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Three Cisco VoIP phones on a desktop.


Do you ever find yourself looking at your watch and thinking "This call's costing me a fortune." If you do, you're still stuck in the 20th century with telephone technology that's barely changed since the 19th!

In the 21st century, there's no reason why we should be paying through the nose, by the minute, to use a telephone network when most of us now have access to a very credible alternative: the Internet. After all, if the Internet (which relies on large parts of the telephone network) can carry text, images, and video clips, it should be able to carry people's voices just as easily. That's the thinking behind VoIP (Voice Over Internet Protocol) which, simply stated, means using the Internet to make and receive telephone calls. How exactly does it work? What are the advantages and the drawbacks? Let's take a closer look!

Photo: VoIP phones look much the same as ordinary ones, but work in a totally different way. VoIP means making telephone calls using computer networks, with the sound of your voice converted to packets of digital data that travel over the Internet in exactly the same way as Web pages, downloads, emails, or any other data. Photo by Jim Heuston courtesy of US Army National Guard and DVIDS.

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  1. What is the Internet anyway?
  2. What is VoIP?
  3. How does VoIP work?
  4. Types of VoIP
  5. How does Skype™ work?
  6. Advantages and disadvantages of VoIP
  7. The growth of VoIP
  8. Who invented VoIP?
  9. What about VoLTE?
  10. Find out more

What is the Internet anyway?

To lots of people, using the Net means looking at YouTube videos or buying books from—but both of these things are really about the World Wide Web, not the Internet.

The Internet is the worldwide network that links virtually every modern computer on the planet, and it's made up of telephone lines, satellite links, fiber-optic cables, and old-fashioned copper wires. The World Wide Web (all those shopping sites, home videos, and so on that you browse from your computer) is just one of the things that uses the Internet; email is another. The Internet is designed so that it can send all kinds of information, in all kinds of different ways, between the various computers that it connects together, and without any kind of rewiring or redesign. (Technically, this is called the end-to-end principle.) That's why, in the mid-1990s, some clever technical people were able to figure out how to send telephone calls over the Net, much like any other kind of information. This was the birth of VoIP.

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What is VoIP?

All the information that travels over the Net—from the latest music videos on YouTube to the confirmation email from Amazon that your book is on its way—is sent by a method called packet switching.

Something like an email, which might be pages and pages of characters, isn't actually sent as one big chunk: when it leaves your computer, it's broken down into many small pieces called packets, each of which travels independently across the Internet (theoretically by a completely different route from other packets) before being reassembled into a copy of the original email when it arrives at its destination. It's a bit like sending a book through the post not as a big fat parcel but by putting every single page into a separate envelope, individually addressed and dispatched. It might sound odd to send things this way, but packet switching is actually an extremely quick and efficient way of handling the billions of emails, web pages, and everything else that has to zip back and forth across the Net every single day. (You can read more about how it works in our main article on how the Internet works.)

All the computers connected to the Internet understand how to send and receive packets like this; thankfully, they all agree to work in exactly the same way using exactly the same system, which is known as the Internet Protocol or IP. (One of the key parts of the IP that you may be familiar with is that every computer can be "addressed" by quoting a unique number, known as its IP address, which is a bit like the computer equivalent of a telephone number or building address. Currently most computers have IP addresses made from four pairs of two digits separated by points, such as

Simple artwork showing how packet switching works

Photo: Packet switching is how data travels over the Internet. It's a bit like moving house by breaking the building into individual bricks and putting each one in the mail! It sounds crazy, but it works extremely efficiently.

The Internet has only one job to do: to keep packets moving back and forth. The computers, fiber-optic cables, and other systems that make up the Net don't know what packets they're moving or why—and they don't care. A packet might be a piece of a photo you took on holiday in Florida, or it could be part of an email telling someone they're fired. As long as the data you want to send is in the form of packets, and they're formatted in the correct way according to the IP, you can send absolutely anything over the Internet.

How does VoIP work?

How, then, do you send a telephone call over the Internet? There are really three separate problems to solve before you can do it: alerting someone that you want to call them, turning your voice into digital sound and sending it over the Net (and receiving replies in the opposite direction), and "interfacing with" (linking in to) the ordinary telephone network, if your call is going to a traditional landline telephone or cellphone (mobile phone). Let's look at each of these in turn.

Call signalling

When you make a traditional telephone call to a friend, you lift the receiver and listen for the dial tone before punching in someone's number. What's happening here is that you're opening up an electric circuit between your home phone and the telephone exchange. When you dial the number, the exchange opens up a second circuit to the receiver's phone, causing their handset to ring. As soon as your friend lifts the receiver, there's a complete circuit open between your two phones and you can start to talk ("send and receive voice data", if you prefer).

