call management features, sometimes called ACD or call routing, let you set up your phone system to direct incoming calls to specific agents according to rules you've set ahead of time. (This feature is very similar to self-service IVR and skills-based routing in our previous example.)
Mobile Compatibility
A VoIP phone system should be compatible with mobile devices, desktops, and browsers. Usually, most VoIP features—such as analytics, call controls, team chat, and even video conferencing—are available on all devices, including mobile platforms like iOS and Android.
Integrations
A VoIP phone system should be able to integrate with your company's third-party apps. Some VoIP providers, like RingCentral and Dialpad, integrate with dozens of other apps, allowing you to use their features directly within the other app's interface and vice versa. Useful integrated apps include CRM (Customer Relationship Management) platforms like Salesforce, calendar apps like Google, and collaboration apps like Slack.
Collaboration Tools
In addition to calling, many VoIP providers offer collaboration features that agents can access directly within the system's app. These include team chat rooms (which enable users to create threads, share files and images, and assign tasks) and video meetings (utilizing collaboration tools, like simultaneous whiteboards, screen sharing, and live polls).
Additional Numbers
VoIP providers typically include a DID number with each user sign-up. However, they also let you purchase more VoIP numbers. You can add numbers with area codes from anywhere in the United States; some providers even have virtual numbers from countries all around the world.
Video Conferencing
Many VoIP providers offer video conferencing as a communication channel. Agents can join internal team video meetings for collaboration purposes or send invite links to customers. Each provider supports unique video meeting participant capacities, time limits, and collaboration tools. Video meetings typically host up to 200 participants, last up to 24 hours, and support features like chat and screen sharing.
IVR
Also called auto attendant, IVR is a self-service phone menu that customers can use to reach specific agents within your company. Most VoIP providers allow you to configure your own IVR menu, using type-to-talk or custom-recorded messages to provide different options such as "Dial '1' for sales," etc.
Key Benefits of Using Business VoIP Phone Service
The key benefits of using business VoIP phone services include scalability, affordability, versatility, compatibility with many devices, excellent audio quality, advanced features, remote teams, and accessibility around the world.
Scalability
VoIP virtual phone providers let you modify the system's users in minutes—no matter where they are—without installing new phone jacks or setting up new desktop equipment. This means that when your company wants to add or remove agents, you can do it in just a few clicks. In contrast, traditional on-premises PBX systems require you to add new physical phone lines and purchase new hardware, making it more challenging to include new users.
Virtual phone providers offer subscription pricing plans that are highly flexible, letting you add and remove features just as fast. You can also scale your company globally by purchasing VoIP numbers in countries outside your local area. This scalability is impossible with cable landlines. VoIP also supports operating multiple small businesses under a single account.
Affordability
VoIP systems are cheaper than traditional landline phone systems because they are less expensive to install, maintain, and modify. They also have more features, capabilities, and calling options per dollar.
Most VoIP pricing plans offer over 50 advanced features—including team chat, video conferencing, routing, and queueing—even with their most basic subscriptions, which are typically under $20/month per user. These phone plans often include unlimited calling within the US and Canada and do not require any additional hardware purchases.
Versatility
VoIP phone platforms serve as more than just phone systems. It also provides unified communications services like team chat, task management, drawing and brainstorming, call center monitoring and video collaboration. This allows you to oversee a whole team of users and phone numbers globally from a single dashboard, making account management much easier.
Quality
Since most VoIP providers and devices support high-fidelity audio codecs—such as G.722 and the Opus codec—they deliver a broader frequency range. This results in clearer and more natural-sounding audio quality when compared to traditional landline calls.
Business Features
VoIP pricing plans offer a range of advanced business features. Lower-tier plans typically include IVR menus, basic routing and queueing, team chat, video meetings with 100 participants, voicemail transcription, and basic call logs. These also usually give you access to tools like call blocking and caller ID to help you avoid telemarketers.
Mid-tier pricing plans add more advanced multi-level IVR menus, collaboration features in team chat channels, call recording, and call center monitoring (which allows supervisors to listen in and join agent calls). They also include advanced analytics providing insights, metrics, and key performance indicators (KPIs) about everything from queue activity to call volume and customer satisfaction scores—unlocking a variety of marketing and customer-support use cases.
