How Does VoIP Work? The Complete Guide to VoIP in 2024

Visualize a phone system that grows with you, integrates existing devices, mobile phones, softphones, offers you numerous features, allows you to place and receive both local and international calls for free or for incredible cost-friendly prices, and doesn't take up any space in your office/home. And this was just a palate of the realm of VoIP phone systems.

What is VoIP?

VoIP stands for Voice over Internet Protocol. In novice's terms, the VoIP is the transmission of voice, data, or video content over IP networks. The VoIP protocol allows you to make and receive phone calls through your high-speed Internet connection using a VoIP adapter and standard touch-tone phone. VoIP provides the same quality as a traditional phone service, and you get more features for less money. Broadband phone, internet telephony, and IP telephony are some other labels of VoIP technology.

Have you ever used Facebook's call function? That is VoIP.

By using a multitude of different networks and operators, it enables you to connect with your staff members, clients, and customers across the globe. You can even use an IP phone to make/receive calls to your oversea family and friends proficiently. You dial the number and connect through to the person on the other end, and most of the time, you won't even realize if there is a difference!

What are the different types of VoIP solutions?

The four types of VoIP solutions are:

Integrated Access ' This VoIP service mimics the traditional phone line. With integrated access VoIP, the users integrate VoIP software and existing phone systems. This way, the users can keep their old number and equipment while also gaining access to advanced telecommunications features.

SIP Trunks ' Session Initial Protocol (SIP) transmit voice and video signals across data networks. It lets users take advantage of shared lines and upsurge their communication flexibility. It works well with cloud technology and is easy to integrate with PBX telephone systems. Phone systems connect via SIP Trunking.

Managed IP PBX ' This service functions the same as SIP Trunks, but a third party manages everything and maintains the technology for a fee. The equipment is housed on-premise by the business. Configuration, updating, and upgrading the technology all come under the concern of the provider.

Hosted IP PBX ' Hosted IP PBX (Private Branch Exchange) are mostly muddled with the managed services, but they are quite different. Instead of getting equipment from a managed service provider to maintain at the facility, the provider hosts all IP PBX functions.

How does VoIP work?

Forget copper wires and handsets. Today you can make phone calls anytime, and all you need is an internet-connected computer, a headset, and voice over IP. VoIP technology converts your voice into digital signals (primarily represented through numbers) that enables you to make a call directly from a computer or a VoIP phone. This digital data is then compressed into IP packets (small chunks of data) so that they be can smoothly transmit to several computers over the internet. So instead of a phone line, your voice passes through your router. All this process finishes at an implausible speed.

A traditional telephone can act as a VoIP phone when connected to analog telephone adapters (ATA) that perform the conversion. The digital data then travels over the public internet to the device or phone. When these IP packets reach the other end, they have to undergo a reversal process. This process converts them back into analog signals. The resultant analog audio data then reaches the ears of the receiver using software and speakers/headphones. For a VoIP to work efficiently and smoothly, a stable internet connection is a prerequisite. A good internet connection will ensure the clear and uninterrupted transmission of your audio signals.

This technology allows traditional telephony service to operate over computer networks using packet-switched protocols. The data packets flow through a chaotic network along thousands of possible paths, and this is known as packet switching. Packet-switched protocols work like this:

VoIP technology uses packet switching. It breaks the conversation into small packets of data instead of leaving the whole circuit open throughout the conversation. It then transmits that data over the Internet. Rather than exploiting a circuit, packet switching sends and receives data as required. Analog audio converts into packets for VoIP transmission, have you ever wonder how this all happens? The easy description is Codecs.

Codec stands for Coder-decoder, and it converts an audio signal into a compressed digital form for transmission. Also, it decodes these signals into uncompressed audio signals for replay. Codecs complete the conversion by sampling the audio signals several thousand times per second. VoIP is capable of higher quality calls than the PSTN (Public Switched Telephone Network), but it is a flexible enough technology that it can work under less than optimal conditions. Your provider may be able to switch manually between G.711 and another, lower-quality bandwidth, and in the future, the codec you use will automatically adjust to available bandwidth. There are different sampling rate in VoIP, depending on the codec:

How are VoIP calls made?

