The Essential Guide to IP Phones for VoIP

Updated: April 30, 2009

Although it resembles your average, run-of-the-mill office phone with its handset, cradle and buttons, an IP phone is a far cry from what Alexander Graham Bell had in mind. That's because an IP phone sends traffic over a TCP/IP network using an Ethernet connector, and is typically used for VoIP applications. Because it depends on private networks and the Internet instead of traditional phone lines, an IP phone can deliver enormous cost savings and practically eliminate long-distance charges. Other benefits include hassle-free installation, centralized call management, scalability, hot desking and easy integration with business applications.

IP Phones: The Numbers

  • 164 million: Number of IP-phone units that will be sold in 2010 according to research firm In-Stat
  • 10 million: Number of IP-phone units sold in 2006
  • 7 years: Average life expectancy of a legacy phone system
  • $1.6 billion: The market for IP-PBXs last year, according to Juniper Research Ltd.
  • 50: The percent by which the price of IP phones has dropped in recent years

How IP Phones Work

There are a wide range of IP phones available today, from high-priced, videoconference-enabled devices to low-end, standard units . But for the most part, IP phones can be divided into the following categories:

Desktop: Designed for the workplace, today's desktop IP phones typically include single-line access, a limited number of interactive soft keys and a two-line LCD screen with browsing and IM (instant messaging) capabilities. High-end IP phones are also known to feature a backlit, high-resolution, color touch screen for easy access to communications information, XML applications and special features.

Wireless: Wireless IP phones are gaining in popularity with the advent of wireless networks. That's because a wireless IP phone contains a wifi adapter that allows it to connect to a wifi network. And for businesses boasting an existing 802.11 network, a wireless IP phone allows voice and data support on the same wireless backbone. Although slightly more expensive than wired phones, wireless devices can deliver long-term cost savings.

Conferencing: IP conferencing phones offer instant, face-to-face communication between two or more participants. Ideally suited for small or medium-sized conference rooms, these specialty phones incorporate a camera, speaker, keypad and handset in a single unit. What's more, many feature 360-degree room coverage and a backlit 3-by-24-inch LCD screen, and weigh less than two pounds.

Third-Party SIP (Session Initiation Protocol): A third-party, SIP standards-based phone is a low-cost, no-frills alternative that can include more than 16 standard calling features and can be configured to work with the majority of today's IP-PBX systems. These phones typically fall into the desktop category.

High-Quality Audio: There are now several classes of IP phone that offer considerably improved audio quality - at or above CD-quality audio. These phones essentially compress and transmit a much higher level of audio signal. They degrade to the phone's regular quality on the other end cannot handle the signal, but when both phones use the same high-quality standard, the audio improvements are substantial.

IP Phone Benefits

The specific benefits of an IP phone over traditional phones include:

  • Easy routing
  • Enhanced productivity
  • Greater collaboration
  • Cost savings on long distance charges

IP Phone Features

Looking to differentiate themselves from the competition, IP-phone vendors are finding new ways to add value to standard devices. Special features include:

CMC (Client Matter Code): This feature helps businesses such as law offices and accounting firms associate inbound and outbound VoIP calls with specific billing and tracking codes. Specified by a system administrator, CMC can track factors including the length of calls for each client - information which can later be packaged into detailed reports for accounting and billing purposes.

Corporate Directory: IP phones with this feature have a soft key or button which lets users place a call to a number in the directory listing. Listings span from corporate contacts stored in Microsoft Active Directory to personal contacts in Microsoft Outlook. Either way, searchable directories appear right on the phone's display for convenient access. Some IP phones even go so far as to provide users with at-a-glance presence information for an entire corporate directory list so that they can instantly see which co-workers are available or on the phone.

E911 (Enhanced 911): E911 is an enhanced version of the 911 emergency service that automatically delivers a caller's personal information, such as name and address, to a local dispatch center or PSAP (Public Safety Answering Point), as required by the Wireless Communications and Public Safety Act of 1999. While this is really a feature of the phone system, a good IP phone can provide integrated access or one-touch emergency calling.

IP Video: Features including advanced VGA (Video Graphics Array) resolution camera sensors; color and rotatable LCDs; video-call hold, transfer, and forward; video phone book; and video-capture capabilities allow companies to participate in high-quality video conferencing with geographically scattered colleagues and co-workers.

IP Phone Costs

IP phones are proof that talk isn't cheap. A single IP phone can cost upward of $700 - a hefty price tag for a company with either limited funds or a sizable workforce. Of course, prices vary depending on a device's bells and whistles. The objective, however, is to select only those features that promise to address your business requirements and ultimately, cut costs. On the other hand, there are numerous low-end desktop alternatives under $200, although they typically do not have all the features of high-end handsets.

Featured Research
  • Phone Systems Comparison Guide: VoIP for Small to Midsize Businesses

    It was a painstaking process, but to help B2B companies start 2017 off on the right foot, we recently compiled a comparative list of the top 43 small to midsize business phone vendors. more

  • 16 Mistakes to Avoid When Buying a Phone System

    Purchasing a phone system for your business is a major investment. With the average business changing phone systems only once every seven years, it’s important to make the right decision. more

  • [Infographic] Top 11 VoIP Vendors

    A good VoIP provider will offer additional benefits as well, but many first-time buyers find assessing each option to be difficult. Nevertheless, this is an important step in the buying process because a substandard provider can easily waste both your time and money. more

  • The New 2017 Phone Systems Comparison Guide

    It was a painstaking process, but to help B2B companies start 2017 off on the right foot, we recently compiled a comparative list of the top 34 business phone vendors in the world. In one, easy-to-reference location, we’ve neatly outlined the information you need. more

  • 8 Common Pain Points UC Eliminates

    Many businesses rely on a collection of communication tools that they adopt to address specific needs as they arise. This strategy may seem to work in the beginning, but eventually will lead to a system that is cumbersome to use, difficult to explain to new hires, expensive, and effective in some areas, but full of gaps. more