Components of a VoIP Phone System

Updated: April 30, 2009

For the average business user, the decision to move to VoIP starts with the decision that the organization needs a new phone system - either that or it is a new organization looking for its first phone system. And for most businesses, that's as complex as they want the decision to be - they want every employee to have a phone with an extension, they want voicemail, they want to transfer calls and so forth. The rest of the details are relatively unimportant.

But that isn't the way that VoIP companies provide phone service. And the use of that word service is part of the problem. A modern business phone system is a complex and difficult beast, made up from at least three parts and sometimes more.

Modern VoIP phone systems provide telephone calls where at least part of the call travels over an IP network. That means part of the call goes over at least your internal Ethernet network for your business. Part of the call may also travel over the Internet by a public or a private route. And if you are calling a regular phone, part of the call will also travel over the regular public telephone system (the PSTN). The need for an IP network means that to use VoIP, your business will need to at least have an internal Ethernet network. Fortunately, if you use computers in your business, you undoubtedly already have one and, even if you don't, they are very cheap and easy to set up nowadays.

The core components are simple: you want phones - the actual desk units that you talk into. You want service - a company that makes the whole system work and connects your phones to the worldwide telephone network. And, finally, you want the connection itself - and that connection can be as simple as a few pieces of wire or as complex as a rack of servers and switches and gateways and routers all running full tilt and connected both to the Internet and to the PSTN.

But those three simple components can disguise a great deal of complexity and if you want that complexity to disappear, you will either have to invest time and money in understanding and maintaining your phone system or you will have to pay a premium to have someone else do it for you.


By every measure the easiest of the components to understand and to evaluate. When it comes down to it, a phone is one of the most well understood pieces of technology in the world. Everyone knows the basics, how to dial, how to answer and the protocols for using it. In the business environment most potential users even understand the common mechanisms for using most of the advanced features: voicemail, transferring calls, conferencing, hold, menu systems, etc.

Any phone has to conform to these standards as well as provide any additional functionality that a VoIP system may provide. In fact, many VoIP systems make most of their functionality available through in-call menus that mean that a phone on the desk really just needs the standard 12 buttons on a dialpad, a handset to talk to and a way to plug it in.

But most phones offer a range of additional buttons to control options, some kind of display to show numbers dialed and caller ID, a speakerphone and mute capability and volume controls. These should be regarded as a bare minimum for the desktop phone in any new phone system.


This is where the phone system gets more complex. For any business of more than three people, the business needs some form of switching and connecting mechanism to allow for extensions, connecting several calls at once to the phone system and sharing lines. Sharing lines is the key. In any organization, typically only about a third of the people are on the phone at any one time, so you really only need phone line capacity for lines to match a third of the people in your organization. This is important because phone lines into your business are a significant portion of the ongoing cost of any phone system. But to share lines you need a switching system to make sure that people get connected correctly.

Typically for a business, all of these connectivity needs come together in a PBX system that manages the lines, the switching, the routing and connecting to the public telephone network. There are numerous kinds of PBX systems but they basically fall into two camps: hosted PBX systems and on-premise PBX systems .

Hosted PBX systems manage all of the PBX issues and traffic offsite, away from your office. This means that all you have in your office is your Ethernet network, phones that plug into your Ethernet network and a router that connects your network to the external Internet. Phone calls get routed by your hosted service provider over the Internet to their system where they do all the switching, connecting to the regular phone system and management.

On-premise PBXes take all the routing, switching, gateway and connectivity to the regular PSTN phone network and put it on a server box that you keep and run at your office location. This PBX is also connected to your Ethernet network and to the Internet and sometimes to the PSTN as well. (If it isn't connected to the PSTN, then your service provider handles that portion of the activity offsite.)

Either way, these PBX systems take the place of the old Centrex system that your phone company would have had you use. Centrex systems could also be on-site or hosted at the phone company.


The final piece of the puzzle is service. No matter what you do, somebody has to provide broadband Internet access and termination of telephone calls into and out of the PSTN. And that somebody is your service provider. It may also be the same company that runs your PBX or sold you your PBX, or it may be a third party, but whichever it is, the services it provides and the support it gives you are critical to your new phone system.

Here is a short glossary/dictionary of other VoIP phone system issues and terms you may hear bandied about.

ATA - an analog telephone adapter. This is a gadget that turns any telephone into an IP-based phone. It simply converts all the signals, from dialing to talking, into a digital form that can move over an IP network - and vice versa, takes incoming digital data and plays it out through the analog phone. ATAs are often supplied by residential VoIP service providers to let users keep existing phones and this is an option for your new phone system if you want to keep your phones. It is also the easiest way to add a fax to a VoIP system, something that is otherwise difficult.

Soft switches - a soft switch is a software controlled switch that connects the two ends of a call. Think of it as a piece of software that does the function of the old Bell operators in movies who had handfuls of wires and plugged them into boards.

Protocols - these are definitions for how to convert and use digital information that is sent and received - almost like a language. A VoIP call made in one protocol cannot be received by a VoIP system operating on another protocol unless a conversion/translation is performed along the way. Common VoIP protocols are SIP and H.323. Most complete business systems can handle both. SIP is commonly used for newer VoIP systems and H.323 is very commonly used internationally.

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