What is VoIP and how does it work?
VoIP (Voice over Internet Protocol) makes phone calls travel over the internet instead of the old copper phone network. Your voice is turned into small data packets, sent across your broadband, and turned back into sound at the other end. Each call uses about 100 kbps, and you can call from a desk phone, mobile app or web browser.
What does VoIP actually mean?
VoIP stands for Voice over Internet Protocol. In plain terms, it is a way of making and receiving phone calls using your internet connection rather than a traditional phone line. A normal landline runs your voice down a dedicated copper wire on the PSTN (Public Switched Telephone Network). VoIP does the same job, but it sends your call as data over the same broadband you use for email and the web.
The person on the other end cannot tell the difference. They dial your number, your phone rings, and you talk. What changes is everything behind the scenes. There is no physical phone line tied to a single building, so the same number can ring on a desk phone in the office, a mobile app on the train and a laptop at home all at once. That flexibility is the main reason UK businesses are moving across, and it is why VoIP is the replacement for the old network when the PSTN switches off on 31 January 2027.
VoIP is sometimes called internet calling, cloud calling or IP telephony. When a business runs its whole phone system this way, with menus, ring groups and voicemail in the cloud, it is usually described as a hosted phone system or cloud PBX. The underlying technology is the same: voice carried as data.
How does a VoIP call work, step by step?
A VoIP call follows a simple chain from your voice to the other person's ear. None of it is visible to you, but it helps to understand what happens when you press call.
- Your voice is captured. The microphone in your phone, headset or laptop turns the sound of your voice into a digital signal.
- It is compressed into data packets. A codec (coder-decoder) squeezes that signal into small chunks of data. Modern HD voice codecs keep more detail than the old PSTN, which is why VoIP calls can sound clearer than a landline.
- SIP sets up the call. A signalling protocol called SIP (Session Initiation Protocol) handles the dialling: finding the other party, ringing them and connecting the two ends. SIP is to a call what a postal address is to a letter.
- Packets travel over the internet. The data packets cross your broadband and the provider's network to reach the recipient. This is the part that uses around 100 kbps per call in each direction.
- The audio is rebuilt. At the other end the packets are reassembled and decoded back into sound, in real time, so the conversation flows naturally.
All of this happens in a fraction of a second. As long as your connection is stable, the call feels identical to any normal phone call. The clever bit is that because the call is just data, the system can also record it, transcribe it, route it through a menu or hand it to an AI agent without any extra hardware.
What do I need to use VoIP?
Far less than people expect. You do not need new phone lines, an engineer visit or an expensive box on the wall. The two essentials are a reliable internet connection and a device to call from.
| What you need | Detail |
|---|---|
| Broadband connection | FTTP, SoGEA, cable or a decent business line. Allow about 100 kbps per simultaneous call. |
| A device to call on | Choose one or mix them: a mobile app (iOS or Android), a web softphone in the browser, or an IP desk phone. |
| A VoIP provider account | This gives you your numbers, call routing and features. Setup is usually done remotely with no installation. |
| A stable router (recommended) | Any modern business router is fine. QoS settings can prioritise call traffic if your line is busy. |
That is the lot. Most businesses are up and running the same day they sign up, because there is nothing to physically install. If you already have broadband and smartphones, you have most of what you need. For a closer look at bandwidth by team size, see our guide on what internet speed you need for VoIP.
Hosted VoIP or an on-site system?
Most UK small and medium businesses now choose hosted VoIP, where the phone system lives in the provider's cloud and you simply connect your apps and phones to it. The alternative is an on-premise PBX, a physical box installed in your building that you own and maintain. Hosted wins for most teams because there is no upfront hardware cost, no maintenance and it scales up or down instantly. We compare the two in detail in hosted VoIP vs on-premise PBX.
Why are UK businesses switching to VoIP?
Three reasons come up again and again. First, cost. VoIP usually works out cheaper than traditional lines because there is no line rental for each phone and calls between sites or staff are free. Second, flexibility. The same number can follow a person across their desk phone, mobile and browser, which suits hybrid and remote working. Third, the deadline. The old PSTN and ISDN networks are being switched off on 31 January 2027, so every UK business on traditional lines has to move to an internet-based system before then.
On top of that, VoIP unlocks features that copper lines never could. Because the call is data, the system can record and transcribe it, summarise it with AI, route it through an auto-attendant, queue it for the right team or even answer it with an AI receptionist when nobody is free. Those are practical wins for a small team that wants to look and run like a bigger one. To weigh the two options side by side, read VoIP vs landline, and browse all our guides in the Learn hub.
Frequently asked questions
Is VoIP the same as a landline?
No. A landline sends your voice over the old copper PSTN network, while VoIP carries the call as data over your internet connection. To the caller it sounds the same, and you can keep your existing number, but VoIP runs through an app, softphone or IP desk phone rather than a dedicated phone line.
How much internet speed does VoIP need?
Roughly 100 kbps in each direction per simultaneous call, so about 0.1 Mbps per active call. A five-person office making five calls at once needs around 1 Mbps spare on top of normal web use. Any modern FTTP or SoGEA broadband connection comfortably handles this.
Do I need special equipment to use VoIP?
No special hardware is required. You can make and take calls using a mobile app on iOS or Android, a softphone in your web browser, or an IP desk phone that plugs into your network. A broadband connection and the provider's account are all you really need to start.
Will VoIP work in a power cut?
VoIP needs power and internet, so desk phones go down if both fail. The business stays reachable through automatic call divert to mobiles, a backup 4G or 5G connection, or the mobile app on staff phones. This is straightforward to set up before you switch.
Is VoIP good enough quality for business calls?
Yes. VoIP supports HD voice codecs that carry a wider audio range than the old PSTN, so calls often sound clearer than a traditional landline. As long as your connection has spare bandwidth and a stable router, call quality is excellent for everyday business use.
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