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VoIP Phone Service: A Comprehensive Overview

This article was updated on December 30, 2023

Communication is vital to business operations, which makes finding the right phone system critical for any business. VoIP opens up a new world of possibility for small business phone systems, including more features, increased flexibility, and less maintenance — all while saving on costs. If you’re a small business owner, there are many reasons to consider using a VoIP phone system.

Woman sitting at a desk, on the phone, looking at a tablet. This conveys VoIP phone service.

VoIP for Business

Voice over internet protocol (VoIP) is a multi-line phone system with a variety of added capabilities, including video calls, text messages, faxing, and more. The uses of VoIP become even more impactful in the context of a small business, where it’s critical to remain flexible and scalable as the business evolves. Read on to learn more about how VoIP phone service works and the ways a multi-line phone system like VoIP complements small-business operations.

How Does a VoIP Phone Work?

VoIP phones make calls via a high-speed internet connection, rather than a typical phone line. VoIP converts your voice into a digital signal that is then transferred through the internet to its destination. Several qualities make VoIP phone service different from, and oftentimes superior to, a traditional telephone. Below are some answers to common questions about how VoIP phones operate, and how a VoIP business phone differs from a traditional landline system.

Is VoIP the Same as a Landline?

No, VoIP is a completely different system from a traditional telephone. Landline phones transfer analog audio signals via a physical, wired system. VoIP transfers digital signals via an internet-based, wireless system.

Can I Use a VoIP Phone To Call a Landline?

Yes, you sure can! If you use a VoIP phone to call a landline, your digital signal is simply converted back to a regular telephone signal before hitting the landline. Similarly, a landline number can make calls to a VoIP phone.

Do You Need a Special Phone for VoIP?

For a phone to use VoIP, it needs to be internet-capable and somehow connect to the internet. This can be through a Wi-Fi router, a hardwired internet cable, or through a 4G/5G internet connection from a mobile phone service provider. Most modern VoIP phones have the capability to use both WiFi and a 4G/5G connection.

It’s also worth noting that VoIP phone service is not limited to cell phones. Since VoIP uses the internet, you can use it to make calls from computers or most other internet-capable devices. What’s more, you can use the same VoIP phone number to make (and receive) calls from various devices. This becomes especially relevant when using VoIP phone service for a business, where having a single, unified phone number is crucial for efficient business operations. You can even have a completely separate line on the same device, meaning you can use your business number on a personal phone, eliminating the need to carry around a second phone.

Some devices that can use VoIP include (but are not limited to):

  • Smartphones
  • Desktop computers
  • Laptops
  • Tablets

Additionally, while landline phones would not typically be internet-capable (and thus not compatible with VoIP), you can still make VoIP calls on a landline with the help of a special adapter.

How To Use a Landline Phone With VoIP

Making VoIP calls on a landline requires a way to convert its analog signal into a digital one. While most landline phones cannot simply be plugged into a router, their calls can be converted to VoIP calls via a device known as an Analog Telephone Adapter (ATA). These adapters convert your voice signal into digital packets, which are transferable over the internet, and does the reverse when you’re receiving calls on the adapted landline. (Keep in mind that most ATAs do not come with their own built-in internet connection. Unless your ATA has a built-in router, you will still need a means of internet access to use your landline phone.)

If you’d rather have office phones that are already VoIP-compatible, there are a wide variety of office phones and systems that are internet-ready, each with its own set of features to accommodate any business’s needs.

VoIP as a Multi-Line Phone System

A multi-line phone system is able to host multiple calls at the same time. Multi-line phone systems provide features that are essential to most businesses, including auto attendants, call waiting, voicemails, and more. Out of the three types of multi-line systems (the other two being Key Systems Units and Private Branch Exchanges), VoIP is the only internet-based system and offers the most abilities by far. It’s also capable of housing multiple lines with individual extensions, meaning that you’re able to direct customer calls to different parts of your business.

Additionally, if you use a Unified Communications as a Service (UCaaS) solution like Vonage’s, you’re able to take advantage of local company numbers, a feature that allows you to have numbers in multiple regional markets. You’re able to add as many area codes as you want to the same number, meaning you can establish a local presence in any region. You’re also able to monitor the performance of each local campaign via the Admin Portal.

Do VoIP Phones Work Without the Internet?

The short answer is “no,” but there are some failsafes available. Some service providers — like Vonage — can include redundancies for emergencies, such as call continuity. But ultimately, you’ll need a high-speed internet connection to use VoIP to its full potential. 

On that note, ensuring you have a strong, reliable internet signal is important for using VoIP phone services. If you already have internet service, you may need to increase your bandwidth to accommodate the extra load. Your VoIP provider can consult with you about whether your internet is adequate, or needs a boost. Reach out to us if you want to know more.

Is VoIP Worth It for a Small Business?

