The VoIP market in the US, growing at a compound annual growth rate (CAGR) of 12.1%, will reach $151.21 billion in 2024. This upward trend will continue until 2028, when the market value is expected to hit $236.25 billion.
This growth is due to the fact that Voice over Internet Protocol, or VoIP, offers cost savings, flexibility, and advanced features that traditional phone systems simply can't match.
In this blog post, we will discuss what VoIP is and how it works to help you decide if it’s right for your business.
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What is VoIP?
Voice over Internet Protocol (VoIP) is a technology that allows you to make phone calls over the internet instead of using a traditional analog phone line. It converts your voice into a digital signal that can be transmitted over the internet.
How does VoIP work?
VoIP turns your voice into digital data, compresses it, and sends it over the internet. Your VoIP provider manages the call setup much like your internet provider connects you to the web.
Here's how it works:
- Your phone connects to your home internet network through a switch or router.
- When you dial a number, your IP phone signals your VoIP service provider to connect the call.
- The provider sets up the call and exchanges data packets with your phone.
- Your phone then converts that data into the sound you hear.
During a VoIP call, your conversation is broken down into tiny data packets that travel across the internet instantly. Your phone and the VoIP provider constantly exchange these packets to keep the conversation flowing.
VoIP services help you completely bypass traditional analog systems. You'll have no technical problems as long as you have a decent internet connection.
VoIP vs. traditional phone systems
The biggest difference between landlines and VoIP is how they connect calls. Landlines use physical copper wires, so they’re limited to specific geographic locations. In contrast, VoIP works on an internet connection and works globally wherever the internet is accessible.
Cost is another factor. Landline systems are expensive to set up and maintain. Analog systems require laying down miles of copper wire and switching equipment.
VoIP is much more cost-effective in comparison. Because VoIP is managed through the cloud, it eliminates the need for on-site installation or maintenance. Adding or changing users is as simple as updating the software: no technician required.
Here are some more key differences between VoIP and landline systems:
Types of VoIP services
VoIP comes in a variety of forms. Here's a quick look at some of the most popular business VoIP phone services available today.
1. Device-based VoIP services
This option involves users purchasing a VoIP device from the provider and plugging it into their landline. They can then make and receive calls within a specified country for free. This set-up eliminates monthly bills and allows users to enjoy a VoIP phone number with their existing phone set.
2. Software-based VoIP services
This popular VoIP service is accessed online via a user's browser or installed as software on their desktop. Their PC's audio input and output devices serve as their phone.
Zoom and Skype are great examples. They offer features like video conferencing, instant messaging, and screen sharing, all while using your computer as the communication device.
3. Mobile VoIP services
Mobile VoIP is essentially software-based VoIP adapted for a user's smartphone or tablet. Users can make and receive calls from anywhere after installing the app and ensuring a stable internet connection.
4. Business VoIP services
Business VoIP services offer two deployment options: on-premise and cloud-based. Both of these are cost-effective compared to traditional phone lines.
Both options come with features like call forwarding, call transfer, call recording, and much more. These services are designed to grow with your business. Leading providers should offer good technical support.
On-premise VoIP involves purchasing and maintaining all the necessary hardware within the office space. This is a significant upfront investment, especially compared to cloud-based VoIP, which is hosted by the provider.
5. Analytics-based VoIP services
The latest VoIP advancements analyze agent and customer speech to provide valuable insights. With top-tier speech analytics software, businesses can understand user mindsets and perceptions while evaluating agent resolution effectiveness.
What equipment do you need to set up VoIP?
Generally, a VoIP-compatible computer or laptop, a softphone, and a headset is sufficient for home use.
Businesses, however, might need additional hardware, such as:
- A VoIP adapter or digital voice adapter (ATA): This small device converts analog signals to digital ones. This allows you to use your existing analog phone for VoIP calls.
- A VoIP phone: This phone connects directly to your router with an Ethernet cable.
- A headset: Especially important for office use, headsets with microphones ensure clear communication.
- A router and modem: Essential for connecting to the internet.
- A firewall: To protect your system, a VoIP-specific firewall can identify and report VoIP threats.