Higher-tier pricing plans usually feature file storage, AI support like meeting summaries and live agent coaching, and advanced real-time queue analytics.
Remote Working
A VoIP phone system makes it easy to unify a remote workforce—even one spread across the globe. Where on-site PBX systems prevent remote users from adopting a company number or area code, multiple users can share the same phone number—and even make calls simultaneously—no matter where they're located. This means that agents can utilize their business phone number from their car, at home, from a coffee shop, or even while they're on vacation.
A VoIP system's internal collaboration tools—especially team chat and video conferencing tools like whiteboards—also enable remote employees to draw, present, and brainstorm as if they were together in person.
Device Compatibility
While traditional PSTN telephony requires a landline phone, VoIP users can make calls and send messages from any internet-connected device, including computers, tablets, and mobiles. Nearly every VoIP phone system has softphone functionality, enabling agents to make online business calls from any device.
Global Accessibility
Many VoIP providers include international toll-free and local phone numbers, and nearly all of them also have virtual phone numbers in area codes throughout the US. This means no matter where your business is, you can establish a presence across the globe. For example, if you do business in China or Italy, you can operate from a local number in one of these countries, creating a more familiar presence for your customers.
Choosing the Right VoIP Service for Your Needs
Choosing a VoIP system with the right features, capabilities, and channels to serve your customers' demands and business needs is essential. This will improve customer service, marketing, agent productivity, and internal team satisfaction.
The information below will help you determine which service provider is best suited to help you grow your business.
The Best VoIP Services for Call Centers
Vonage is one of the best VoIP services for call centers because they offer routing, queueing, analytics, and call monitoring features. Vonage also delivers ACD, ring groups, call recording, and a supervisor dashboard. These features address the common call-center issue of ineffective routing, where customers wind up speaking to the wrong agent.
The Best VoIP Services for Virtual PBX
Some of the best virtual PBX phone systems are Ooma and Grasshopper since they deliver high-quality audio, unlimited calling within the US, and voicemail features. These two providers also offer call routing, management, and basic controls. With many on-site PBX systems, it can be a hassle to set up voicemail services—but this process is easy with Ooma and Grasshopper.
The Best VoIP Services for Law Firms
GoTo Connect is one of the best VoIP providers for law firms as it includes call recording, SMS, voicemail, call transcription, and advanced call analytics with customer satisfaction score (CSAT) and customer sentiment. Law firms need to track and record the core details their clients mention, and the above features support this.
The Best VoIP Services for Hotels
Mitel, one of the best VoIP providers for hotels, offers call extensions, detailed call logs, routing, and analytics. These tools help hotel management monitor their guests' call times, destinations, and expenses, while efficiently routing calls throughout the hotel as needed.
The Best VoIP Services for Hospitals
The best VoIP providers for hospitals, such as RingCentral and 8x8, include extensions, custom routing, and detailed call logs. In most cases, hospital phone systems do not require messaging, video conferencing, or collaboration features; they need widespread phone usage. Those calling into a hospital get frustrated when they can't easily connect with the guest they want to reach—these routing features resolve this issue.
The Best VoIP Services for Residential Use
The best residential VoIP providers, like Verizon and VOXOX, deliver high-quality audio, voicemail with transcription, reliable uptime, and unlimited calling in their domestic area. Residential users typically don't need collaboration tools or multiple communication channels. Instead, they require reliable services and high-quality voicemails delivered by these providers.
Types of VoIP Systems
Below, we outline some of the most common types of VoIP phone systems.
Hosted System
A hosted VoIP system implies that a third-party provider manages your cloud-based phone system off-premises. With this, your company doesn't have to oversee the IP PBX hardware or install updates. Instead, your provider handles the VoIP phone system for you. Hosted VoIP systems are best for small businesses due to their highly flexible pricing structure. (All the providers on our list are hosted VoIP systems.)
On-Premise System
An on-premise PBX system means you provide your own voice-over IP service through an IP PBX or SIP Trunk, which is installed in your building. Some companies find that SIP trunking saves them money in the long run (compared to a hosted VoIP provider). On-premises systems are better for large businesses since they can utilize one hardware room to power the whole building's phone scheme.
