30-Second Summary:

  • VoIP is a technology that emerged from more traditional and conventional telephone service.

  • Network convergence has allowed voice services to be delivered over IP-based data communications networks.

  • A VoIP phone system delivers telephone service to end users allowing them to enjoy the advantages that IP networks have over traditional telephony technology.

  • VoIP phone systems can be deployed in a flexible and scalable way, delivering mobile services that can be integrated with other innovative business applications.



The telephone is a device that we are all familiar with.  It’s hardly surprising, since it has been around for more than 120 years!  Over the past two decades, however, telephone service has been undergoing what is arguably its most significant technological revolution since its inception. 

Voice over Internet Protocol, stylized as VoIP, is a family of technologies that deliver voice communications, a.k.a. “telephony”, over an IP network.  A VoIP phone system is a set of devices and services that deliver this VoIP-enabled telephony to end users.

Phone switch system and digital telephones isolated on white

In this article, we’ll delve deeper and attempt to describe more thoroughly what a VoIP phone system is, and the advantages that it can potentially deliver to its end users.

A look at traditional telephony

When we think of the telephone in its simplest form, we usually picture a single telephone device plugged into the telephone jack on the wall.  As soon as you pickup up the phone, you hear a dial tone indicating that it’s ready to receive the number you wish to dial.

But what’s happening in the background?  There are several possible scenarios:

Traditional Telephony Topologies

The phone is connected to a subscriber line that links to the central office of the telephone company that corresponds to a single number composed of eight to twelve digits in length, depending on where in the world you live.  Anyone calling that number will make that phone ring.  The following diagram depicts this scenario.

process of customer premises

Alternatively, the phone may be connected to a Private Branch Exchange (PBX).  This is a typical scenario of a business that can have dozens or even hundreds of employees, each with a phone.  The PBX is physically located on the enterprise’s premises, and allows internal communication between local telephone devices, usually using a three- or four-digit code.  The PBX in turn is connected to the Public Switched Telephone Network (PSTN) so external calls can be made, by typically dialing a prefix number to get “an outside line”.  The following figure illustrates this scenario.

process of enterprise premises

In both of the above scenarios, physical connections terminating on the phones are typically two-wire analog connections, which require a single pair of wires to connect each and every telephone.  The connections from the PBX to the central office are most often ISDN circuits. ISDN is a digital technology that delivers either 2, 23, or 30 voice channels per circuit, depending on various factors including the type of ISDN circuit as well as the region in the world you live in.

Why is understanding traditional telephony important?

We are all familiar with the use of a phone.  Knowing what goes on in the background when we make a phone call however is an important part of understanding phone systems in general.  Understanding the logic behind the operation of traditional telephony is also important because of one more significant fact:

VoIP telephone systems have been designed to mimic traditional telephony as far as the end user experience is concerned.

Let’s face it, we don’t want people to retrain on how to use the telephone!  For this reason, the interface (a.k.a. the telephone device), the audio tones, and the whole feel of a VoIP telephone system is based on that of a traditional telephone system.  But that is not to say that VoIP is limited by the same restrictions that traditional telephony conforms to.  VoIP has taken the telephone and has skyrocketed it to a whole new set of levels, as we will see shortly.

What is VoIP?

Traditional telephony evolved from a circuit-switched network technology.  Data networks on the other hand, developed as packet-switched networks.  Thus, these two communications networks were incompatible with each other from the start.  Consequently, two disparate independent networks needed to be deployed to support both voice and data services.  The advent of VoIP changed all of that.

Network convergence

Maintaining two networks for these two communication services was expensive and inefficient.  With VoIP, voice services started being developed that could run on the same network infrastructure as data.  As these developed, network convergence, the act of running both voice and data over the same IP-based communication infrastructure, was born.

Conditioning the Network

Data networks were not designed to carry voice, so additional tweaks needed to be implemented to these IP networks to ensure the proper operation of voice communications, and to keep the user experience as similar as possible to traditional telephony.  Specifically, Quality of Service (QoS) mechanisms must be deployed to give VoIP packets priority over other IP packets especially during network congestion. 

In addition, features such as Power over Ethernet (PoE) deliver power to IP phones so that you don’t need to provide an external power supply for your telephone.  Remember, users are not used to plugging in their phones to a mains power socket as well as a telephone jack, so delivering power over the same cable as your voice communication is important.