- A session border controller (SBC): A session border controller handles the signaling and media streams associated with setting up, conducting, and ending calls.
Advantages of VoIP
VoIP's widespread adoption across businesses of all sizes is driven by several key advantages as outlined below.
Affordability
Businesses switching to VoIP typically save between 30% and 50% of their telecommunications costs. VoIP cuts out expensive line rental fees and charges less per minute you talk, especially for long-distance calls.
Plus, many providers let you keep your existing numbers, so you don't have to spend money on new local or toll-free numbers. They also offer the option to combine calls, faxes, chat, and video conferencing into a single VoIP/UCaaS plan. This can be more affordable (and effective) than relying solely on phone-based communication.
No need for new equipment
Aside from savings on software, VoIP solutions rarely require businesses to buy new equipment. You can often use the service with your existing internet-connected devices. If you prefer traditional desk phones, you choose tor rent them as needed.
Easy setup and use
Businesses prefer VoIP services because setting up a new account is usually simple and fast. Enter all the necessary account and billing information yourself or work with a sales representative who can handle the setup process.
Either way, the VoIP setup is typically completed the same day, if not within minutes.
Wider reach for your brand
With the right VoIP service plan, your brand's reach extends far beyond local boundaries. VoIP allows you to capitalize on the potential to reach customers globally without connectivity issues or expensive long-distance phone bills. Not only can you target new markets, you can also contact suppliers around the world who may be able to streamline your operations and help you reduce overhead costs.
High-quality audio
VoIP systems provide clear voice quality with the help of audio codecs. These codecs compress the audio to transfer it over the networks easily. Due to its small size, the transmission takes place instantly and reduces the chances of any interruption that can affect clarity.
Some modern codecs, like Opus, also use advanced audio processing techniques that can further improve clarity. These techniques include noise reduction, echo cancellation, and audio enhancement algorithms that help to make voice quality much better.
Disadvantages of VoIP
While VoIP offers numerous benefits, it's important to be aware of its potential drawbacks.
Stable internet speed
Smooth VoIP calls rely on a stable internet connection. Slow speeds, frequent outages, or high latency (signal delay) can frustrate call quality. Aim for at least 100 kbps upload speed per device. Thankfully, VoIP is bandwidth-efficient, so a reliable internet plan is usually enough.
Latency and jitter
Besides internet speed, latency and jitter can also impact your calling experience. High latency causes noticeable lag, while high jitter makes the connection feel jumpy and unreliable.
Online communication involves data packets traveling smoothly to their destination. However, latency and jitter occur when these packets face delays or get lost during transmission, leading to slower information arrival and potential retransmission.
Several factors, including network congestion, outdated equipment, and worn cables, contribute to these issues.
Emergency calls have less accurate location tracking
Unlike traditional phone lines, VoIP doesn't automatically give precise location data during emergencies. Cell phones use cell tower data for accurate tracking, but VoIP relies on IP addresses, which can be less specific.
This detail is important in case of an emergency. Make sure your emergency information is always updated with your current address. This way, even when using VoIP, emergency services can find you quickly when needed.
Key features of VoIP
So, when choosing the right VoIP service for your business, what should you look for?
Here are some essential features to keep in mind.
Auto attendant
An auto attendant greets your callers with a menu of options.
For example:
- Press 1 for Sales.
- Press 2 for Support.
While basic auto attendants are helpful, VoIP providers like Plivo take this a step further with their advanced IVR (Interactive Voice Response) system. With Plivo’s IVR, you can:
- Create multi-level menus with audio or text prompts.
- Use automatic speech recognition to understand caller requests.
- Route calls intelligently based on caller input or other criteria.
Mobile and desktop apps
With phone and computer apps, you can use your VoIP phone service even without a special phone. Perfect for people on the move or working remotely, these apps ensure everyone's reachable.
Since some prefer headsets or mobiles anyway, check who needs a desk phone before switching to VoIP. You might save some money.
HD call quality
Thanks to high-quality codecs, every VoIP call over a stable internet connection has HD audio. You'll enjoy clear, easy-to-understand conversations with colleagues and customers.