VoIP transmits real-time voice signals from one IP address to another. The VoIP calls can be made from one phone to another or from a computer to a phone. Requirements for VoIP depend on the service and method you choose to use. For a VoIP call to take place, there are a few essential requirements. As we have already discussed, the audio signals for the call convert into digital data, and the data travels over a network connection. We use different devices to make VoIP calls as long as they have microphones, speakers, and a stable internet connection. Our modern smartphones offer all these hardware specifications, so all they need is an internet connection. But, they also need a softphone to make VoIP calls.

Here are the three common hardware configurations used to make a VoIP call:

Traditional phone to VoIP Service ' ATA stands for analog telephone adaptor, and it's very simple to use. Analog phones need an adapter to receive their audio signals as well as to send their data packets. Using Ethernet cable, the adapter transmits this data to a router. The router then sends the audio call data over the internet to your VoIP service provider. Lastly, the VoIP service provider routes it to the destination you want to make a call. In simple words, you connect the adapter to your computer or Internet connection, plug in a regular phone, and you're all set to make a VoIP call. And so, business travelers prefer to take their phones or ATAs with them on trips, so that they always have access to their home phone.

IP Phone to VoIP Service ' Internet Protocol (IP) phones are special phones that look like traditional phones, but they connect to a router using an RJ-45 Ethernet connector. The call data travels to the VoIP server, which further transmits it to the other party's device. A similar phone is one that operates with Wi-Fi, which implies that when you take your laptop to the local coffee shop to access the wireless Internet, you could also make a long-distance call.

IP Phone to IP Phone ' Without a VoIP service intervention, you can make a direct IP phone to IP phone call. Computer-to-computer is an easy way to use VoIP, and long-distance calls are free. All you need is to pay for the software. To use this method, you will need to download and install the software and be equipped with a microphone, speakers, a sound card, and a high-speed Internet connection. The two VoIP phones send audio data to each other's IP address through routers connected to the internet.

Types of VoIP Phones

Different types of VoIP phones are available in the market. Understanding these VoIP phones can help you determine the system and service that best suits your needs. Each type serves a different purpose:

  • Desktop VoIP Phone ' This standard phone connects to your VoIP phone system via Ethernet and offers all the basic features you would expect. These phones are proposed for office environments that ensure you have quality calls all the time.
  • USB Phone ' This phone hooks directly to your computer via the USB jack. You can use it in conjunction with a softphone app.
  • Wireless IP Phone ' This IP phone has a built-in Wi-Fi or DECT transceiver unit that connects to an access point. With this IP phone, you can move freely around your home/office while on a call.
  • Softphone ' A softphone is client software that loads the VoIP service onto your desktop or laptop and allows you to make phone calls from your PC. These phones offer a more reliable service and provide better call quality than smartphone VoIP apps.
  • Videophone ' A videophone is an IP phone with the added ability to capture video using a small camera that is attached to the unit. These phones are used to make video calls to people who are thousands of miles away.
  • Conference phone - IP conference phones are typically used in large offices and conference rooms where multi-party phone calls take place. These are an integral part of any business that needs to have meetings with employees or clients.

As discussed above, on each end of a VoIP call, there can be an amalgamation of an analog, soft or IP phone as interim as a user-interface, ATAs or client software functioning with a codec to handle the digital-to-analog conversion, and soft switched mapping the calls. How can you expect to get all of these diverse pieces of hardware and software to communicate proficiently? The answer is protocols.

Protocols define ways in which devices like codecs connect and to the network using VoIP. There are different types of protocols, extensively used for VoIP. However, the most commonly used codec is H.323 which is standard developed by the International Telecommunication Union (ITU). H.323 is complex, and it was initially designed for video conferencing.

H.323 Protocol Suite

  • Audio ' G.711, G.722, G.723.1, G.728, G.729
  • Video ' H.261, H.263
  • Data ' T.122, T.124, T.125, T.126, T.127
  • Transport ' H.225, H.235, H.245, H.450.1, H.450.2, H.450.3, RTP, X.224.0

H.323 is a large collection of protocols and specifications, but it is not specifically tailored to VoIP. Therefore, the Session Initiation Protocol (SIP) emerged as an alternative to H.323. SIP is a more streamlined protocol, specifically developed for VoIP applications.

