What Is Voice Over Internet Protocol (VoIP) Technology?

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Alexandra Twin
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Alexandra Twin has 15+ years of experience as an editor and writer, covering financial news for public and private companies.
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Updated December 29, 2022
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Robert C. Kelly
Robert C. Kelly Robert C. Kelly
Reviewed by Robert C. Kelly
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Robert Kelly is managing director of XTS Energy LLC, and has more than three decades of experience as a business executive. He is a professor of economics and has raised more than $4.5 billion in investment capital.
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What Is Voice-Over-Internet Protocol (VoIP)?

Voice-over-Internet protocol (VoIP) is communications technology that allows users to interact by audio through an Internet connection, rather than through an analog connection. Voice-over-Internet Protocol converts the voice signal used in traditional phone technology into a digital signal that travels through the Internet instead of through analog telephone lines.

Key Takeaways

  • Voice-over-Internet protocol (VoIP) is a technology that lets users make calls using a broadband Internet connection instead of a standard phone line.
  • VoIP technology converts the voice signal used in traditional phone calls into a digital signal that travels via the Internet rather than analog phone lines.
  • Because calls are being made over the Internet, they are essentially free when made wherever the Internet is available.
  • The traditional telephone industry was hit hard by the VoIP boom, with many users abandoning it as some of its services have become nearly obsolete.
  • During the COVID-19 pandemic, VoIP became essential to modern workplaces as telecommuting replaced the office.

Understanding Voice-Over-Internet Protocol (VoIP)

Voice-over-Internet-Protocol (VoIP) technology allows users to make "telephone calls" through Internet connections instead of through analog telephone lines, which renders these calls effectively free wherever the Internet is available. VoIP changed the telecommunications industry by making traditional phone lines and services nearly obsolete and reducing demand for them significantly.

As access to the Internet has become more widely available, VoIP has become ubiquitous both for personal use and for business use. 

Intermedia, RingCentral, 8x8, Intermedia, Vonage, Dialpad, Microsoft Skype, Ooma, Mitel, Freshdesk Contact Center, and Line 2 led the list of PCMag's best Business VoIP providers for 2022.

How Voice-Over-Internet Protocol (VoIP) Works

VoIP works by converting voice audio into packets of data that then travel through the Internet like any other type of data such as text or pictures. These packets of sound data travel almost instantly through public and private Internet networks to route from the origination to the destination. Any landline or mobile phone that is connected to the Internet can place and receive VoIP calls. VoIP calls can also be conducted on computers through the computer microphone and speakers or headsets.

Because VoIP calls travel through the Internet instead of through analog telephone lines, they are subject to the same lags and delays as other data traveling the Internet when bandwidth is compromised or overwhelmed.

Advantages and Disadvantages of Voice-Over-Internet Protocol (VoIP)

VoIP technology reduces the cost of voice communication to almost nothing for personal and commercial use. Many Internet providers throw in VoIP telephone service for free as an incentive to buy broadband or higher-speed Internet connection and Internet cable television channels. Since it costs the Internet provider a little extra to provide this service and it costs the customer nothing extra for this service, it is a win-win for everyone involved in the transaction.

VoIP service has also enabled video calls, conference calls, and webinars for commercial and personal use at prices that are affordable or free. Previously, video conferencing and web conferencing were expensive and only available to companies large enough to justify the expense, but VoIP allows companies of all sizes, including solo practitioners and freelancers, to afford it.

The main con of VoIP services is that they can lag or clump. Because the sound goes in packets, it is slightly delayed. Under normal circumstances, untrained listeners won't be able to tell the difference between VoIP and analog calls. But when there is high bandwidth usage on the Internet, the packets may cluster or be delayed, which can cause a jerky, clumped sound on VoIP calls.

Some VoIP services can't work during power outages if the user or provider does not have backup power. Some 9-1-1 services do not have the ability to recognize locations of VoIP calls.

VoIP Services

The first VoIP service was launched in 1995 by a company called VocalTech. The company launched the first Internet-based phone, with the appropriate name InternetPhone. This did not come with any video capabilites, and required both users to be logged on to the same software in order to talk.

Early VoIP services suffered from a poor user experience, with frequent distortions and dropped calls. However, the service steadily improved, until the launch of Skype in 2003 made VoIP attractive and practical for average users. This allowed phone calls that were completely free of charge, in addition to video calls and calls to landlines, with much-improved sound quality.

The COVID-19 pandemic proved another boon for the VoIP industry, as millions of office workers and administrators now began working remotely. VoIP and related services such as Zoom became even more critical for office administration, as teleconferencing became the new norm for the average workplace.

What Is a Simple Definition of VoIP?

Voice over Internet Protocol (VoIP) is a technology that allows people to speak over an Internet connection, similar to an ordinary telephone call. VoIP allows audio conversations for a much lower cost than traditional telephone networks, especially over a long distance. However, VoIP calls may also be subject to bandwidth limitations.

What Is Mobile VoIP?

Mobile VoIP, or mVoIP, is a set of communications protocols that can extend VoIP communications to handheld devices. This is frequently used to facilitate audio conversations over WiFi or LTE networks at a lower cost than traditional telephones and without a wired connection.

What Does SIP Means on VoIP Phones?

SIP, or session initiation protocol, is closely related to VoIP and is used to manage multimedia communications channels such as phone calls and videoconferencing. SIP is often used interchangeably with VoIP, but they are not the same thing.

What Does Non-Fixed VoIP Mean?

Non-fixed VoIP refers to a Voice-over-Internet protocol (VoIP) phone number that is not attached to a physical address. While VoIP phone numbers can sometimes be fixed to a residence or company office, non-fixed VoIP numbers are not associated with any geographical location. This is convenient for call centers and remote workers, but can also be used by scammers pretending to be their victims' neighbors.

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  1. PCMag. "The Best Business VoIP Providers for 2022." Accessed Jan. 23, 2022.

  2. Be Businessed. "History of VoIP." Accessed Jan. 23, 2022.

  3. Spectrum. "Are SIP and VoIP the Same?" Accessed Jan. 23, 2022.

  4. Nextiva. "Fixed and Non-Fixed VoIP: Everything You Need to Know." Accessed Jan. 23, 2022.