With VoIP, things are different. Internet telephony is much more like cellphone telephony, with people having unique telephone numbers that aren't permanently linked to one physical location: the person you're calling could be anywhere on the planet (and might not be in the same place two days running). So the first part of making a VoIP call involves your computer locating the receiver on the Internet, signalling their computer to receive a call, and, once that's done, the two computers agreeing the technical nitty-gritty of how they will actually exchange the data (just as fax machines and modems "handshake" at the start of a call).

For VoIP to work effectively, every computer that uses it has to do these things exactly the same way—and that's why VoIP systems use carefully agreed international standards (known as protocols). The two protocols that cover signalling are technically known as H.323 and SIP (Session Initiation Protocol, sometimes also known as RFC 4168). Simply speaking, these protocols set up a communication route between two IP addresses (the sender's and the receiver's) across which the actual telephone call data can be sent and received in the form of data packets. You may also come across a newer alternative to H.323 and SIP called WebRTC (Web Real-Time Communication), which is essentially designed to allow direct communication between web browsers. [1]

Artwork showing the concept of VOIP: two telephones make a call via two computers.

Call transmission

To send a basic telephone call over the Internet, you have to turn a speaker's voice into digital (numeric) form. That's relatively easy and the technology has been around for many years. (For example, when rock bands record CDs or MP3s, the noises they produce with their voices or instruments, which are analog sounds, are converted into numbers, which are digital signals, that can be stored or manipulated by computers. For more about the difference, see our main article on analog versus digital technology. This general process is called analog to digital conversion. When you listen to a CD or MP3, those numbers are converted back into sounds your ears can hear by digital to analog conversion.) The piece of software responsible for this process—converting audio sound into digital data and back again at the other end—is known as a CODEC (Coder-Decoder). The CODECs used for VoIP are designed to work optimally with sounds of frequencies from a few hundred hertz (Hz) up to perhaps 5000Hz or so (the frequency range of the human voice), although since 21st-century phone calls are just as likely to contain video (chat) data as voice sounds, VoIP systems often contain video CODECs as well as audio ones.

Once a spoken voice has been turned into numbers, it's relatively easy to break it into packets and send it over the Internet to another computer, where it can be reassembled and turned back into the sound of a voice by exactly the reverse process. Again, the computers involved in sending and receiving the data have to work according to the same protocols (agreed methods). The data-sending (transport) protocol used in VoIP is called RTP (real-time protocol), and it's also the protocol that computers use for receiving streaming media (videos you watch as you download them, in real time, over the Internet). [2]

Interfacing with the telephone network

So far, we've seen that sending and receiving phone calls between two computers connected via the Internet is a relatively simple concept; it's broadly the same as chatting online or exchanging emails, except that the data travelling back and forth is digitally encoded sound and travels in real-time.

Making a telephone call from a computer to a traditional landline phone (or vice-versa) is more complex because it involves making a link from the Internet to the ordinary phone network (which is technically referred to as the PSTN or Public Switched Telephone Network). That complicates both aspects of VoIP that we discussed above. Call signalling is more complex, because the phone you're calling might be on either the PSTN or somewhere on the Internet—and it has to be located first. (One solution to this is to assign a special, nongeographical "area code" to VoIP numbers so they can be instantly identified and routed to the Internet.) Sending and receiving a phone call is also more complex because if you're calling from a VoIP phone to an ordinary landline handset, there's nothing at the receiving end to convert the digital data back into analog sound. So the data has to be converted before it reaches its destination.

What makes phone calls like this work is an extra piece of equipment known as a gateway, which acts as a bridge between the Internet (on one hand) and the PSTN (on the other). You can think of a gateway as a kind of translator that converts telephone calls in IP-format into traditional signals that ordinary phones can understand (and vice versa). It's also involved in call signalling, so when you dial a landline from a VoIP phone, the gateway converts the call-signalling data into a format that the PSTN can understand (and rings the landline the old-fashioned way).

How a gateway acts as a go-between, connecting the Internet and the PSTN

Photo: A gateway allows VoIP Internet phones linked to computers and routers (left) to communicate with ordinary landline phones connected to the PSTN (right). Two landlines can communicate directly over the PSTN (yellow line), just as two VoIP phones can connect directly over the Internet (red line) in something like a Skype call. But if a landline wants to communicate with a VoIP phone (green line), it has to go via a gateway (blue box).

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Types of VoIP

Simply speaking, there are three different kinds of VoIP.

