Market musings

Business Phone Basics: What Is VoIP?

by Nina Quasebarth
September 9, 2017

Office telephone systems are still an essential communications tool. Even with the proliferation of email, chat, and online communications, the phone is still the most efficient tool for information exchange and is the preferred means of contact for many customers. At the same time, the telephone system can be a significant expense for small to medium-sized businesses (SMBs). To combat rising telecom costs, more businesses are looking for less expensive phone strategies, including integrating the telephone into their enterprise network infrastructure by adopting voice over IP (VoIP).

What is VoIP? In brief, it’s a means to use the internet for telephone calls. Based on the Internet Protocol (IP), VoIP establishes a telephone connection between the user and remote phone systems using the internet as the trunk line between connections. Because the internet does not incur carrier charges, many consider it virtually free telephone service.

Business Phone Alternatives

When it comes to business telephone systems, SMBs normally consider three basic choices:

1. Key System Unit (KSU)

If you need basic wired phone service, a KSU system works much like an old-fashioned wired home phone system could work for very small businesses. It supports a limited number of phone lines with very basic service using a central switching unit that handles phone line selection. Costs for KSU systems can be as low as $20, but there is no flexibility, there is no wireless support, it doesn’t scale well, and phone extensions are chosen manually. Ultimately, there are much more technologically advanced options that are just as affordable.

2. PBX

For decades, the private branch exchange, or PBX, was the most common corporate phone system. PBX is more advanced than KSU systems, with more features, including programmable switching and automatic routing of incoming calls. With a PBX system, the company typically owns the on-site telephone infrastructure, connecting the internal PBX system to the outside world through a phone carrier. PBX systems can cost up to $1,000 per extension to install, although IP PBX or hosted PBX can cut costs by moving the telephone infrastructure off site and hosting it in the cloud.

3. VoIP

VoIP is attractive for business owners because it offers a full-featured phone system at a fraction of the cost of PBX. VoIP enables long-distance and even international calls over the internet using the computer infrastructure. The cost for VoIP services escalates when you add in more users and more specialized hardware. Because VoIP is IP-based, it also can be delivered as a system hosted by an online service provider, which substantially cuts costs. VoIP systems have an average cost of $175 to $200. VoIP is the perfect solution for businesses looking for communications flexibility and scalability.

The Benefits of VoIP

In addition to lower operating costs, VoIP also delivers more capabilities. Because VoIP phone lines are integrated into the computer network, they can deliver more computer-enabled functionality.

Crystal-Clear Signal

Because VoIP is digital, the quality of the voice transmission is clearer than that of analog phone systems—no more noise on the phone line.

Universal Compatibility

VoIP also is IP-based, which means it is compatible with any computer network. No matter what type of network you have, whether you have your own servers or use cloud computing platforms, VoIP will work over your infrastructure.


One of the most valuable VoIP features is portability. Because VoIP is IP-based, VoIP devices have a unique IP address so that you can take them anywhere, connect to the internet, and receive incoming calls. For remote workers and call center agents, this feature has real benefits, because they can work from anywhere with an internet connection.

In addition to VoIP phone portability, VoIP also supports “find me”/”follow me” call routing, which allows you to program in numbers where you can be found. For example, you can have the office phone ring twice and then route to your cell phone; then, on the fifth ring, route to your home phone; and ultimately to voicemail. It’s the perfect solution for companies looking to make the most of their “bring your own device” strategies, because “find me”/”follow me” can route calls to any smartphone.

Integrated Smart Directories

VoIP allows you to use a common employee directory, using the same contact information for both calls and email. This simplifies communications by letting you choose to contact someone. For example, using presence, the system may indicate that the party you are trying to reach is busy, so you can switch to email or SMS messaging rather than leaving a voicemail. Smart directories also help you keep track of office hours and caller locations.

Robust Voicemail

Voicemail is more powerful with VoIP as well. In addition to notification of a voicemail message, the VoIP system also can transcribe the message and deliver it as email using the address stored in the smart directory. This is a much cleaner alternative than listening to a message over and over to make sure you have the right callback number.

Call Screening

VoIP also offers more sophisticated call screening beyond simple caller ID. You can view an incoming call and choose how to handle it. For example, a call from your spouse can be routed to your cell phone, or robocalls can be disconnected. You also have total control over your VoIP system, including activating “do not disturb” and routing calls to voicemail.

System Greetings

VoIP systems also feature an automated attendant that gives users access to a menu of options, including instructions to access employee directories or departments. Most businesses are opting for an electronic receptionist, so this feature can make your SMB look more professional.


Because VoIP calls are data, you can use data analytics. As a business, you want to keep track of telephone activity to identify problems and monitor the company’s call history, rates, costs, and so on. VoIP usage data is easier to track and analyze.

Thinking Beyond VoIP

VoIP is a good foundation for any business phone system, but why stop there? Because support for mobile users is a key selling point for VoIP, why not enable your employees to directly connect their smartphones to the business phone system?

Many SMBs are leveraging inexpensive VoIP services to reduce or eliminate long-distance costs and are using services such as Spoke to keep their employees connected.

Spoke is a simple app that can connect as many employee smartphones as you wish into a single business telephone system. With Spoke, your workers’ smartphones become their telephone extensions. Incoming calls are routed to their smartphones with the same features you expect from the latest VoIP systems: auto attendant, call routing, smart directories, group calling, conference calling, voicemail, and even presence.

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