Voice Over IP: What Is VoIP and How Does It Work?

What Is VOIP and How Does It Work

Did you know that, according to Finances Online, there were 1 billion mobile Voice Over IP users in the US in 2017—and that the number of VoIP users is expected to be 3 billion by this year? These statistics come as no surprise, given that this technology is so useful for so many businesses.

If you’re a business owner or operation manager considering using VoIP technology, then you probably have many questions about this technology. You might be asking yourself:

“What is VoIP?” “How does VoIP work?” “How do VoIP phones work?”

If you don’t have the answers to these questions, you might feel confused. You might even feel frustrated because you can’t make up your mind about whether you should invest in VoIP technology. And even if you have, you still might not be sure about which type and service will work best for you.

That’s why we’ve put together this guide. Once you have the information you need about what VoIP is and how VoIP works, you can decide if Voice Over IP is right for you. You can also choose the right type and service. Read on to learn more.

What Is VOIP and How Does It Work

What Is VoIP?

The answer to the question “What is a VoIP phone service?” is answered by the letters in its name. “VoIP” stands for Voice over Internet Protocol. What this means in non-technical terms is that the communication you’re having over your phone is actually occurring over the Internet.

Basically, the analog audio signals—which are what you usually hear when you’re on the phone—are transformed into digital data. Because of this, their sound can be carried on the Internet itself, making it unnecessary to have a phone connection.

Because so many people use 3G and 4G now, you don’t need to be sitting at your PC or laptop to make a VoIP call. You can do it from your cell phone, too, which means ease of use.

The reason VoIP is so popular is that it enables users to make free calls through the Internet. They don’t have to go through the usual landline or cell phone providers. This cuts costs dramatically, especially if you’re making many long distance calls regularly.

Now that you have the answer to the question, “What does VoIP stand for?” we’ll answer the rest of the question, “What is VoIP, and how does it work?”

How VoIP Works

If you’re asking yourself the question, “How does VoIP work?” the answer comes down to how the technology itself works on a micro-level. This happens in a series of steps. The first step is that the voice calls, which are analog, are transformed into data packets.

These data packets are carried the same way any other data packet is carried, traveling the same way as other types of data over an IP (or private Internet Protocol) network or public Internet system. So they will arrive the same way that notifications on social media or emails do.

In terms of using VoIP, you can call both cell phones and landline phones. Additionally, you can do all your communications to and from computers. This can be done with the computer’s internal microphone and speakers or with a headset.

The Different Types of VoIP

There are different types of VoIP technology available to you. These are computer-to-computer communications, the analog telephone adapter (ATA), and IP phones. Depending on your or your business’s needs, some types will be better options than others. 

Let’s review these in detail so you can decide which one works for you.


If you’re looking for ease of use, then we recommend the computer-to-computer method. This is because you only need a few additional things in addition to your computer itself. You only need a fast and reliable Internet connection, a sound card, speakers, a microphone, and the VoIP software.

Outside of the VoIP software and the Internet connection, your computer likely has all these other features. Considering that only 6% of the American population doesn’t have fixed broadband, you likely have the Internet connection you need. Even if you don’t, you can tether to your phone’s network with your computer.

This leaves only one last step if you’re using computer-to-computer VoIP. All you have to do is purchase the software, and you’re all set!


The most common and simple way of using VoIP is with analog telephone adapters (ATA). To do this, you simply connect the phone you already have in your home or office to the Internet or to your computer. Once you’ve done this, you can connect it to the VoIP technology. How does this work?

This brings us back to questions such as “What does VoIP mean?” and “How is the VoIP meaning related to how it functions?” With an ATA, you’re taking the voice parts of your analog phone and turning them into data so that they can exist on the Internet.

The ATA itself is a technology that adapts the analog telephone sounds into data. It’s an analog-to-digital converter. All you have to do is order an ATA, have it shipped to you, and plug your phone cable into the ATA converter instead of into the usual wall socket. That’s it!

IP Phones

If you’ve asked yourself the question, “What is a VoIP phone?” then this is your answer. These are phones that look just like ordinary phones you would use, but they actually work differently. Instead of being connected to a building’s phone line with an RJ-11 connector, they’re connected to an Ethernet connector: an RJ-45.

Because of this different connection, this type of phone is directly connected to your Internet router. Additionally, these phones have the technology already in them that’s needed to place VoIP calls, such as hardware and software. If you want to make the change to VoIP software but don’t want the transition to be difficult for your employees, this can be a great choice.