The simplest uses VoIP telephone handsets that look and work much like traditional telephones, except that instead of being wired to a telephone line, they're either directly connected to your computer (by something like a USB cable) or indirectly connected to it by a wireless (Wi-Fi) router.

You'll find a slightly different kind of VoIP on cellphones (mobile phones). You make and receive mobile VoIP calls much the same as normal cellphone calls but, instead of calls being sent and received on a permanently open line, like a traditional cellphone call, they're broken into packets and sent back and forth—rather like a web page that you're browsing with something like a smart phone. In other words, they're using packet switching over the cellphone network.

A third kind of VoIP is entirely computer based. When you call someone, the VoIP software running on your computer (known as a client) sets up a more or less direct connection (known as a peer-to-peer or P2P) connection with someone else's computer, across the Internet. You send and receive text messages, voice data, or webcam chat over this direct link. Apart from the initial logging on process, there is no intermediate computer managing the communication between the sender and receiver, which makes this relatively secure compared to other forms of telephone communication. Skype worked this way until a few years ago but now uses a much more centralized cloud-computing system. (Zoom also uses cloud-mediated connections, rather than peer-to-peer, for reasons it explains in this blog post.)

How does Skype™ work?

Skype was the original peer-to-peer VoIP software—indeed, the technical nitty-gritty that it uses is even known as the "Skype protocol." After Microsoft bought Skype in 2011, it slowly began the process of changing it over to a more centralized, client-server model, which is how it works today. "Original Skype" (as I'm going to refer to it from now on) was quite different.

Original Skype

The Skype desktop panel, showing a traditional phone keypad.

Photo: Skype is the best known (although by no means the only) VoIP system. You can call any user just by entering their Skype username. Or you can use the Skype pop-up keypad to make calls to any phone, anywhere in the world, using the ordinary telephone network (PSTN).

"Original Skype" was a proprietary VoIP system using its own protocol based on peer-to-peer (P2P) networking; essentially, it worked by creating ad-hoc, direct communication between two computers on the Internet in a similar way to file-sharing systems such as KaZaa (developed by Niklas Zennström and Janus Friis—the same people who developed Skype). Apart from a logon server that grants access to the network, assigns unique usernames, and so on, "Original Skype" was completely decentralized and distributed: there was no centralized "Skype control system." At any given moment, there were something like 100 million "Original Skype" users logged on worldwide.

When you signed on to "Original Skype," your computer became one node in a global network of equal peers. Each user ran a piece of software called a client that allowed them to send messages to other Skype users, make calls, send files, and play real-time games. Each of the clients became an active part of the network and, whether it was actively sending messages or not, helped the network as a whole to locate and route traffic to other users. Within the network, some of the users with highest bandwidth and best connectivity, known as supernodes, acted as traffic hubs. The network as a whole was made up of supernodes connected to one another (something like 50,000 of them), with each supernode linking to many ordinary nodes.

Unlike other instant messaging programs (such as the Yahoo! and Microsoft Live Messengers and AOL's AIM), "Original Skype" was much more adept at communicating through firewalls by random selecting the ports it would use. As a consequence, it was much harder for system administrators to detect and block "Original Skype" than traffic between other Internet chat programs. "Original Skype" also used encrypted communication between peers, which also made it highly secure—and relatively hard for random eavesdroppers or law-enforcement agencies to monitor.

Modern Skype

Microsoft's acquisition of Skype changed all this. First, around 2012, the company restructured Skype so it worked using a network of 10,000 supernodes entirely under its own control, apparently for security reasons, but prompting concerns about privacy. Later, Microsoft switched from the anarchic peer-to-peer model to a more centralized, cloud-based client-server model, completing the transition in around 2016. This prompted further fears of systematic privacy invasion and surveillance, although Skype's developers argued that the change had really been made to improve performance, particularly for mobile users.

Advantages and disadvantages of VoIP

The biggest plus point of VoIP is call cost, which is typically either free or much less than making traditional calls over the PSTN. (That's a huge plus point for customers, but a huge drawback for the big telephone companies, who've been forced to regear their businesses to meet the threat from Internet telephony.) VoIP is easy and often immediate to set up, and generally requires no long-term contract (although you do need to set up an account of some kind to create a phone number or user name where people can call you). You can usually send any kind of data over VoIP, from text and images of your computer desktop to voice and webcam chat. Another big plus is that VoIP liberates you from a fixed, physical location; if you have a Skype username, for example, you can sign in with it and receive calls from anywhere in the world.

A US army soldier makes a VoIP call from a laptop connected via a radar dish to a satellite.

