What is VOIP?


As one of the fastest growing industries of the last few years, voice over internet protocol (commonly

known as VoIP) is expected to be the one of the most successful industries of the decade, continuing

years of strong performance and astronomical growth. So what is VoIP and how does it work? How does

it work for businesses?


Voice over Internet Protocol is a technology that allows communication via Internet protocol rather than

traditional analog systems. Other terms commonly associated with the technology are voice over

broadband (VoBB), IP communications, Internet telephony, and broadband phone service. With VoIP,

the voice signal from your telephone is converted into a digital signal that can travel over the Internet.

Depending on the type of VoIP service you’re using, you can make a call from a traditional phone, a

computer, or a special VoIP phone without an adapter.

VoIP in the Corporate World

Because of bandwidth efficiency and low costs, businesses are migrating to VoIP from traditional

telephone systems to reduce monthly phone costs. In 2008, 80% of all new private branch exchange

lines installed internationally were VoIP. The VoIP technology solutions aimed at businesses have

evolved into services of unified communications that treat all communications—including phone calls,

faxes, e-mail and more—as distinct units that can all be delivered through any means to any handset,

including cellular phones. There are two main types of competitors competing in this space: one that is

focused on VoIP for medium to large enterprises and another that is targeting the small-to-medium

business market. VoIP allows the integration of voice and data communications into one single network,

which brings a significant reduction in infrastructure costs.

A Growing Industry

In 2012, the VoIP industry produced over $63 billion in revenue, a 9% rise in profit over the previous

year. Analysts predict massive growth in the future. Cisco’s Visual Networking Forecast, for example,

predicts that IP traffic will at least triple within the next five years. It is estimated that over 31 million

people already use a VoIP connection in their home and this number is expected to only grow over the

next five years. Industry analysis has shown that the market for VoIP has increased about 16.7 annually

over the last five years. The fact that 4G capabilities will be included on more mobile devices will help

the market experience even more growth in the coming years.