What is a VoIP phone?

A VoIP phone is a hardware- or software-based telephone designed to use voice over Internet Protocol (VoIP) technology to send and receive phone calls over an IP network. The phone converts analog telephony audio into a digital format that can be transmitted over the internet and converts incoming digital phone signals from the internet to standard telephone audio.

VoIP phones, also known as IP phones, include features and capabilities not found in traditional analog phones. They also have additional performance requirements because phone calls are placed over the internet instead of the legacy public switched telephone network (PSTN).

How does a VoIP phone work?

VoIP phones convert voice calls into digital signals that are transported through IP networks, such as the internet. VoIP phones may work through physical phones that use VoIP technology or as virtual phone software installed onto a computer or mobile device.

Several networking components are required to make VoIP phones work. Phones are assigned IP addresses through the Dynamic Host Configuration Protocol, which automatically configures the network and the VoIP parameters. A domain name system tracks the IP addresses to enable devices, such as IP phones, to connect to each other.

VoIP phones require several protocols to facilitate the delivery of voice communications over the internet. Scroll down to read about the different VoIP protocols and their purpose.

Types of VoIP phones

The two main types of IP phones are hardware-based and software-based phones. Many VoIP service providers offer both types.

Physically, a hardware-based VoIP phone resembles a traditional hard-wired or cordless telephone. These phones include physical features, such as a speakerphone or microphone, touchpad, and display hardware to show user input and caller ID. VoIP phones also feature call transfer, multiparty calling and support for multiple VoIP accounts. Some VoIP phones can transmit and receive image data during calls, so they are considered video telephones.

Software-based IP phones, also known as softphones, are virtual phone software clients installed on a user’s computer or mobile device. The softphone user interface often resembles a phone handset, with a touchpad and caller ID display. A headset with a microphone that connects to the computer or mobile device is encouraged, or sometimes required, to make calls. Users can also make calls using their device if it includes a built-in microphone.

Softphone clients offer similar capabilities to hardware-based IP phones, such as voicemail, call conferencing and call transfer. Some clients may offer additional capabilities, such as video conferencing and instant messaging (IM).

Traditional analog phones may also be converted into IP phones by connecting to an analog telephone adapter (ATA). Analog phones can be converted by plugging the Ethernet network jack into the ATA, which then connects to the phone. The analog phone will connect to the internet rather than the PSTN, and it will appear to the phone system as a VoIP phone.

VoIP phone features

The main feature of a VoIP phone is that it enables voice calls to be made through the internet or other IP networks. VoIP phones may include other features and functionality, such as the following:

  • video calling;
  • IM;
  • team chat;
  • text messaging;
  • online faxing;
  • voicemail with speech-to-text transcription;
  • records and logs of calls;
  • Bluetooth communication with devices such as headsets, handsets, speakers and microphones;
  • easy conference call access;
  • auto attendant;
  • mobile and desktop apps;
  • mobile and local number portability that enables a subscriber to choose a new telephone carrier without needing a new number;
  • call routing;
  • call recording;
  • call analytics; and
  • integration with customer relationship management (CRM) and other software.

VoIP product features vary between offerings and vendors.

VoIP phone systems vs. traditional phone systems

It’s important to have an understanding of how VoIP phone works and differ from traditional phone systems, such as landlines and cellular phones, as they rely on IP networks rather than physical wiring to the PSTN network or cellular networks.

Compared to landline phone systems deployed on a similar scale, VoIP phone systems cost significantly less and include additional features beyond voice calling. However, as VoIP phones rely on IP networks, such as the internet, performance can be hindered by poor connections.

VoIP phone systems are also significantly cheaper than mobile phone systems deployed on a similar scale. While modern mobile phones may have many of the features included in VoIP phone systems, they generally lack enterprise-focused features, such as analytics, CRM and software integration.