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Telephony took on a new beginning when the VoIP technology emerged nearly two decades ago. Since its first commercialization in 2004, hundreds of thousands of businesses have adopted VoIP worldwide. So, what is VoIP?


VoIP Definition

VoIP stands for Voice over Internet Protocol.  It refers to the transmission of voice communications over the Internet.

VoIP is also known as Internet Telephony, IP Telephony or Broadband Telephony.


How VoIP Compares to Regular Phone

The traditional public switched telephone service (PSTN) relies on circuit-committed protocols for voice communications. It uses analog signaling. Instead, VoIP uses a digital signal that is transmitted over a data network. The data packets travel on local networks and on Internet.

VoIP allows non-phone devices like tablets and computers to be used as phones in making voice calls.


About VoIP Communication

Network Requirements

VoIP requires a broadband Internet connection, such as DSL or cable, T1 or wireless. A VoIP call needs at least 100kbps of bandwidth upstream and downstream.



Codec stands for ‘coder-decoder’. A codec converts audio or video signals into compressed digital for transmission, and then back into an uncompressed signal for replay. VoIP devices digitize your voice using a codec.


Generations of  VoIP

First generation VoIP solutions were built after the traditional phone systems. They offer services that are fully compatible with PSTN concepts.

Second generation VoIP solutions provide communication services over a closed network. Users have to be registered to access the service and the traffic is free. Skype is a good example of such a product.

Third generation VoIP allows various combinations of third-party hardware and software. It’s also referred to as a ‘federated VoIP’ system because it relies on dynamic connectivity between internet domains. An example of such a product is Google Talk.


Hosted VoIP vs. On-Premises VoIP

At first, VoIP designs only took on-premises networks into account. This means you had to install IP PBX equipment locally.

As VoIP evolved and cloud technology took over local infrastructures, hosted VoIP was introduced.

There are differences in the capabilities of on-premises and hosted VoIP. Let’s have a look:


  On-Premises VoIP Hosted VoIP
Installation and Setup
  • Needs local PBX equipment
  • No need to purchase PBX equipment
  • A reliable internet connection does the trick
  Requires long hours and on-site presence for setup
  • Fast setup
  • On-site presence is not required
Multiple Offices More equipment needed to connect multiple offices Easy inter-office connectivity


Devices Only IP Phones Multiple options (handset, mobile app, web dialer)
Call Transfer Call forwarding to mobile or landlines only Multiple call forwarding options (any device)
Scalability Scaling can be complex and requires long man hours
  • Scalable as desired
  • Instantaneous configuration
Costs High upfront investment and maintenance fees
  • No initial investment
  • Low monthly fees
  • Provider-dependent
  • Can incur high costs for long distance calls
  • Unlimited continental calls
  • International calls at a fair rate


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Written by The Sherweb Team Collaborators @ Sherweb

As a value-added cloud solutions provider, Sherweb is dedicated to providing more for its partners, direct customers and extended network. The Sherweb Blog is just one example of how we make this happen, and our team members frequently collaborate on content to ensure it's as beneficial as possible for our readers. If you like what you see here, we strongly encourage you to subscribe!