Photo: You can make a VoIP call from anywhere you can connect to the Internet, whether or not there's a telephone network or cellphone mast nearby. That's why VoIP has proved a big hit with the military. Here, a soldier is making a VoIP call with a laptop linked to the Internet via a radar dish and satellite connection. Photo by Teddy Wade courtesy of US Army.

The biggest drawback of VoIP is call quality, which is neither as good or as reliable as you'd get with a direct call between two landlines. Although the sound quality itself may be poorer (it varies considerably according to the CODECs that are used), this is not usually much of an issue since most people are used to the highly variable quality of cellphone calls. Since VoIP calls travel back and forth as streams of packets, network problems that lead to the total loss of packets cause a degradation in call quality and a loss of communication—though that's also a problem people are used to with cellphones and poor signals. A much bigger issue is call latency, where delays in sending data across the Internet (coupled with the time it takes for the CODECs to process them) result in a significant lag between the sender saying something and the receiver hearing it (similar to a really bad international telephone call), which can lead to people talking on top of one another. A related problem called jitter can make snippets of conversation arrive in irregular bursts, separated by silences (it happens because a certain number of digital packets have to arrive from the Internet and be assembled before they can be converted into audible sounds), and this can also be very confusing to the people involved in a conversation. The "geographical freedom" of VoIP can also be a drawback in an emergency, because if you make an emergency call from a VoIP phone the emergency services cannot automatically figure out where in the world the call has come from. By the same token, nuisance calls made over VoIP may be much harder to trace or block.

The growth of VoIP

VoIP has grown enormously since it was first developed in the mid-1990s, especially with business customers. What can we glean about overall VoIP use worldwide? There are no exact figures—only estimates—but here are a few telling statistics I've managed to pull together, every year or two, since 2012, as I've updated this article:

In the future, as broadband Internet and traditional telephony continue to converge, the strict split between the PSTN and the Internet is likely to disappear. It will be much more common to see, for example, Web pages with clickable links that make immediate VoIP calls to sales agents. Telephone calls are also likely to become more sophisticated, for example, with multi-way video calling over VoIP increasingly replacing two-way voice-only calling over the PSTN, and stereo VoIP calls replacing mono PSTN calls.

Who invented VoIP?

Here's a quick summary of some key moments in VoIP history.

What about VoLTE?

VoLTE icon and settings on a Samsung mobile cellphone.

Artwork: The VoLTE icon indicator (top, red) and settings (bottom, blue) on a Samsung Android cellphone.

Simply speaking, VoLTE is a kind of VOIP designed for cellphones, in which voice calls travel as Internet data, packet-switched over a mobile network. Where VOIP uses your home broadband line or work Internet connection VoLTE operates in an analogous way over a 4G or 5G mobile cellphone network. While VoLTE can offer greatly improved call quality compared to standard mobile calls ("I'm going through a tunnel... my signal is poor..."), and faster call connections, it's still less reliable than "desktop" VOIP, which uses a much more stable, fixed Internet connection. If you have a reasonably new phone, you'll probably find a little icon in the status area indicating that VoLTE is enabled—and an option in your settings to turn it on and off. For the time being, VoLTE is a handy option for mobile users, but the plan is for VoLTE/VOIP to be the default method of making mobile calls in the future.

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  1.    H.323 and SIP are relatively old protocols, dating from the mid-1990s, but have been extended since they were originally defined. Although they are "competitive" standards, SIP is simpler and considered the more versatile, open, and flexible of the two, and it has largely replaced H.323 in many applications. Unlike H.323 and SIP, WebRTC is not a protocol; technically, it's a specification (WebRTC: Real-Time Communication in Browsers) developed by the World Wide Web Consortium (W3C). WebRTC can be used with or without SIP and H.323 and is designed to allow direct ("peer-to-peer") communication between browsers, although a web server still generally sets up the link to begin with. SIP is well explained in Chapter 3 of Packet Guide to Voice over IP: A system administrator's guide to VoIP technologies by Bruce Hartpence. O'Reilly, 2013. There's a user-friendly introduction to WebRTC in Networks and New Services: A Complete Story by Roberto Minerva and Noel Crespi. Springer, 2016, p.121.
  2.    For an introduction, see RTP: Audio and Video for the Internet by Colin Perkins, Addison-Wesley 2003, and Chapter 4 of Packet Guide to Voice over IP: A system administrator's guide to VoIP technologies by Bruce Hartpence. O'Reilly, 2013.

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Text copyright © Chris Woodford 2012, 2023. All rights reserved. Full copyright notice and terms of use.

Skype is a trademark of Skype Technologies SA.

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@misc{woodford_voip, author = "Woodford, Chris", title = "VoIP", publisher = "Explain that Stuff", year = "2012", url = "", urldate = "2023-04-03" }

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