What is VOIP?

While cell phones and landlines continue to dominate as the main telephone services, they aren’t the only choices available to businesses and consumers. Voice over Internet Protocol, typically called VOIP, offers similar telephone services using software on a computer or an app on a mobile device. It has been making inroads as an alternative to traditional phones since the 1990s, but VOIP really took root in the early 2000s when broadband Internet started to become affordable and widely available.

How it works

Traditional phones transmit patterns of electrical currents over physical lines. VOIP calls, on the other hand, are primarily digital. They operate in largely the same way as any file transfer over a network. When a person speaks into a microphone, or phone designed for VOIP, the computer converts the electrical signals into data packets. The VOIP software routes these data packets through servers until they reach the recipient.

If both people are talking through a computer, the software on the recipient’s computer reassembles the data packets and plays them through a speaker or headphones. Calls routed to a traditional landline requires an additional piece of hardware, called a VOIP gateway. The gateway converts the data packets into something landlines can transmit, as well as translating signals from landlines into data packets a computer can understand.


VOIP offers a few significant advantages. It leverages technology and services that customers already use, such as computers, broadband Internet and microphone headsets. This means residential customers don’t need to make any costly equipment purchases to use a VOIP service. Business customers that want to replace a traditional private branch exchange or PBX with a VOIP PBX will need to buy equipment that can be costly.

Another key advantage of VOIP is low-cost long distance calling. User-to-user calls are generally free on the same service. VOIP to landline services are frequently set up as a flat-fee subscription with unlimited domestic calling, up to certain thresholds, and reasonable international rates. This can make VOIP much more affordable for both residential and business customers. VOIP services often bundle in text messaging and video calling as standard features, which makes it attractive to customers who get these features on the cell phones.

VOIP services also face problems common to all Internet-based services, and some unique to voice over the Internet. VOIP only works when the customer’s Internet connection is functioning properly. Additionally, VOIP doesn’t work during power outages. Call quality can be uneven. Limited bandwidth on either end of the call can lead to voice distortion or fade outs, delays and dropped calls. The nature of data packet transmission can also lead to delays. Packets can arrive in the wrong order, which slows down the reassembly process and generates a pause. The final and biggest disadvantage is that some VOIP systems don’t connect with 911 at all, or connect but don’t provide location information. The issues around calling 911 make VOIP problematic as a full replacement for business or residential landlines.

VOIP phones takes advantage of technology found in most homes and businesses to route voice data over the Internet. This bypasses most or all of the traditional phone system and allows VOIP providers to offer a low-cost alternative to traditional long distance. It also allows for attractive features like video conferencing. VOIP’s reliance on an Internet connection makes it prone to problems with call quality. It also won’t function in the event of a power or Internet service outage. The problems with contacting 911, however, is likely to remain the biggest stumbling block to widespread adoption of VOIP as a replacement for traditional landlines.

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