What equipment do you need?


  • If you go for an on-premise PBX, you will need a space in your house or office to house the PBX. Plus, you will need to buy the PBX.
  • A VoIP Phone is a must. You can choose from a variety of formats like desktop, cordless, or conference phones.
  • You may buy headsets and other accessories such as DECT clips and special receivers.
  • To connect your analog phone to a VoIP network, you will need an adapter.
  • Softphones are downloadable applications. They consist of a keypad for making calls along with other VoIP functions.
  • If you opt for a hosted PBX service, the VoIP service provider will house the PBX and will charge you a monthly fee.

Internet Connection

As aforementioned, you will need a good-quality internet connection to support a VoIP service. You will need an Internet connection via cable modem, DSL, or other high speed dedicated connection that can provide you with at least 128 Kbps upstream and downstream.

VoIP Service Plan

Once you have ensured all the technical capabilities to support VoIP, the final step is to choose your service provider and buy a VoIP service plan.

What are the benefits of VoIP?

When you are starting a business or need a residential phone system, one important thing is to ensure you have a reliable communication system. Even though most of the work is done on networked computers, but you still need a phone for daily communications. In such a situation having a traditional landline can get expensive. This calls for having a VoIP service instead. It uses the broadband internet connection and a hosted VoIP system to make communications happen. It also comes with lots of benefits that makes it a better choice as compared to the traditional phone lines.

Let's have a look at some of them:

Easier to install, configure, and maintain ' VoIP phones are easier to install even for someone who has limited technical knowledge. You can make changes in the configuration of the system from the web control panel. You don't even need hardware. All you need is a computer, VOIP software, and headsets to start using the service. This significantly reduces maintenance costs.

A lot more flexible ' With a traditional phone, you have to estimate precisely how many phone lines you will need. It's extremely difficult to add or remove new phone lines after the configuration. When it comes to VOIP, adding or removing users is a piece of cake.

Complete portability ' The best thing about VoIP is you will be connected wherever you are. Since it operates with a broadband connection, it's all you need to use the phone service. That's why it's best if you have friends or clients spread across different parts of the world.

Loaded with features ' Unlike the traditional phone system, a VoIP system supports a wide range of call features that you might need such as call hold, call transfer, follow me, find me, conference calling, music on hold, call blocking, voicemail, auto-attendant phone menus, call recording, and more.

Supports fax ' VoIP phone systems come with a virtual faxing feature that allows you to send faxes whenever necessary. The best part is you don't even need a fax machine and paper for that. You can send and receive faxes by simply using your email account.

Collaboration ' Since VoIP is a hosted system, it is easy to integrate with the business applications that we use daily. For instance, you can use Outlook to place outbound calls and even access your voicemail accounts through email.

Calls can be diverted anywhere ' You don't have to be physically located in the same place to take calls. VoIP lets you divert calls anywhere in the world all thanks to the cloud-hosted VoIP system features. Users can conveniently access the web portal anytime regardless of their location and reconfigure their system. It's perfect for people who travel a lot.

Cost savings ' Traditional phone lines can be very expensive, especially if you need to make frequent calls to international clients. But VoIP has reduced this expense to a massive scale. Plus, you don't need any hardware, scaling up or down doesn't cost much and there is no need for expensive repairs. You don't even have to worry about the maintenance. All you have to do is pay for the VoIP plan. For a startup that has to take care of a lot of other business expenses, a huge amount of capital investment will not be necessary to use the VoIP service.

It is because of these benefits, lots of businesses have switched to VoIP services already. It's time you consider these benefits and make a move too.

What are the weaknesses of VoIP?

VoIP is often cheaper and more flexible than the traditional copper wireline systems. At the same time, it is worth keeping in mind the potential weaknesses, too. For instance:

Call quality ' Call quality highly depends on your broadband, hardware, and services. Common issues that occur during calls are delays, distortion, and echo. The good news is that the advancement of technology and the use of fiber optic cables have minimized these audio quality concerns.

