VoIP – Voice over Internet Protocol – allows broadband users to access telephony services over their standard internet connection. Corporate uptake is increasing as the market matures and companies appreciate the lower costs and productivity benefits on offer.

This article was written by Graham Hill, who has worked in the telecommunications industry since 1976. He is the founder of Foxhall Solutions, which provides a range telephony services, including VoIP setups, to small and medium sized enterprises.

VoIP – Voice over Internet Protocol – allows broadband users to access telephony services over their standard internet connection. Corporate uptake is increasing as the market matures and companies appreciate the lower costs and productivity benefits on offer.

What is VoIP?

Voice over Internet Protocol (also called ‘Voice over IP’, or ‘VoIP’), is one of a family of communications protocols for delivery of voice and media communications over Internet Protocol (IP) based networks, such as a business Local Area Network (LAN), Wide Area Network (WAN), or the Internet.

In essence, voice is turned into data, just like what is stored on your computer hard drive, and transmitted on networks in the same way that data files are transferred between personal computers.

One standard called Session Initiation Protocol (SIP) seems to be emerging as being preferred for set-up and control of VoIP calls. The majority of VoIP telephones are SIP compliant and literally hundreds of types are available from many reputable manufacturers.

How does VoIP differ from traditional telephony?

Traditional telephony uses analogue and digital protocols (analogue signals are transmitted in their original form while digital signals are changed for the duration of transmission) for the transmission of voice through local wiring, and through the public switched telephone network. Typically ‘traditional’ telephone systems require their own separate network cabling within the business, run from proprietary equipment, and require analogue or ISDN (a digital line, whereas traditional phone lines are analogue) digital lines provided by and rented from the telephone company e.g. BT.

VoIP uses the same network structure that is used for connecting PCs, laptops, printers etc. together and to the Internet (i.e. 10/100 Base-T Ethernet). VoIP systems can be local i.e. the phones are connected to and part of the computer network, but the connection to the outside word is via ‘traditional’ analogue or ISDN lines – or they can be wide-area where the VoIP system also uses the Internet to carry calls to and from third parties. Rather than analogue or digital voice transmission, VoIP assembles the voice transmission into ‘packets’ of data that are then routed between the source and destination devices.

What are the main benefits of VoIP?

There are many benefits of VoIP:

  • Singular IT structure: a single IT structure (i.e. an Ethernet Local Area Network) can be used for the support of both voice and data transmission in a business, rather than having a computer network and a separate telephone network
  • Free calls: while not all calls made on a VoIP system are free of charge, all calls that take place between the extensions of your telephone system either on your Local Area Network, or to/from other parts of your network on the Internet, are free of charge.
  • ‘Processable’ data: VoIP can be ‘processed’ using applications just like data can. This means that many hardware additions to traditional telephone systems, e.g. voicemail and auto-attendant, are software based on VoIP systems and easily enabled or added to the product for minimal cost (if not already there as standard). Many VoIP systems include as standard features voicemail, voice recording, auto-attendants and integration with Microsoft Outlook.
  • Smoother telephony integration: Computer Telephony Integration (CTI) is much simpler because the voice and data transmission is similar. CTI allows software to act as phone directories so you can easily make outgoing calls (e.g. use a Microsoft Outlook contact entry to generate a call), and also enables screen-pops of that contact data on incoming calls.
  • Multiple lines: the internet can be used as virtual trunk lines known as SIP trunks (trunking is where access to many clients is provided by sharing a set of lines rather than providing them individually), to connect calls to other telephone users via carrier companies who set up media switches on the Internet. A single ADSL service can be used to carry multiple calls, and so the install and rental costs of telephone lines can be reduced dramatically. A company using eight to 10 lines could see a reduction in their line costs of as much as 60 to 70 percent.
  • Inexpensive trunk lines: virtual SIP trunk lines, which can bundle several channels capable of making calls into one, can be installed quickly and for minimal cost. A traditional analogue phone line will take from two to six weeks to install, with an installation cost of around £120, and cost roughly £14 per month. A typical SIP trunk line can be installed in 24 hours, with zero install cost, and rental of just £2 per month. A SIP trunk line will provide the same caller ID and Direct Dial Inwards (DDI) services as an expensive ISDN line, at no additional cost.
  • Cheap call tariffs: carrier companies bulk-buy connection bandwidth for local, international and mobile calls. Therefore call tariffs are typically very low when compared with main-line ‘traditional’ carriers.
  • Portable and scalable: telephone numbers are issued and associated with the VoIP lines used by these systems. Since these lines are ‘virtual’ and reside in Internet connections, they are 100 percent portable and still apply to the system if it is moved - even if that move is to a different town, county, or country. This means that if a business moves, there is no disconnection from its customers and no period where call diversions or customer education needs to take place.
  • Transfer existing numbers: existing telephone numbers may be ‘ported’ to the VoIP system, so there is no need to lose a number due to the move to a different technology.
  • Virtual local presence: a business may set up several numbers from different area codes, to show a ‘local’ presence in the areas which it operates.
  • Inexpensive upgrades: Traditional telephone systems (PBXs) are modular with extensions being supported by cards (typically able to connect eight or 16 extensions per card). VoIP PBX systems are usually software-based and run on server computers. Therefore, no hardware upgrades are required to add further extensions to a VoIP system. In most cases, addition of an extension just requires the phone, and potentially upgrade of a software license depending on the type of system.

