Introduction to Voice over Internet Protocol (VoIP)

Additionally, VoIP helps businesses save a ton on monthly phone expenses since calls are routed over the Internet. And VoIP providers offer all kinds of cool features that old landline systems simply can’t match. Things like conference calling, call forwarding, voicemail transcriptions, and more.

The key benefits of VoIP include:

  • Cost savings – VoIP systems are significantly cheaper than traditional phone services. Calls between VoIP users are often free, while calls to landlines and mobiles are much more affordable.
  • Flexibility – VoIP systems allow you to take your phone system anywhere with an internet connection. This enables remote working and mobility.
  • Scalability – VoIP systems make it really easy to add or remove users as your business needs change. You can quickly scale capacity up or down. You simply pay for what you need.
  • Advanced features – VoIP providers offer a wide range of productivity and collaboration features like auto-attendants, call routing, voicemail to email, call recording and more.

Types of VoIP Services

There are three main types of VoIP:

1. Cloud VoIP

With cloud VoIP, your phone system is hosted on off-site servers that you access via the Internet. So instead of maintaining equipment on your own premises, everything is hosted and managed by the VoIP service provider. It’s called “cloud” VoIP since your system lives up in the cloud – meaning remote servers rather than physical hardware at your office. The provider takes care of housing all the servers and technology needed to deliver VoIP phone services right to you over the Internet. So you don’t have to worry about equipment and maintenance – it’s all handled in the cloud by your VoIP provider. Pretty cool how it works!

With cloud VoIP, all hardware and PBX systems are hosted off-site by the provider. This allows businesses to outsource the maintenance and management of their phone system infrastructure.

Some of the key benefits of cloud VoIP include:

  • Little to no upfront costs – no need to invest in an on-premise PBX.
  • Predictable operating expenses based on the number of users and features.
  • Scalability to easily add or remove extensions.
  • Advanced features like auto-attendants and voicemail transcriptions.
  • Mobility – phone system accessible anywhere with internet.
  • Quick and easy setup – providers handle configuration and maintenance.
  • Disaster recovery and business continuity.

Popular cloud VoIP providers include RingCentral, Nextiva, 8×8, Ooma Office, and Vonage Business Cloud.

2. On-premise VoIP

On-premise VoIP involves investing in a private branch exchange (PBX) that is housed on the business’ premises and connected to the local area network (LAN). The PBX hardware can be purchased or leased and is maintained by the business’s own IT staff.

On-premise systems provide enhanced control and customization for larger enterprises that require complex phone configurations supporting many employees across multiple locations.

Benefits of on-premise VoIP:

  • Full control over hardware and system management.
  • Ability to integrate VoIP with other in-house applications.
  • Customize configurations to suit your needs.
  • No recurring subscription fees like cloud VoIP.
  • Keep voice traffic separated on an internal network.
  • Support for devices like analogue phones and fax machines.
  • Improved security and call quality.

Popular on-premise VoIP PBX platforms include Avaya, Cisco, Microsoft Skype for Business, Asterisk, RingCentral Office, and Mitel.

3. Hybrid VoIP

Hybrid VoIP solutions combine both cloud-hosted and on-premise VoIP technologies. For example, a business may use cloud VoIP for a mobile workforce while also maintaining an on-premise PBX at headquarters.

Key benefits of hybrid VoIP:

  • Maintain control over the core phone system while leveraging cloud capabilities.
  • Keep critical infrastructure on-premise while shifting other users to the cloud.
  • Transition from legacy to VoIP at a gradual pace.
  • Leverage the flexibility of cloud VoIP while keeping key data and servers internally.
  • Take advantage of both cloud and on-premise features.
  • Geo-redundancy and disaster recovery across platforms.

Hybrid systems allow businesses to strategically distribute resources between cloud and on-premise platforms to strike the right balance for their specific needs.