Bandwidth dependency ' VoIP depends on your internet connection. Your phone line goes down with a connection failure. Likewise, quality issues are caused by insufficient bandwidth. This is why we recommend having a dedicated internet connection just for your voice data.

Security ' Like other internet technologies, security is a major consideration with VoIP. Identity and service theft, viruses, phishing, call tempering, and spamming over internet telephony are possible threats. Luckily, there are some easy steps you can take to protect yourself.

Extra costs ' If you use VoIP to phone someone with VoIP capabilities, you will have to pay extra charges.

The Ten Best VoIP Service Providers for 2024

1. AxVoice

Axvoice is the top VoIP provider on our list. It has been designed for those who like to make calls without worrying about their phone bills. Axvoice offers residential and business services at relatively reasonable prices. With every VoIP plan, it ensures high-quality voice calling across the US and Canada. It also offers free unlimited in-network calling. It's our top choice due to its extensive features, competitive pricing, and customer support. You can manage your online account from anywhere. They have a plug and play service so your phone system will be up and running as soon as you buy and set it up. To get started, you just need an Internet router, Axvoice device, and your phone. Although they don't have live chat support yet, they are good at communicating via email.

Pricing plans:


  • Competitive pricing
  • Easy to set up
  • Crystal-clear voice quality
  • Online account management for VoIP account
  • More than 30 VoIP calling features
  • Free in-network calling
  • 15-day money-back guarantee
  • Low international rates
  • BYOD capability
  • Ability to lower the bandwidth so that the call quality is not affected


  • No free trial version
  • No live customer support

2. RingCentral

Ringcentral offers cloud unified VoIP communication and collaboration solutions globally. It is one of the leading providers of Business VoIP solutions. It doesn't just come with a robust set of features, but affordable pricing plans. Along with the call features, it also offers business tools that can fulfill any company's business demands. It also offers the foundation for a hosted PBX system with a variety of advanced features. Therefore, its price is higher than most of the VoIP providers on our list. All its plans include unlimited phone calls and unlimited business SMSs. It has comprehensive guides on its website, but its customer support is not satisfactory.

Cloud phone system Administration
Local numbers Call logs
Toll-free numbers Automatic call recording
Extensions Greetings
Presence and head-up display Music on hold
Call delegation Caller ID
Call screening Call monitoring
Shared lines Audio Conferencing
Call forwarding Video conferencing
Call flip Message alerts

Pricing plans:


  • Robust user scaling
  • Quick to set up
  • Makes team collaboration better and fast
  • Enables to maintain increased control over customer relations
  • Unique cloud PBX system to control the entire system via an online dashboard
  • Mobile app


  • No home phone service
  • Pricier VoIP solution
  • Cant customize greeting messages

3. Vonage

Vonage is another widely used VoIP service offering a range of calling plans to meet the needs of both residential and business users. To get the most out of business communication, Vonage offers different VoIP phones and routers, too. Setting up the adapter is pretty easy. However, the international call quality for Vonage is a bit low. On the whole, its feature-full plans make it one of the popular names in both residential and international phone calling.

Pricing Plans:

Vonage Residential

Subscription Plan Price
Vonage North America $24.99/month
Vonage World $27.99/month
Vonage US & Canada 400 $12.99/month
Vonage 3000 to Globe Philippines $29.99/month

Vonage Business Cloud

Subscription Plan (1-4 Lines) Price
Mobile $19.99/user/month
Premium $29.99/user/month
Advanced $39.99/user/month


  • Unlimited free calls from Vonage-to-Vonage
  • Online Vonage account management
  • 30-day money-back guarantee
  • Supports phone number portability
  • Supports 911
  • User-friendly web interface


  • Setting up the service requires technical skills
  • International call quality is very low
  • Doesn't have numbers in all cities
  • Customer service is not up to the mark

4. MagicJack

Magicjack is the most affordable traditional landline replacement. It enables you to make unlimited local and long-distance calls to mobile phones and landlines in the US and Canada. You just need high-speed internet and any landline phone for efficient calling. It offers up to 20 VoIP features, including conference calling, call transfer, and voicemail. Unfortunately, most of the advanced features are optional extras. For instance, you will have to pay an extra $10/month to get an auto-attendant. Plus, its customer support service is not that good as multiple users have reported about the unpromising behavior of their customer support agents.