What do you need to be aware of when installing a VoIP system?

Prioritise VoIP data

When voice and data are being transmitted on the same network, there needs to be a mechanism in place to ensure that the packets carrying voice are given priority over packets carrying data (Internet, e-mail, files). Data packets may be delayed or even arrive in a different order than they were sent without problems, but voice packets must arrive in the same order they were sent, and cannot be delayed without affecting call quality.

There are different ways to ensure call quality, but the two main methods are to either tag the voice transmission with a piece of code that gives it a priority weighting, or to identify the network addresses that will transmit and receive the voice traffic.

A single router can be used on a very small VoIP system [to carry both voice and data to and from the Internet], but the router must have some way to prioritise the voice traffic, either by its type or its source. In medium to large systems (e.g. six to eight extensions or more), it is best to use a completely separate broadband service for VoIP and terminate it onto your local network using a second router. If voice is sent through one router, and data through the other, then problems associated with voice and data clashes on the internet connection will be removed.

In the same way, a local network ethernet switch (a box that can connect multiple computers to the internet) can cause the same problem, unless that switch too has a Quality of Service (QoS) mechanism. Smart-switches can be used to prioritise the voice transmissions, either using the voice packet priority tag, or by prioritising transmissions from certain data ports over others. Some advanced switches also provide electricity (known as Power over Ethernet) so that the VoIP phones can be powered through the data cable rather than needing a separate power supply.

QoS is an extremely important consideration when designing a VoIP system, and will make the difference between a system that works, and one that doesn’t.


VoIP systems using internet are vulnerable to failure of the broadband service itself. This is becoming less common as carriers & ISPs improve infrastructure, and service monitoring by the ISPs ensures that failures are detected and rectified quickly. While fault reporting on ‘traditional’ telecommunications systems is still largely down to the subscriber to report the fault - VoIP systems have the benefit that proactive monitoring gets faults attended and cleared much faster, with less input from subscribers.
Note that broadband services for a company must be delivered on an analogue line and therefore there is always a perfectly good alternative call route. It is straight forward to configure alternate fall-back routines that automatically use the analogue line number to route calls to and from the VoIP subscriber during the broadband service outage.

What is the current state of the VoIP market, and how are things evolving?

The VoIP market is still perceived as new, but has in fact been well established for many years. 2008 is seen as the year that VoIP really kicked off by providing hosted services across Internet, to both residential and business markets. There are two main directions in which VoIP has been deployed …

Hosted VoIP

Hosted VoIP uses the internet to connect a SIP compliant VoIP phone back to a central media server (on the internet) that provides PBX functionality. The media server then onward-connects via high-capacity lines to local, international and mobile telephone services. The media server platform provides a set of features and facilities to hundreds, if not thousands, of hosted extensions, but will group those extensions for billing and for (free) internal calls, diversions and transfers. Each extension is billed on a rental basis and charged for its calls.


IP-PBXs are VoIP servers that reside at the user’s premises supporting extensions on the company’s Local Area Network (LAN), and connecting to carriers via software or hardware gateways connecting analogue, ISDN, mobile or Internet based services. IP-PBXs can connect to the same media servers as Hosted VoIP extensions, but via SIP trunks – virtual lines through the Internet. When connecting in this way, the media server is providing only call set-up and clear-down services – and connection charges are lower!

Both models have their advantages with Hosted VoIP having lower set-up costs, but higher on-going costs than IP-PBXs. In many cases however, an IP-PBX can provide bespoke facilities that the shared-platform nature of Hosted VoIP makes difficult.

Move towards integration

VoIP is evolving in many directions, but primarily the main path could be labelled ‘integration.’ There is a lot of work that has gone into making e-mail a part of a company’s Customer Relationship Management (CRM) strategy, and now similar things are happening to telephony. While it is agreed that it is invaluable to be able to talk to your customers and suppliers, traditional telephone systems have made it difficult to integrate phone calls with the CRM process. Integration is making voice-mail part of e-mail and as such, part of the CRM process & strategy.

In addition, there is a removal of boundaries, allowing a telephone system to exist outside of the walls of a business. Branch offices, home workers and even partners and suppliers at other companies can become part of a telephone network that provides free calls between its users. A company’s phone system can become as big as the internet.

Finally, integration makes a single contact number able to be used to contact a person no matter where they are. Incoming calls can simultaneously ring mobile numbers, and automatic call redirection can occur based on the time of day. Users can manage their extensions using a web browser, and change their call routing e.g. I’m working at a customer’s offices today, so re-route calls from my extension to my mobile number. VoIP applications are also being created for smart-phones, making it possible to make and take calls to and from your company IP-PBX via wireless network & internet.