how voip works for business

It’s crucial to understand how VoIP works if you are to grasp fully the extent to which it can actually transform your business.

A key aspect of any business is communication, and communication costs money.

For many small businesses running on tight budgets, the possibilities of such low-cost communications as electronic mail, social media, and e-commerce, must create a significant temptation to go phoneless as well as paperless.

Some tech commentators insist that this is the way to go. Computerworld writer Mike Elgan, for instance, argues that “the ability to talk to someone using a phone is just another app”.

But the traditional phone system has hung in there, especially for business, probably due to the uniqueness of phone numbers, which even many mobile apps, email providers and websites use to verify the identity of their users.

Certainly as a means of communication, a direct way of getting business done, the telephone handset is not going to disappear overnight, regardless of advances in technology.

So the two key factors for a business to consider are cost and efficiency, and that is where Voice over Internet Protocol (VoIP), and how VoIP works, has the most potential for businesses, in particular, small firms. But what is VoIP? Let’s take a look.

How VoIP works

Circuit Switching, on which traditional phone communication is built has been in use for more than a century. It is a connection between phone users, in both directions. Originally, this connection was made physically via copper wire links between your phone and that of the person or the business you were calling. That is why long-distance calls used to cost so much. A leap forward occurred when Fibre Optic Cabling enabled digitally-converted analog signals of numerous calls, not just one, to be transmitted via a single fibre optic cable.

However, fibre optics did not distinguish between talking and silence—the silence from one side of the conversation that occurs when the person on the other side of the communication is talking. This inefficient waste of circuit space was tackled initially with the advent of Packet-Switching, the live transmission of only the essential parts of the telephone conversation: the chat, not the silence.

This system worked in the same manner as websites use the Internet. When you view a website, your computer or mobile device will not be constantly connected to the site. Connections are only made to send or receive information when required. This enables swifter, more efficient transmission of information over the Internet.

This essentially at the heart of the question, What is VoIP, and the underlying principle of how VoIP works. The circuit switching of traditional phone systems involve the maintenance of a constant, open connection between phones, packet-switching makes connections for just long enough to transmit packets of data from one device to another.

But VoIP does not work by packet-switching. A Voice IP phone service works via the Internet Protocol used by computers to communicate over the Internet. The Internet’s protocol TCP (Transmission Control Protocol)/IP is much superior to packet-switching. As the name implies, TCP and IP work together, with TCP establishing a session between computers on a network, and assembling the packets of data in the correct order. Essentially, this means that the Internet is the exchange for a Voice IP phone service, in the blink of an eye breaking down a caller’s voice data and reassembling it again at the recipient’s end, and vice versa.

VoIP & The Internet

TCP/IP was introduced in the Internet’s formative early 1980s, and it was Tim Berners-Lee’s work with TCP/IP a decade later that gave rise to the Internet as we know it, the World Wide Web.

While VoIP has been with us for some time, a big turn-off for business, initially, was voice quality and connectivity. It’s only with the relatively recent explosion of business and domestic access to high-speed internet that the question of What is VoIP has been taken seriously by the business world.

The efficiencies of speed have enabled not only superior voice quality in person to person phone calls, but also the much more efficient use of communication data space.

VoIP and Business

For businesses, VoIP has ushered in a whole range of possibilities, for a fraction of the costs of maintaining a traditional business phone system. For one thing, logistically, having a managed Voice IP phone service requires no specific hardware in business premises; simply a high-speed broadband connection.

The available data space freed by the massive efficiencies in voice transmission also opens an enormous vista of possibilities and solutions that have been created to meet that potential.

Businesses and all users are suddenly granted the ability to transmit voice and huge volumes of data, such as video and imagery in addition to text, via the Internet. And if you have a hosted service provider, which can add or subtract lines from your service at the push of a button, then you’re in a dream position, whether you are upsizing or downsizing.

Conclusion – An Ideal Compromise

VoIP usage is forecast to reach one-billion people worldwide by the end of this year, and for businesses who are increasingly called upon to engage with their markets on a multiplicity of levels, this is a dream proposition.

The client benefits from all of the underlying certainties that underpin our use of traditional phone communications, and none of the constraints. This overview of how VoIP works demonstrate that it is a win-win for businesses, who gain all of the multi-media possibilities of the ongoing digital communications revolution.