Product Features

Three-way calling Do not disturb
Auto-attendant E911 service
Call queue Call forwarding
Call transfer Music on hold
Call waiting Online Call logs
Caller ID Toll-Free numbers
Caller ID blocking Voicemail
Conference bridge Virtual fax

Pricing Plan:

Subscription Plan Price
First-time customer $49.99 for 12 months
Renew 1 Year $39 for 1 year
Renew 3 Year $89 for 3 years


  • Crystal clear voice quality
  • Easy installation
  • Turn any iOS or Android tablet into a phone with magicApp
  • Access voicemail, call waiting, call forwarding, and more
  • 30-days money-back guarantee


  • Slow customer support service
  • Needs a computer to be plugged in to get a dial tone
  • Limited features for business users

5. Grasshopper

Grasshopper provides an excellent VoIP service for small business users who want to avail of all the phone features from their mobile phones or traditional landline on their business phone. It is a quick, affordable, and easy to set up service. Apart from having standard VoIP features, it also comes with advanced collaboration options like voicemail to email, custom greeting, and call forwarding features. But, it lacks some important features like conference calling.

Product Features

Desktop + Mobile app Incoming call control
Voicemail transcription Business phone number
Simultaneous call handling Call forwarding
Custom greeting Voicemail
Reporting Extensions
Business texting Call transfers
Virtual fax Business phone number

Pricing Plan:

Subscription Plan Price
Grasshopper Connect (1 Number) $39/month
Solo (1 Number & 3 Extensions) $29/month
Partner (3 Number & 6 Extensions) $49/month
Small Business (5 Number & unlimited Extensions) $89/month


  • Connects with your desktop or smartphone
  • User-friendly dashboard
  • Call forwarding to anywhere in the world
  • Offers a detailed call report
  • 24/7 Live Support
  • 7-day free trial


  • No comprehensive plans for small businesses
  • Must be used with a mobile device or existing landlines
  • No audio or video conferencing
  • No cloud phone rentals

6. is another competitive VoIP solution, particularly for business users. It offers cloud-based service; therefore, there is no need for hardware or maintenance. The service is easy to use and set up. You can keep your phone, or you can get one of their IP phones to use the service. The features are great, but the service is costly. Plus, many users have reported that its customer support is average. Also, there are no sufficient guides or resources available on their website.

Standard Features Premium Features
Call blocking Call recording
Address book CRM integration
Call forwarding Video conferencing
Call transfer Voicemail transcription
Caller ID Caller Analytics
E911 dialing Live receptionist
Hold music  
Text messaging  
Number porting  

Pricing Plan:

Unlimited Service Plan Price
Base $29.99 per month
Plus $37.99 per month
Pro $59.99 per month

Note: Prices are charged for a per-user extension


  • Easy setup and rich features
  • Suitable plan for small businesses
  • User-friendly dashboard
  • 30-day money-back guarantee


  • Limited call recording options
  • You have to pay even for local calls
  • Resource material and guides are missing on their website

7. Nextiva

Nextiva is yet another recognized company in the VoIP industry that is ideal for small businesses and entrepreneurs. They offer three basic plans that are more or less similar except for the number of lines. It is also a cloud-based business VoIP service offering advance features, including call management, voicemail to email, and more. But, Nextiva is a pricier VoIP solution as compared to other service providers. Most users have complained about its complex interface and perplexing website.