Key Differences Between Cloud vs On-Premise VoIP

When evaluating VoIP solutions, the main decision point is whether to go with a cloud-hosted or on-premise system.
Let’s look at some of the major differences between cloud and on-premise VoIP:

FactorCloud VoIPOn-Premise VoIP
InfrastructureHosted on remote servers maintained by the VoIP provider.Housed on privately owned PBX systems on company LAN.
Upfront CostsLittle to no hardware costs. Pay per user fees.Significant upfront costs to purchase PBX.
Operating CostsVariable monthly fees for service and features.Easy to scale up or down via the provider dashboard.
MaintenanceHandled entirely by the VoIP provider.Managed in-house by IT staff.
ScalabilityNot inherent – must pay a provider for backup.Scaling requires purchasing new PBX capacity.
ReliabilityDependent on internet connection quality.On-premise offers greater uptime control.
Disaster RecoveryNot inherent – must pay provider for backup.PBX can be configured for failover and redundancy.
Call QualityCan vary due to network factors.Consistent, high-quality calls on LAN.
SecurityEncrypted but risks from network exposure.Greater control over internal security policies.
CustomizationPackaged features from the provider.Fully customizable features and configs.
MobilityLimited to choices from providers.Mobile features require additional setup.
Feature SetPackaged features from provider.Can build custom feature set.

VoIP Communication Protocols and Standards

VoIP calls are transmitted over the internet via specialized communication protocols and codecs. The main protocols used for VoIP include:

Session Initiation Protocol (SIP)

SIP is the most common VoIP signalling protocol for establishing, managing and terminating voice and video calls between two or more endpoints. SIP handles call setup and controls the various parameters of sessions between users.


H.323 is another popular VoIP protocol that defines how audio-visual conferencing data is transmitted across IP networks. It coordinates communications between endpoints and gateways required for multimedia streaming.

Inter-Asterisk Exchange (IAX)

IAX is an efficient protocol designed specifically for use with the open-source Asterisk PBX. It combines signalling and media channels to reduce overhead and improve VoIP call quality.

Media Gateway Control Protocol (MGCP)

MGCP is used for controlling media gateways from external call control elements called media gateway controllers. It separates the call control intelligence from the media processing into distinct devices.

Real-time Transport Protocol (RTP)

RTP is used to deliver audio and video streams across data networks. It provides functionality like payload identification, timestamps, and delivery monitoring.

Secure Real-time Transport Protocol (SRTP)

SRTP provides encrypted delivery of RTP streams to protect against packet sniffing and eavesdropping attacks.

In order to ensure interoperability between the various VoIP protocols and systems, the International Telecommunications Union (ITU) established standards known as H.32X. These include:

  • H.323 – standards for packet-based multimedia communications across IP networks.
  • H.320 – standards for multimedia conferencing over circuit-switched networks.
  • H.324 – standard for voice, data and video transmissions over regular phone lines.
  • H.248 – Gateway control protocol for controlling media gateways.

Adhering to widely adopted protocols and standards ensures compatibility between the range of products and solutions in the VoIP ecosystem.

VoIP Codecs for Optimal Call Quality

VoIP converts analogue voice signals into digital packets for transmission over the internet. To represent the audio signals efficiently, VoIP systems use audio compression algorithms called codecs.

The codec applied has a major impact on call quality since high compression leads to a loss of audio fidelity while low compression consumes more bandwidth.

Here are some of the common codecs used in VoIP platforms:

  • G.711 – The default narrowband codec that provides excellent voice quality but requires 64kbps of bandwidth per call.
  • G.722 – A wideband codec that delivers higher audio quality than G.711 while using 64kbps bandwidth.
  • G.722.1 – Also a wideband codec that provides good sound quality at just 24kbps or 32kbps.
  • G.729 – A narrowband codec that compresses audio signals into just 8kbps per call.
  • SILK – An advanced codec developed by Skype that provides outstanding quality at low bitrates.
  • Opus – Opus is an open-source codec that dynamically adapts its bitrate based on network conditions, offering high-quality audio between 6-510 kbps.
  • SPEEX – Free codec that compresses audio between 2 to 44 kbps. Effective for VoIP applications.

Selecting the appropriate codec enables balancing call quality against bandwidth utilization. Newer codecs like Opus offer excellent versatility by automatically adjusting compression as network conditions change.

