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What is a VoIP Phone, How Does It Work, and Why Should Your Business Switch?

Do you understand all the business communications options available to you? Or are you in danger of being left behind by your rivals? In the past, telecommunications was all about landlines. You had to be connected to the network of copper wires that make up the traditional phone system in order to make and receive calls.


In 2023, that’s not the only option. The internet has revolutionized the way we communicate. In fact, VoIP (Voice over Internet Protocol) means anyone can talk over the web without the need for a landline.


But what is a VoIP phone? How does this technology work? And could your business benefit from switching? Let’s dive into the answers to these questions and more.

Illustration of a computer keyboard and monitor. On the monitor screen are a row of stars representing a 10-digit phone number


What Is a VoIP Phone?

A VoIP phone — sometimes also called a Voice over IP phone — isa phone that allows you to make calls over the web using VoIP technology.

There’s a variety of ways to access that VoIP technology. You can use just about any internet-enabled device, with the right software or app, to make VoIP calls. You can also get purpose-built IP phone handsets or connect an Analog Telephone Adapter to a traditional desk phone to help it act as a VoIP phone. 

The best VoIP systems usually come as part of a unified communications package. Unified communications solutions are platforms which include multiple communications channels and features like virtual receptionists, call forwarding, performance monitoring, and more. All those features and functions are accessible in one place, making it quicker and simpler for businesses to connect with customers and colleagues.  

This can be a real game-changer for small to medium-sized businesses, giving them access to the kind of integrated tools and analytics that can make comms strategies truly competitive. 

What that means is that  VoIP is a technology and communications alternative all forward-thinking businesses should understand. 

With this in mind, let’s look at how it works.

How Does a VoIP Phone Work?

When you make a VoIP call, your voice is converted to digital data packets, which travel over the internet to the recipient. At the other end, it’s converted back into audio. 

If you use a VoIP-based system, it doesn’t mean you can’t call traditional landlines. In fact, if you’re calling a landline from a VoIP telephone, the experience isn’t any different than you would usually expect. Your voice is converted into digital signals, which are sorted into regular phone signals before reaching the destination. Users of traditional landlines can still call you, too, without any noticeable differences to calling another landline.

There is a positive element to the experience as VoIP is often higher quality, more flexible, and comes with lots of features.

VoIP Vs. Traditional Phone Systems: Key Differences

VoIP phone systems operate via the internet and legacy phone systems rely on a network of copper wires, but this isn’t the only way they differ. 

Let’s take a look at some of the most significant differences between VoIP and landline phone systems:

Use VoIP Anywhere With an Internet Connection

Traditional phones must be connected to the traditional telephony system. This is essentially a network of copper wires that converts sound into electrical signals, transports these, converts them back, and delivers them to the recipient. 

While this system has worked well in the past, modern businesses have increasingly complex communication needs. Enter VoIP.

You can use VoIP-based systems from anywhere with an internet connection. You don’t need to be in a landline-enabled location to make and receive work calls. Instead, you can collaborate with team members, take customer and sales calls, and so on, from virtually anywhere in the world. 

Any Internet-Enabled Device Can Be a VoIP Phone

While traditional and legacy phone systems have to be wired into the landline network, it isn’t the case with VoIP. Any device that can connect to the internet and operate a VoIP app or interface can be used to make calls.

For that reason, VoIP phone systems are a lot more flexible than traditional landlines. Flexibility means your employees can easily perform a call flip, seamlessly transferring calls from one VoIP-enabled device to another, without dropping the conversation. 

VoIP is More Reliable Than Legacy Phone Systems

Why is VoIP more reliable than traditional phone systems? It’s simple: fiber-optic cables. VoIP operates using the fiber-optic cables that carry the internet; traditional and legacy phone systems are reliant on copper wires.

Fiber-optic cables are much faster at transmitting data. They can also carry a lot more of it. Copper wires, on the other hand, can only carry a limited amount before they drop out and must be reset. So, you can’t always rely on traditional phone systems to handle high volumes of calls reliably.

With VoIP, however, the speed, clarity, and general quality of your calls are typically a lot higher and more consistent than with a legacy system.

The Benefits of VoIP Phone Systems for Businesses

It’s fair to say that using Voice over Internet Protocol tech has a lot of business benefits. Here are a few of the most significant advantages of VoIP for small and medium size businesses:


Costs matter in business, especially for smaller businesses. This is an area where VoIP can help. VoIP systems are often more cost-efficient than traditional landline systems.

Many VoIP providers charge monthly fees rather than a per-call fee. In many cases, this works out far more economical than a landline. What’s more, VoIP often makes it easier and more cost-effective to add extra people to your VoIP account than to install extra landlines.

A business that relies on landlines and traditional equipment will naturally have more overhead than a business that doesn’t. For example, in order to make and receive calls, employees need to be stationed by a landline phone during the working day. This means having a dedicated office that’s lit, heated, and more. With VoIP, you no longer need these phone stations. Employees can make and receive calls from anywhere and using any device.

