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How Does VoIP Work?

We access VoIP systems every day. Most of us, however, have no idea how VoIP actually works. Today, we’re going to explain the intricacies of VoIP – including how VoIP works and where VoIP might be going in the future.

What is VoIP?

Voice over Internet Protocol (VoIP) is a set of technologies that allows you to send voice data over the internet.

From a technical standpoint, VoIP takes the analog audio signals (like the ones transmitted over traditional phone networks) and turns those signals into digital data that can be transmitted over the internet (using the existing internet protocol system).

Using VoIP, we can make free phone calls over the internet. We can call friends and family from anywhere in the world without paying costly fees to telecommunications companies.

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Types of VoIP

There are three broad types of VoIP systems in the world today, including:

Analog Telephone Adapters (ATA)

ATA VoIP allows you to connect standard phones to your computer or internet connection and then use those phones for VoIP communications.

Basically, the job of the analog telephone adapter is to transform the analog signal outputted by your telephone into a digital signal that can be transmitted over the internet.

Today, many VoIP providers will give you ATA hardware as part of your monthly subscription. You take the ATA out of the box, plug the cable from your phone that would normally go in the wall socket into the ATA, and connect your ATA to the internet. Just like that, you’re ready to make VoIP calls.

IP Phones

IP phones look like a normal phone (they have a handset, cradle, and standard dialing buttons). However, where the normal RJ-11 phone connector would be, an IP phone has an RJ-45 Ethernet connector. These phones connect directly into your router. Hardcoded into the phone is all the software needed to handle an IP call and transfer that call to and from digital/analog data.

Computer to Computer or Device to Device

In the early days of VoIP, calls were placed from computer to computer. Today, however, there are a wide range of devices we can use to place calls, including smartphones and tablets. Thus, this third and final category is more accurately described as “device to device” VoIP.

With device to device VoIP, you can make a call anywhere in the world. Typically, device to device VoIP involves both you and the recipient having the same software platform – like the Skype app – on both your devices.

Traditional Phones Use Circuit Switching

In order to understand how VoIP works, you should first learn how traditional telephone networks work.

Traditional telephone networks use a platform called the Public Switched Telephone Network, or PSTN. The PSTN is the same system that has been in place for over 100 years. One of the key features of the PSTN is that it uses a somewhat inefficient method for connecting calls called circuit switching.

Circuit switching is a basic concept: when a call is made between two parties, the connection between the two parties needs to be maintained for the duration of that call in both directions. This is why the “circuit switching” connection is called a “circuit”: you’re connecting two points in both directions to form a complete circuit.

In the early days of telephone communications, this circuit required a physical connection between two end points. If you wanted to make a call from New York to Chicago, for example, then you needed to have a copper wire stretching that entire distance. That copper wire would need to be continuously activated for the duration of the call.

Over time, telephone networks became digitized, allowing for more efficient data communications. Multiple calls could be transmitted over a single fiber-optic cable.

Ultimately, circuit switched phone networks gave way to packet-switched phone networks, which are the networks we use for VoIP today.

VoIP and Packet Switching

VoIP relies on something called packet switching to transfer voice data over the internet.

Packet switching is a superior alternative to circuit switching. With packet switching, the other party is always listening while you’re talking, which means that only half the connection is in use at any given time. This cuts down the connection data usage in half and makes the conversation more efficient.

Packet switching also saves data based on the idea that a lot of our conversation is dead air: like when neither party is talking.

By bundling up only the audio data into packets and sending it over the network, packet switching can make big leaps and strides in efficiency. Instead of sending a continuous stream of audio data in the form of bytes, packet switching just sends packets of noisy bytes.

Here’s what this looks like in step by step form:

-The computer sending the data will chop the data into small packets. Each packet has the destination address instructing the data where to go.

-Each packet also contains a payload, which is the key part of the data – like the information inside an email, music file, or voice call.

-The sending computer sends that packet to a router, and that router directs the packet across the internet. Different data packets will take different routes across the internet, but they’ll all end up at the same destination.

-The receiving computer will eventually get all of the packets. Since the packets are received out of order, the receiving computer will need to sort out of these packets using Transmission Control Protocol, or TCP. This puts the packets in a coherent order, so things like your voice can be understand over the internet.

The main advantage of packet switching technology is that it lets the network pick the least congested, cheapest, and most efficient path for the packet to take. It also frees up the two communication devices – like the computers – to accept information from other sources, which means your VoIP communication doesn’t monopolize the connection.

How Does VoIP Use Packet Switching to Send Telephone Data Over the Internet?

Now that you know how traditional telephones work, and how packet switching works, it’s time to learn how VoIP providers use packet switching technology to send telephone data over the internet.

For this example, we’re assuming that both you and your recipient have service through a VoIP provider. That doesn’t necessarily mean you have the same provider. Both you and your friend have your analog phones hooked up to the ATAs given to you by your VoIP service provider. Here’s how that process works:

  • You pick up your receiver, which sends a signal to the ATA
  • The ATA receives your signal and sends a dial tone to your receiver. When you hear the dial tone, it means the ATA has successfully connected you to the internet.
  • You dial the phone number of your recipient. The ATA converts your analog tones into digital data, temporarily storing this data in preparation for the phone call.
  • The ATA sends the phone number data to your VoIP provider’s call processor in the form of a request. This call processor verifies the phone number to make sure it’s in a valid format.
  • The call processor checks where to map the phone number. “Mapping” refers to the process of translating the phone number into an IP address. Then, a software platform called the soft switch reaches out to the recipient’s device, connecting the two devices together.
  • A signal is sent to your friend’s ATA. That signal tells the phone connected to that ATA to ring.
  • As soon as your friend picks up the phone, the session between your phone and your friend’s phone begins. At this point, each system begins sending and receiving packets of data from the other. Two channels are established, with one channel going in each direction.
  • Packets are sent back and forth throughout the conversation. Throughout the conversation, the ATAs convert analog data to digital and back again.
  • At the end of the conversation, you hang up your receiver. That terminates the connection and closes the circuit between your phone and the ATA. The ATA sends a signal to the VOIP provider’s soft switch telling the soft switch the call is over.

Advantages of Using VoIP

We’ve hinted at all of these advantages above, but here are some of the valuable differences between VoIP and traditional phone service:

  • Uses significantly less data (and it uses that data more efficiently) than traditional phone systems
  • Easier to install, configure, and maintain than traditional phone systems
  • Easy to scale up and down according to the needs of your home or business (like by adding new phone lines or features)
  • VoIP supports additional features like virtual faxing, virtual PBX systems, and other systems that would normally require significant hardware
  • Integrates with other business systems – you can connect to your business’s VoIP network when on the road, for example
  • No geographical boundaries, which means you can call to and from international numbers while avoiding the high rates charged by traditional carriers

VoIP isn’t a complex technology: essentially, you’re just transmitting voice data over the internet in packets. The way VoIP works, however, has changed global communications technology forever.

Editor’s Note: Looking for information on VoIP Phone Systems? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need:



About Johnson Hur

After having graduated with a degree in Finance and working for a Fortune 500 company for several years, Johnson decided to follow his passion by embarking on a path to the digital world. He has over 8 years of experience with large companies setting marketing strategy and he likes to workout in his spare time.

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