Unified communications
Unified Communications as a Service (UCaaS) combines different communication methods, like instant messaging, calls, and video conferencing. Plus, with extras like call recording, reporting, and voicemail, UCaaS takes VoIP to the next level.
Switching to VoIP sets you up for better teamwork. VoIP is a great way to start if you're thinking about using video calls more, or like the idea of instant messaging.
Call encryption and VoIP security
The internet can have security risks, so any call made online needs to be safe. With VoIP, everything's scrambled and protected, both during the call and when it's stored. No one can listen in: they only see basic info like when the call happened and how long it lasted.
For example, imagine you have a conference call with your sales team. The call log will show the date and duration of the call, but the actual discussion will remain private.
Call recording
VoIP lets you record calls to track quality or comply with regulations. It offers simple call recording, where calls are saved online and ready to download later.
You can also choose advanced call recording with features like sentiment analysis to spot unhappy customers or find opportunities to sell more.
How much does VoIP cost? [2024 pricing guide]
VoIP is surprisingly budget-friendly, considering all it can do. Expect to pay around $20-$50 per person per month for VoIP. That's a considerable saving compared to traditional phone systems.
To give you a better idea, here's a quick cost breakdown for VoIP:
- Upfront costs: Anywhere from $0 to $50 per line.
- Monthly fees: Between $19 and $45 per line.
- Phone costs: $80 to $600 for each special VoIP phone.
- International calls: Start at $0.01 per minute.
- Taxes and fees: These depend on where you are.
Traditional phone systems have hidden costs you might not think about:
- Installation fees: $50 to $100 per phone line.
- Deposit: Can be $100 to $500.
- Maintenance contract: Often $1000 or more every year.
- International calls: Start at $1.00 per minute.
- Credit check: They might check your credit.
Choosing a VoIP provider
While most VoIP providers cover the basics, it's smart to pick one that aligns with your business needs.
When picking a VoIP provider, make sure that they offer:
- Expert setup assistance: Full support to set up advanced features (like auto attendants and call queues), get your phones working, train your team, and advise you on any extra hardware or software you might need.
- Network compatibility: Seamless integration with your current network setup or the ability to adjust to fit your needs.
- Industry experience: A track record of helping similar companies to yours, with success stories to back it up.
- Top-notch customer service: 24/7 or at least quick customer support, especially for switching your phone number, on-site setup, and ongoing help.
- Reliability and security: A proven track record of being reliable with minimal downtime.
When choosing a provider, scalability is also an important factor. Your VoIP solution should easily handle increasing call volumes and expanding communication needs as your business grows.
CallHub, a leading voice and text messaging platform for political and advocacy groups, is a perfect example of this. During the last US midterm elections, CallHub facilitated over 9 million calls. This highlighted the need for a strong and adaptable VoIP infrastructure.
Plivo handled CallHub's massive call volumes, ensuring seamless communication even during peak periods.
As CallHub's CTO, Chetan Giridhar, notes, "Even with the growth in volume and load, Plivo has really been able to scale with our customer needs. One day a campaign actually reached a rate of 600 calls per minute or 36,000 per hour, and it was only possible with Plivo’s scalability.
Upgrade your business communication with Plivo
VoIP has evolved far beyond just voice calls over the internet. Today, it helps businesses use voice, video, and multimedia content to streamline their communication.
Plivo’s Voice API platform seamlessly integrates voice calling into your applications. This enables features like conference calls, voice alerts, surveys, and more.
Plus, you can connect and control calls to any device, build VoIP calling into your mobile and browser apps, and use powerful call management features.
Plivo also ensures exceptional call quality with its advanced call insights. This feature helps you to:
- Proactively monitor call quality
- Quickly identify and troubleshoot issues
- Gain detailed call statistics
- Gather user feedback
Plivo is your trusted partner for secure, reliable, and scalable communication solutions. We're SOC 2 certified and meet top privacy and security standards like GDPR and HIPAA.
Ready to take control of your call quality? Try Plivo's voice API trial today and see how you can improve your communication strategy.