Additionally, there are Wi-Fi-based VoIP phones that directly connect to the Wi-Fi in your home or office. These are a more modern type of IP phone.

Top VoIP Features

If you’re trying to decide whether VoIP technology is right for your business, you need to know what features come with this technology. Of course, there are savings to be had, especially if you make many long distance calls. But there are additional features. Let’s review these in detail.

CRM Integrations

CRM integrations make it easier for you to combine your calls made with the everyday running of your business. If you have a business that has a complicated long-term strategy that involves communication between colleagues or with clients, this feature will make the admin side of things much simpler.

Text Messaging (SMS)

Have you recently booked a hair or dentist appointment, after which you received what seemed like an automated text confirming the date and time? Did you, closer to your appointment, receive a reminder? This was likely done with VoIP technology.

Because this technology enables text messaging (SMS), it makes communications with customers easy. This technology is perfect for reminders or confirmation of appointments.

Team Collaboration

VoIP technology also enables team collaboration. Because everyone’s using the same communications system, it’s easy to share information. Additionally, because VoIP technology is Internet-based, you can also share screens and videos with each other.

Availability Awareness

Depending on the VoIP service, you can tell whenever anyone on your team is available to receive chat messages or calls. If you need to get in touch with one of your team members about something important, you’ll know if they’re available.

App on Your Smartphone

Many VoIP services offer a smartphone app you can use while on the go. This means that your team can answer calls even if they’re on the go. Additionally, this can be helpful if you have employees working from home during the COVID-19 Pandemic. Instead of having to send them a VoIP phone or help them with setup, they can simply use their smartphone.

Voicemail-to-Email Technology

Another great positive is the voicemail-to-email technology available with many VoIP providers. Because everything’s connected online, you don’t have to call your voicemail to check to see if a customer’s been in touch. Instead, you can simply access their message in your email.

Conference Lines

VoIP technology also makes it easy to have conference calls. Because everything’s connected, you simply set up the meeting and invite your colleagues to join. Many VoIP providers also make it possible to record and moderate the call.

High-Quality Sound

With VoIP technology, you won’t have to deal with weak phone connections or static anymore. Usually, VoIP technology uses HD voice quality, which means your phone calls will be clear and crisp. In addition to making it easier to communicate with your team, this will also make you seem more professional to customers.

Call Waiting

Instead of having to ask your administrative assistant to pick up the phone, make a note of who’s calling, and put them on hold until you’re ready to take a call, VoIP technology handles call waiting entirely. This will allow your office workers to focus on more urgent tasks and will diminish the frustration customers feel while waiting for you to pick up the phone.

Automated Answering

Whenever a customer calls your office, they won’t have to wait for anyone to pick up the phone. Instead, with VoIP technology, you get automated answering. They’ll get their call picked up immediately, after which the technology will ensure that their call is directed to the right person.

Faxing Online

While faxing may seem like something of the past, it’s necessary for some businesses, especially when it comes to sending sensitive documents or documents that need to be printed. But who has a fax machine anymore? Even if they do, how would you even go about sending a fax?

This is where VoIP technology comes in. With VoIP technology, you can send and receive faxes with no hassle at all.

Unlimited Calls

Because VoIP technology is far cheaper than using a phone line, you’ll have unlimited calls. If you’re calling in Canada or the US, you can call anywhere, no matter how far away. Even when making international calls, you’ll save money.

How to Choose the Right VoIP Service for You

Now that you know all there is to know about VoIP and how it works, you should be aware of the different considerations to make so that you can choose the right VoIP service for you. To make your decision, you should consider:

  • Customer reviews
  • The company’s case studies
  • The company’s reputation
  • How long the company has been around
  • Customer service
  • Reliability
  • Additional features

Of course, you should also take a look at your budget and see what you can afford. Depending on what you can afford, there will be some VoIP services that are better than others. Compare both monthly and initial costs of the different companies you’re considering working with.

Need More Information?

Do you need more information on VoIP technology? Maybe you need help deciding which type of VoIP will work best for you or your business. Or maybe you’re looking for the right VoIP software or provider to work with.

Whatever your needs are, we’re here to help. At Metro Data Systems, we’re experts when it comes to VoIP technology. We specialize in finding the best VoIP providers based on the needs of your business. To ask questions or learn more about how we can help, contact us here.