VoIP Call Routing Methods

Direct Peer-to-Peer Calls

With this method, VoIP clients connect directly to each other to establish communication. This is suitable for simple point-to-point calls between two known endpoints.

Via a SIP Proxy Server

A SIP proxy server acts as an intermediary for call setup and routing between VoIP endpoints. The endpoints only communicate signalling information with the proxy server which routes the calls.

Using an IP-PBX

On-premise VoIP deployments route calls through a private branch exchange (PBX) located on the company’s LAN. The IP-PBX receives calls, applies dial plans, and routes them internally or externally.

Through a VoIP Gateway

A VoIP gateway converts signals from VoIP networks into a format compatible with landlines or mobile networks. Calls are routed from the IP network via the gateway.

With an SBC Session Border Controller

An SBC enhances security by acting as a proxy between internal and external VoIP networks. It only allows authorized traffic to cross between the networks.

Using ENUM Telephone Number Mapping

ENUM maintains a DNS mapping of phone numbers to VoIP URIs. It converts numbers to VoIP addresses and routes calls over the internet accordingly.

Careful planning of call routing ensures seamless connectivity, controlled call flows, and optimal voice quality.

Key Benefits of Upgrading to VoIP

Here is an overview of the main advantages businesses can realize by upgrading from traditional landlines to modern VoIP phone systems:

Substantially Lower Costs

VoIP helps reduce monthly phone bills by enabling free calls between system users and charging much lower rates for long-distance calling.

Improved Mobility

Cloud VoIP systems allow employees to make calls from anywhere with internet access via desktop or mobile apps.

Powerful Collaboration Tools

VoIP offers features like web conferencing, video calls, instant messaging, file sharing and other Unified Communications capabilities.

Enhanced Call Management

Administrators gain better insight and control over call activity through advanced call routing, monitoring, recording and analytics.

Better Customer Service

VoIP provides call centre features like intelligent call routing algorithms, interactive voice response (IVR) menus and customer insights to improve service quality.

Increased Scalability

Cloud VoIP makes it easy to scale up or down by instantly adding or removing extensions to align with business needs.

Reliability and Disaster Recovery

Cloud providers offer robust service level agreements combined with redundancy across multiple data centres.

Simplified Administration

VoIP management is centralized on an easy-to-use web-based dashboard rather than maintaining premises-based hardware.

By transitioning to a modern VoIP solution, businesses can shed outdated systems and processes while gaining an edge over competitors.

Choosing the Right VoIP Solution

Selecting a suitable VoIP phone system for your business depends on weighing several key factors:

1. Assess user needs – Consider the number of users, call volumes, mobility requirements, and collaboration needs to size your system appropriately.

2. Choose between cloud vs on-premise – Cloud VoIP offers affordability and flexibility while on-premise provides customization and control.

3. Desired features – Determine must-have features like toll-free numbers, auto-attendants, analytics, IVR menus etc.

4. Scalability needs – Ensure the system can easily accommodate fluctuations in your user base.

5. Reliability – Cloud VoIP offers guaranteed 99.99% uptime with failover across multiple data centres.

6. Security – Look for 256-bit AES encryption, SOC-2 compliance, two-factor authentication and other security features.

7. Provider reputation – Select an established, reputable provider like RingCentral or 8×8.

8. Support – Seek 24/7 technical support and onboarding assistance from the VoIP provider.

9. Cost – Calculate the total cost of ownership over 3-5 years for on-premise vs. monthly fees for the cloud.

By evaluating these aspects, you can determine whether cloud, on-premise or hybrid VoIP will provide the best phone system for powering your business communications.


Transitioning from landline systems to Voice over IP provides tremendous opportunities to improve productivity, mobility, customer service and bottom-line savings.

VoIP solutions have matured into robust, enterprise-ready technologies built on proven broadband telephony protocols and standards. With cloud and hybrid offerings, businesses now have more deployment options than ever before.

By determining your technical and business requirements, assessing leading provider options, and partnering closely with your chosen vendor, you can successfully upgrade your communications capabilities and gain a competitive edge.

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