VoIP communications

A communication between two VoIP telephones involves two flows of information:

  • Voice packets – These packets contain the actual digitized recorded voice of the speaker, broken up into tiny segments, and sent over the network using the IP protocol
  • Call signaling and control – This exchange of information between VoIP endpoints includes things like Dual Tone Multiple Frequency (DTMF) tones, a.k.a. touch tones, ringback tone, signaling for ringing a phone, as well as the implementation of telephony features such as call waiting, call hold, call transfer and a whole slew of other telephone features.

Voice packets are “packetized” using what are known as voice codecs, which are algorithms that capture voice, digitize it and encode it into packets.  Call signaling on the other hand is handled by protocols such as Session Initiation Protocol (SIP), an open vendor-neutral protocol that allows the interoperation of VoIP devices from multiple vendors.

What is a VoIP telephone system

Until now, we’ve spoken about traditional telephony and how VoIP technology emerged with the advent of network convergence.  We’ve also explained a little bit about what VoIP is and how it works.  All of this information until now was a necessary background in order to fit all the pieces together and comprehend what a VoIP telephony system is.

Briefly stated, a VoIP telephony system is a voice communication system that delivers telephony services to end users over an IP-based data network.  Such a system can come in many forms and can deliver telephony in many innovative ways that far surpass what was possible with traditional telephony.

Components of a VoIP Telephony System

In order to A VoIP telephone system is composed of the following fundamental components:

  • VoIP endpoints – The device with which an end user talks on the phone.
  • IP PBX – The server to which a VoIP endpoint registers (over an IP network) in order to function as a telephone.
  • Internet Telephony Service Provider (ITSP) – The service provider that delivers connectivity to the PSTN.

Of course, there are many more components of a VoIP system than these that perform a multitude of functions.  For a more detailed look at the components of such a system, and what each one does in detail, take a look at the What Equipment is Needed to Make VoIP Successful? article.  For our purposes here, however, suffice it to say that these are the necessary components to ensure that you can communicate with other VoIP endpoints as well as with the PSTN at large.

The following diagram depicts these typical components, as well as their interconnection.

IP network connection

Notice that, unlike traditional telephony, all components are connected to the IP Network.  As long as there is IP interconnectivity between components, the phone system will work.  That IP network can be a Wi-Fi network, an enterprise LAN, the Internet, or any combination of any of these.  This truly gives unprecedented flexibility when it comes to deployment options.

Deployment Options

There are a variety of options available for the way in which each VoIP component mentioned above is deployed. 

VoIP Endpoints                                    

For example, the VoIP endpoint can take the form of any of the following:

  • A physical IP desk phone
  • A piece of software called a softphone installed on a laptop or desktop
  • A mobile app installed on a smartphone or tablet

Any of the above can be an endpoint that corresponds to a specific phone number.  As long as those endpoints have IP network connectivity, they can be anywhere in the world, and they will function as if they were physically located within the same building.


The IP PBX can take the form of any of the following:

  • A specialized physical appliance connected to the local enterprise IP network or hosted on the enterprise datacenter.
  • A software-based server that is running specialized IP PBX software. This server can be a physical server, a virtual machine on the local enterprise infrastructure, or it can be hosted on an off-site cloud service such as Asure or AWS.
  • A Software as a Service (SaaS) service that is hosted by a provider, such as Nextiva, for example, where all server maintenance, software upgrades, and technical day-to-day backend tasks are handled in the background by the provider. This third option essentially bundles the services delivered by the ITSP and the IP PBX together into a single offering.


This is a provider that specializes in VoIP services for VoIP phone systems.  Connectivity to the PSTN is typically delivered using what is known as a SIP trunk – a virtual circuit that runs over the local Internet connection, that delivers voice channels to the IP PBX as well as telephone numbers to the VoIP endpoints served by that SIP trunk.  RingCentral is an example of an ITSP that delivers such services.  This service is typically provided for on-premises or cloud-based IP PBXs.


We can think of a VoIP phone system as simply one more network service being delivered on an IP network.  As such, it can be approached in much the same way as other network services, enabling their deep integration resulting in innovative and productive interoperation.  This includes the integration of a VoIP phone systems with other network and business applications including CRMs, helpdesk applications and advanced call routing functions.


So, what is a VoIP Phone System?  Well, based on what we discussed, it can be many things.  But ultimately, it is a flexible telephone system that allows you offer services to a geographically distributed and mobile workforce by taking advantage of the ubiquity of IP networks.