Short for Voice over Internet Protocol, VoIP is a category of hardware and software that enables people to use the Internet as the transmission medium for telephone calls by sending voice data in packets using the Internet rather than by traditional circuit transmissions of a POTS (Plain Old Telephone Service).
One advantage of VoIP is that the telephone calls over the Internet do not incur a surcharge beyond what the user is paying for Internet access, much in the same way that the user doesn't pay for sending individual e-mails over the Internet. Another advantage is the list of features available. All the standard features of old phones are still there, call Waiting, Caller ID, etc. But also Voicemail alerts via email and personal control panels to see usage and edit features on the fly. Portability is great. If you have remote offices or travel you can take your phones or modems with you with most systems or use a laptop to send and receive calls. Got a meeting in India, vacation on a remote island. Get the high speed internet connection in your hotel, plug in your phone and you are sending and receiving calls as if you were in the office. There are several companies that offer these services to businesses. The main advantages are low cost and greater felxibility.
The main disadvantages are in the Quality of Service as you might imagine with any new technology, but with the right system and the right bandwidth, the quality seems to now be on par. With VoIP you need to implement a modem / router into your phone system and this device could fail, bringing down your phone service. The setup is a bit more complex with VoIP and the Internet has not yet shown the stability we see in the old Telephone Network. You also lose your VoIP in a blackout or loss of electric power in your building, whereas the old phone system is on it’s own grid and usually works in a blackout.
All in all, VoIP is still new and the early adopters are feeling some growing pains, but the advantages of lower cost and remote features are worth the risk for many more companies and I am expecting to see VoIP explode as the dominant market player for new phone systems in the next year or two.