Product Features

Unlimited Calling Conference calling
Unlimited virtual faxing Mobile apps
Toll-Free and local numbers Browser toolbar
Auto Attendant HD on Hold music
Call recording Call queuing
Call-ID Voicemail to email

Pricing Plan:

Note: The price quoted here is charged for per month per user


  • Customer support is amazing
  • Offers an expansive range of features
  • All business plans offer unlimited calling across the United States and Canada
  • Offers unlimited online faxing


  • Setup can take a while
  • Pricier VoIP solution
  • Service is outdated
  • The website can be perplexing and overwhelming
  • The mobile app is offered only with the Pro and Enterprise plans

8. Lingo

Lingo is another popular residential and small business VoIP provider. It comes with several features like free calling to other Lingo users. Plus, you can also keep your existing number. You can call up to 50 countries, and no matter what package you choose, you get free equipment and free activation. It offers average call quality, and for this very reason, It is most generally used for local calling. Its customer service is fine; therefore, it falls at 8th position on our best VoIP service list.

Product Features

Long Distance Calling Repeat Dialing
Unlimited Local Calling Call Tracing
Unlimited Local Toll Calling Deluxe Call Forwarding
Call Hunting Preferred Call Forwarding
Deluxe Caller ID Speed Calling 30
Deluxe Call Waiting Call Blocking
3-way Calling Distinctive Ring
Call Return Voicemail

Pricing Plan:

Residential VoIP Price
Home Essentials $39.95/month
Home Basic $35.95/month
Home Value $33.95/month
Business VoIP Price
Essentials $39.95/month
Basic $35.95/month
Value $33.95/month

Note: The price quoted here is charged for per month per user


  • 20+ premium features for residential users
  • Equipment comes free
  • Simple and easy setup


  • The higher monthly subscription fee
  • Not suitable for business users
  • The 30-day money-back guarantee comes with some limitations
  • Charges early termination fee
  • You have to pay additional administrative fee charges

9. 1-Voip

1-Voip has worked hard to build a reputation of a reliable VoIP service provider. If you don't want to receive calls from telemarketers and robocalls, then you must go for this service. You can use your number and get unlimited incoming minutes. It offers a wide range of basic VoIP features, including call forwarding, caller ID, call waiting, music on hold, and blacklisting. On the other hand, it doesn't offer cloud-based service; therefore, it is most commonly used by residential and small business users only.

Product Features

Music on Hold Virtual Fax
Extension transfer Call waiting
Call recording Auto-attendant
Anonymous call reject Digital Queues
Do not disturb Custom music on hold
Digital Call Forward Voicemail
Call parking Intercom
Configurable caller ID Digital softphone

Pricing Plan:

Residential VoIP Price
Value $8.97/month
USA & Canada Unlimited $17.97/month
World Unlimited $23.97/month
Business VoIP Price
Value $14.97/month
USA & Canada Unlimited $34.97/month
World Unlimited $34.97/month


  • Affordably priced and reliable service
  • Intuitive interface
  • The adapter provided works with a majority of headsets


  • Doesn't offer as many configurations and customization options
  • Miss features as offered by other products like video conferencing and web-based messaging
  • Customer support is average
  • International call quality is very low
  • A little complex to set up and modify

10. Google Voice

Google Voice allows users to manage their communication channels better with a unified communication tool. All you need is to download the app on your phone and link the service. You are all set to make calls at cheaper rates. The service is great and inexpensive, but the problem is, it works via Wi-Fi. Also, its VoIP services are only available in the United States. If you have a tight budget, and you need a service to make calls without having to pay for the cellular plan, then you must go for this option. Otherwise, it lacks even the basic VoIP features, so it is not recommended for business use. For this very reason, we have placed it in the last position on our list.

Product Features

Voicemail Call recording
Transcribed voicemail Call blocking
Free US phone number Do not disturb
Conference calls Send and receive messages
Caller ID Google calendar integration
Mobile apps: Android and iOS Multi-level auto attendant

Pricing Plan:

Local rates International rates
Unlimited free calls and SMS within the USA and Canada Rates for international phone number start from $0.01 per minute


  • Free calls to the US and competitive rates for outgoing international calls
  • Unified communication through one single phone number
  • Offers call recording and voicemail transcription


  • No portability of existing landline number to Google voice
  • Records only incoming calls
  • Doesn't support 911
  • No real-time support is available
  • Many customers have reported call drop out issues

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