UCaaS VoIP systems like Vonage Business Communications offer more features and integrations than a traditional landline setup ever could. This, combined with the flexibility and lower cost per call, allows you to optimize your VoIP system for better performance and results. All in all, a good VoIP setup will deliver a great ROI.


VoIP is the calling technology of the future — and not just because it’s generally faster, more reliable, and more cost-efficient than legacy systems. 

Landlines are being phased out all over the world in favor of VoIP. In the USA, for example, telecom companies no longer have to offer or even maintain landline options. 

That’s since FCC Order 19-72 was passed by the FC in 2019. The order eliminated regulations mandating that companies such as AT&T and Verizon had to provide traditional landline service.

In other parts of the world, the switch to VoIP is happening even faster. For example, the UK PSTN (Public Switched Telephone Network) is being switched off in 2025, and many European countries are working toward similar outcomes.

So, within the next few years, American companies that want to make international calls will likely use VoIP, as landlines will no longer exist in a lot of areas. 

Companies that wish to future-proof their communications should therefore consider switching to VoIP in order to keep up with marketplace trends.

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Helps Smaller Businesses Compete With Larger Competitors

UCaaS services like Vonage Business Communications can be a game-changer for SMBs and help them more readily compete with larger rivals. 

The solutions give these smaller companies access to a host of tools and features that optimize communications. Plus, they make it far simpler to access and use communications data (in marketing, for example).

In years past, features like call monitoring, virtual receptionists, collaboration tools, and performance analytics have been inaccessible to smaller businesses. VoIP platforms can provide these features and more, usually at a cost-effective price.

These features combined with the flexibility, reliability, and cost-efficiency of VoIP, can make it easier for smaller businesses to achieve success and scale operations.

Great for Flexible, Hybrid, and Remote Work

Flexible, hybrid, and remote work have a lot of benefits for staff and companies alike. However, hybrid and remote work is challenging if your business is reliant on a landline system. If your employees need to be in the office to take and make calls by landline connection, remote work is impossible.

With VoIP, you can use any internet-enabled device for calls, and you can use it from anywhere with an internet connection. This gives you and your employees much more flexibility.

It also allows you to expand your work hours, perhaps staggering employee shifts to accommodate different time zones and even countries. With a VoIP system, you can take and make calls at all hours without having to worry about office overheads and employee commutes.

Easy to Scale

Scaling a landline system is difficult and expensive. It involves running additional copper wires through your walls to new phone stations and handsets. That’s not the case with VoIP. Scaling a VoIP system is as simple as adding a new user to your account.

When you add those new users, too, it’s often much simpler to onboard them. Getting up to speed with an intuitive VoIP system is typically faster and easier than learning the ins and outs of a traditional setup. Plus, you can often complete all onboarding remotely, if you desire.

So, VoIP can help you ramp up your business and become even more cost-efficient as you add new phone features, employees, and capabilities.

Must-Have Features of a Business VoIP Phone System

There are lots of things to consider when choosing a VoIP provider, but here are some of the most important features to look for in your new business phone system:

Reliable Quality

VoIP is generally of a higher and more reliable quality than landline systems, but some platforms are better than others. Look for a system that offers consistent quality, including crisp, HD audio and video. Reliability is also very important, so check that your chosen VoIP provider has limited downtime and won’t let you down. 

Collaborative Features

VoIP opens up a whole world of collaborative possibilities too, especially if you choose a UCaaS system like Vonage Business Communications (VBC)

VBC makes collaboration easy thanks to its wide range of features and equally broad selection of add-ons you can choose to incorporate if you need them. Things like:

  • Business SMS and MMS

  • Conference calling

  • Call forwarding

  • Conference bridging

  • Call recording

  • A multi-line business phone system

  • A team messaging and chat app

  • Visual voicemail

  • Vonage Meetings video conferencing

  • And many more!

Flexibility and Mobility

It’s important that your VoIP phone system allows you to make calls from virtually anywhere and at any time. As we mentioned earlier, the flexibility and mobility a good VoIP system offers can be a major benefit for your business.

Global Reach

VoIP technology enables easier collaboration with colleagues and customers from all over the world. You’re no longer restricted by geography — instead, you can work with the best people the international talent pool has to offer and reach markets all over the globe.

To get the most from this global potential, look for a VoIP provider with worldwide reach. For example, Vonage offers international company numbers, making it easier to call and be called by overseas customers and colleagues.

Plenty of Integrations

Modern business is at its best when everything is connected and working together. By integrating your communications system with tools that your teams already use, you can boost productivity and streamline your workflows. Employees can complete their tasks in one place and collaborate more easily with one another, too.

Vonage offers a host of integrations, including productivity tools like Microsoft Teams and CRMs like Salesforce, in our App Center. You can sync data across platforms and systems to boost productivity, optimize customer experience, and empower employees across the board.

Other Considerations When Choosing a VoIP Phone System

Features are, of course, very important when choosing a VoIP system, but they’re not the only consideration. Here are three more important aspects to take into account when shopping for your perfect VoIP solution:

How Much Does It Cost?