In most cases, small businesses can benefit greatly from having a VoIP phone system. VoIP has the advantages of any multi-line phone system combined with the advantages of using internet connectivity. The best phone system for your business is one that’s going to provide you with:

  • High-quality audio calls
  • Adaptability and scalability
  • Cost-effective features
  • Minimal maintenance

By far, VoIP is the best choice for each of those factors, no matter how small (or big) your business is. Additionally, depending on what your business operations entail, you may benefit from Unified Communications as a Service (UCaaS), which adds even more capabilities. We’ll cover UCaaS later in this section, but first, let’s outline a few pros and cons of a VoIP system.

What Are the Advantages and Disadvantages of VoIP?

The benefits of a VoIP phone system will almost always outweigh the drawbacks, though it’s important to consider both for your specific business:

Advantages of VoIP

  • Cost effectiveness: Is VoIP cheaper than regular phones? Yes, and for several reasons:

    • First, VoIP helps you consolidate several functions you need into one provider, some of which we’ll cover later in this piece.

    • Second, VoIP saves you money by saving you time; since your phone service isn’t hardwired, it is more flexible, mobile and adaptable — all of which reduce time spent on maintaining your phones.

    • Finally, since VoIP requires less hardware, there’s less cost required over time to maintain the phone system. And you’re able to do all of this while not having to sacrifice the quality of your calls or services.

  • Less maintenance required: Internet-based phone services are far easier to install, change, and troubleshoot. Additionally, having a unified service provider not only makes costs cheaper, but simpler to pay. Rather than spending your time worrying about operations or paying all your different bills for communication services, you’ll be able to focus on the actual business.

  • Multi-line phone system capabilities: Just about every business needs (or at least wants) the ability to field multiple calls at the same time, and VoIP is exceptional for multi-line phone systems. Out of the multi-line phone systems available (Private Branch Exchange, Key System Units, and VoIP), VoIP is the easiest to modify with new lines, as well as additional features your business may need. This includes the common features of multi-line phone systems, including virtual receptionists, auto attendants, and call parking.

  • High scalability: Because VoIP is internet-based and does not require a lot of hardware, it can easily grow alongside your business. In contrast with a landline system, you don’t need to add a bunch of wires or physical phones anytime you want to expand your services. VoIP is easy (and efficient) to scale as your business needs increase.

  • Remote capability: If you (or your employees) are spread out across the country, or your business requires you to constantly be on the road, VoIP helps you maintain your phone operations over all your locations, under a single provider. Even if your business is completely localized, it’s still helpful to be able to make and receive business calls outside of your brick-and-mortar spots. With the help of VoIP features like a softphone, you’re able to make calls from your business line anywhere in the world — provided you have internet access, of course.

  • Additional advanced features: In most cases, having features like conference calling, video conferencing, and SMS/MMS texts are no longer special, but what customers expect from a business. Even your employees will likely expect the ability to use instant messaging for internal communication, as opposed to voice calls or emails. And out of all three types of multi-line phone systems, VoIP is the only system that can accommodate many of these advanced features. 

Disadvantages of VoIP

  • Relies on a strong, dependable internet connection: If maintaining an internet signal is a problem, your business may struggle to use VoIP. This especially applies if you’re in a rural area or any place where reliable internet service is not always available. Since VoIP is internet-based, you can expect a weak internet connection to result in the same sorts of problems you’d encounter using any internet-based function. Aside from simply not working, weak internet can make your calls poor quality and have a high amount of lag. If you’re unsure of whether your location can properly support VoIP, contact an expert to help you determine the best solution for you.

  • Requires a reliable power source: While landline phones will still work during a power outage, VoIP phones will not — unless you have a backup power supply. This is of course possible, but will require additional investment on your part.

  • Does not support emergency calls: Unfortunately, the data transferred from VoIP calls does not include GPS information, which means that you’re unable to require a location for emergency calls. That said, the Federal Communications Commission (FCC) does provide guidelines regarding emergency calls on VoIP, so 911 calls are still possible in some cases; they will simply take some extra steps to set up.

What is UCaaS?

UcaaS, or Unified Communications as a Service, is a cloud-based communications solution that is powered by VoIP. It supports multiple methods of communication, including telephones, video conferencing, instant messaging, and more. UCaaS provides a lot of flexibility to businesses and is easily integrated into your existing business tools. The more complex your business operations are, the more they stand to benefit from UCaaS. If you’re curious about its capabilities, check out the list of over 50 features Vonage’s UCaaS system includes! Some of the important ones include:

  • Admin portals for customizing your phone system
  • Business SMS and MMS messaging
  • International calling capabilities
  • Video conferencing
  • Visual voicemails, including transcription

How Do I Set Up a VoIP Phone System for a Small Business?

Vonage has you covered! If you’re looking to add a VoIP phone system to your small business, Vonage is committed to bringing our clients a high-quality, scalable UCaaS system. Your service is customized to your business — all while maintaining over 99% uptime reliability (based on averages from July 2021 through February 2022).

Discover why our services are trusted by over 100,000 customers — and see what makes our services such a great fit for your business!

Woman working intently on her Vonage Business Phone system photo above cellphone, laptop and desk phone which are how you use VBC
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