Managed System
A managed system is a cross between a hosted and on-premises VoIP system. With it, your provider assigns a VoIP and IT specialist to set up and manage your on-premises arrangement and internet connection. A managed system delivers substantial flexibility and control over your VoIP network's settings while freeing you from having to maintain it yourself.
A managed system works best for a large business because it has access to an expert who can fully devote their services to resolving any issues that pop up.
Does Switching to VoIP Save Money?
Switching from legacy PBX to VoIP will save your company money in multiple ways: low setup and maintenance costs, a remote workforce without in-person equipment, easy scalability, and a unified company phone bill.
Cordless Costs Less to Setup and Maintain
Landline phone systems require a bulky on-site PBX system, phone jacks, and desk phones for each agent, while hosted VoIP systems require none of this. In fact, you can set up a hosted VoIP phone system without buying any new hardware.
Users can access all VoIP capabilities—such as calling, messaging, video, and routing—using the computers and mobile devices they already have. What's more, your provider handles all maintenance and upgrades.
Remote Workforce Equals Reduced Overheads
VoIP makes it easy to support a remote workforce. You can assign employees virtual phone numbers, enabling them to make calls, send messages, and handle all business duties remotely.
By using a VoIP-enabled remote workforce, your company saves money on overhead fees associated with an in-person office: electricity, plumbing, heating, air conditioning, etc.
No Paying Through the Roof to Move or Expand
VoIP services are flexible, portable, and scalable—saving you money and hassle when your company changes locations, adds a new site, or adds new users.
If you move offices, nothing changes about your VoIP telephone service—agents can keep their numbers and continue to use the same devices. Adding a new office location means simply purchasing new DID numbers from your VoIP phone company. These can be based in your new office's area code or any other you choose. To add new users, you can simply purchase a new subscription—no installation or IT setup required.
One Communications Bill
Rather than managing multiple communication bills, you only pay one monthly subscription with VoIP. Most of the time, this multichannel subscription costs less than $30/month per user.
Calculating the Cost Savings of VoIP
To calculate how much you could save by switching from landline to VoIP, first add up all your communication costs and overhead charges: devices, maintenance, electricity, monthly phone, and messaging bills.
Next, determine which pricing plan meets your needs, factoring in the features and channels you plan to use. The table below will help you compare the costs of a traditional landline vs. a VoIP phone system.
*Note that this is an optional accessory for VoIP users but a requirement for traditional landlines.
*Varies by country. For both VoIP and traditional systems, calls to mobile phones are more expensive than to landlines.
When factoring in the costs of setup, hardware, features, and calling, VoIP is the clear winner over traditional PBX. Especially for large companies, choosing VoIP can save you tens of thousands of dollars per year.
How Do VoIP Phones Work Compared to Landline Phones?
While landline phones use the PSTN to transmit an audio signal via wired cables, VoIP telephony uses the internet to send audio data packets.
Landline phones must be connected to the PSTN with wires and phone jacks, limiting usage to your office location. Once the call is made, the audio signal transmits via cable through a series of worldwide switches before reaching its destination.
VoIP audio data transmits via the internet to your company, which then routes the data to the recipient via a cellular network, the internet, or a landline.
More VoIP Providers We Reviewed
In addition to the 10 services listed above, we also reviewed the following business and residential VoIP providers:
- Nextiva - Best for a well-rounded collaborative platform
- Optimum Business - Best for basic call controls and three-way conference calling
- Spectrum VoIP - Best for HD voice
- CenturyLink Business - Best for caller ID and call blocking
- OnSIP - Best for call management and queues
We Thought You Might Find These Articles Interesting
- VoIP Troubleshooting: 10 Effective Solutions to Common Issues
- IVA vs. IVR: Which Is Better for Your Business?
- 10 Benefits of Choosing VoIP over PBX for Small Businesses
Connect to Customers and Grow Your Business With VoIP
Compared to traditional PBX phone systems, VoIP benefits your business in nearly every way: easy setup, lower monthly costs, easy scalability, unlimited calling, multiple communication channels, and more.
While many VoIP providers offer outstanding functionality, each has unique features and pricing plans. Consider your business type, call area, and use cases, and select the provider that best meets your business's needs.