Cost-efficiency is a key consideration for any business investment, and VoIP is no exception. Most providers will offer several different packages and payment tiers. For example, there are three different Vonage Business Communications pricing plans.

As a general rule, higher payment tiers will offer greater value for money. That being said, it’s important not to end up paying for features you won’t use.

If you’re not sure whether the VoIP plan you’re looking at will be cost-effective, don’t be afraid to ask questions. Good providers will be happy to guide you through the process of picking out the best option for your business.

How Easy Is It to Use?

It’s likely you’ll want to connect all your employees to your new VoIP system, but a platform that’s too complicated will take up a lot of your valuable time and resources training people on it. You may also find staff are more prone to making mistakes with an overly complex system.

So, consider how easy a potential VoIP platform is to use. Is it intuitive? Will employees be able to pick it up quickly? How much extra support will you need to get started? 

Vonage Business Communications is both comprehensive and intuitive. Our Admin Portal allows administrators to easily access, customize, and monitor your phone system and accounts in real-time. Plus, our easy-to-use app lets employees access your communications center from any compatible device.

What Kind of Support is Available?

Even the easiest to use and most intuitive VoIP product will benefit from good support provision. If you need to know more about an unfamiliar feature or you find yourself with an unexpected question about your communications package, it’s helpful to have quick and effective support on hand.

Vonage offers a wide variety of services to give our customers the support they need in a way that works best for them. This includes a comprehensive knowledge hub of on-demand resources for self-service, 24/7 chatbot assistance for questions, a support phone number, the option to create cases within your VBC account, and a community forum that allows customers to share tips and ideas on using Vonage.

Make Any Device a VoIP Phone with a Modern Business Phone System

VoIP is the future of communications. Businesses that want to remain competitive and get ahead of the changing digital environment are switching to cloud communications solutions in droves and reaping benefits like:

  • Flexibility

  • Cost-efficiency

  • Scalability

  • CRM integrations

  • Productivity driving features

If you want to futureproof your business communications with VoIP technology, Vonage may be the provider for you. 

Vonage Business Communications (VBC) is a unified communications platform built upon VoIP technology. With it you can bring together VoIP phone system features, SMS and multimedia messaging, and lots more, too.

Speak to a Vonage expert today to learn more about harnessing VoIP with VBC.

Still Have Questions About VoIP Phones?

VoIP is a protocol that allows you to make phone calls over the internet. UCaaS, on the other hand, stands for Unified Communications as a Service. It provides comprehensive communications solutions across multiple channels.

A VoIP phone system, therefore, is any system that allows you to make and take calls over the internet. 

UCaaS solutions, on the other hand, bring multiple channels and communications together in a single, cloud-based platform. UCaaS solutions will usually also integrate more readily with other platforms, such as CRMs and marketing databases. 

Can a VoIP phone system be part of a UCaaS system? Yes, absolutely! UCaaS solutions like Vonage Business Communications typically offer VoIP calling features as standard.

Using a VoIP phone is easy.

Any device that connects to the internet can in theory be used as a VoIP phone, including tablets and desktop computers. 

In order to use any devices as Voice IP phones, you’ll need a speaker and microphone; to make video calls, you’ll also need a camera. As these things come as standard with most mobile devices and are easy to source for desktops, you can be VoIP-ready within minutes of downloading your app.

Every VoIP platform is slightly different, so the exact way you’ll make calls will depend on the product you choose.

VoIP phones can be much more cost-effective than traditional phone systems. The main reason is that they operate over the internet and don’t require a lot of expensive hardware to operate and maintain. 

For example, you don’t need to install copper phone lines in your building to use VoIP, nor do you need to buy things like phone handsets, extra servers, and more.

Even when hardware is taken out of the equation, VoIP systems still often have the edge over traditional alternatives. Cost per call typically works out a lot cheaper on VoIP systems than it does via landline, especially if you’re making a lot of calls or calling overseas.

It’s also worth noting that using VoIP systems can lower your business overhead expenses, as it gives you and your employees the flexibility to make calls from anywhere and at any time. Without needing to be completely office-based, you could therefore save on electricity, property rental costs, and more.

VoIP phones are fantastic for remote and hybrid workers. You can install a solution like Vonage Business Communications on any mobile device, allowing staff to make and receive work-related calls from virtually anywhere, at any time.

UCaaS solutions like VBC also give remote and hybrid workers access to a range of other communication channels and tools. This makes remote collaboration easier and more effective.

Contact Us

Let's connect!

Want to know more about how VoIP phones can future-proof your business? We’re here to help! Call us at 1-844-365-9460, or fill out this form! A dedicated specialist will show you:

  • How a VoIP system enables employee and customer communications anywhere with an internet connection
  • Why VoIP is more cost-effective than a traditional copper-wired landline system
  • The competitive edge you gain with VoIP, especially when combined with a Unified Communications solution

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