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What Is Voice over IP? A Look at VoIP in Business

What is voice over IP (VoIP)? While its definition — telephony service delivered over a data connection instead of a dedicated voice line — may not sound exciting, the technology's ability to supplant long-standing must-haves like private branch exchange (PBX) service is. VoIP offers flexibility, scalability, and overall value, and Global Market Insights projects that the VoIP market will grow to $55 billion by 2025, a $35 billion growth from 2018.

Colleagues reviewing documents with a laptop and a smartphone.
What is voice over IP? It's cloud telephony, evolved.

Cloud telephony solutions like VoIP have effectively made communications technology revolutionary again. Businesses across the spectrum — from mom-and-pop shops to global enterprises — have embraced the format thanks to its enticing combination of cost savings and reliable service, and the tool will only grow from here. Read on to learn more about a communication tool all businesses should familiarize themselves with.

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A Brief History of VoIP

There was a time when phone lines carried the internet, not the other way around. While it might seem strange that the first VoIP tools were created when most users were still on dial-up, VoIP didn't bring phone service to the internet "just because." Instead, the tools offered an affordable alternative to costly long-distance and international calls, according to BeBusinessed.

The earliest iterations of this technology looked little like the flexible tool we enjoy today. Pioneering VoIP solutions only worked online and required callers and their recipients to have the same software installed on both ends — no transmissions to or from landline phones were allowed. While still useful in specific cases, the lack of baseline capability meant the technology was too early in its lifecycle to support the widespread business use it sees today.

Things have obviously improved. Today's solutions are effectively indistinguishable from landline systems, and the technology's internet-based architecture makes it much easier to modify to the end user's whims. Businesses needing to add a feature, purchase a block of new service numbers, or make other changes no longer have to deal with physical wiring, which means no wiring closets, no waits (or huge bills) for on-site technician visits, and fewer compatibility problems between sites in distributed workplaces.

In its short history, VoIP has grown from a niche alternative to a leading contender for phone service in large and small businesses alike.

A Better Alternative

For businesses, governmental agencies, and other organizations with moderate-to-complex phone needs, all this innovation couldn't have come at a better time. Installing, managing, and paying for a PBX (or similar wireline service) can be costly. The challenges grow as the business does, especially where branch offices and other examples of business distribution are involved.

By comparison, VoIP just works, especially in the distributed workplace. Where adding a new location to a wireline branch exchange can require serious effort and complexity, almost any location with an internet connection can loop into a company's existing footprint with cloud-hosted solutions. Businesses with complex communication tools, such as those employing unified communications products, can use VoIP as a backbone for any number of features, whether they're universal, per-division, or per-location. A sales branch may enjoy on-the-go conferencing capability, for instance, while a division with on-call employees can use the same number across their desktop and mobile phones.

For a growing company, adopting the technology could mean the ability to offer enterprise-class phone features without paying for the setup and continued use of a private exchange. An established company with a presence in multiple regions, on the other hand, can avoid dealing with a tangled web of local communication providers, gaining better volume discounts and less finger-pointing when technical questions arise.

Advantages Abound With VoIP

VoIP's advantages have only grown with the advent of cloud technology. Where on-premises business VoIP systems may necessitate hardware expenses and baseline technical knowledge, a cloud-based VoIP provider handles much of the heavy lifting: They host the hardware, manage the call quality, and handle the technical problems. It's a big step forward, and one with positive implications for businesses everywhere. Adding features and numbers becomes as easy as accessing a web-based portal, and reducing costs becomes easier with less need for on-site hardware and human maintenance.

VoIP offers much more than the ability to place calls over the internet. In its short history, the technology has grown from a niche alternative to a leading contender for phone service in large and small businesses alike. In that sense, companies looking to modernize or simplify their existing phone service are well-advised to give it a look — in either event, VoIP can make it happen.

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