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Your complete guide to Voice over IP (VoIP)

In this guide we cover everything you need to know about VoIP, including what it is, its advantages and why your business might need it. 

Use the quick links below to navigate to a particular question of the guide.

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What is VoIP?

VoIP stands for Voice over Internet Protocol and is sometimes referred to as an IP phone. VoIP technology converts your voice into a digital signal, allowing you to make calls over the internet.

Your Internet Protocol address, or IP address, allows computers and devices to communicate with each other on the internet. With VoIP, users can make and receive calls through the IP telephony network with no limitations. Traditional phones, on the other hand, rely on the Public Switched Telephone Network (PSTN) which routes calls across copper cables connected by telephone exchanges. 

BT Business VoIP services include our cloud-based systems: BT Cloud Phone, BT Cloud Voice, and BT One Phone; and our on-premises systems: Avaya IP Office and MiVoice Business. All of our business phone systems come with the added benefits of new call management features, easy online portal management, cost control features, collaboration tools and a reassurance that the technology is both hassle-free and future-proof, as traditional handsets are phased out ahead of the PSTN switch off in December 2025. 

How does VoIP work?

A VoIP system works by using packet switching technology that converts the analogue audio signals into digital data, which it transmits over the public internet or your private IP network. This allows you to make calls from your computer or IP phone to other computers, landlines, and mobiles.

The call quality is the same as landlines. You’ll get the same level of clarity and, depending on your system set-up, call quality may be even better.

Although the technology behind VoIP is obviously clever stuff, it’s easy to use. It’s similar to using a regular phone, so you don’t need to worry about having any special technical skills.

Internet connection

The amount of bandwidth you’ll need for a VoIP phone system depends on how much data your business uses and how many people will be on the system at the same time.

A VoIP call only uses a fraction of your broadband's capacity, so you may not even need fibre broadband to make VoIP work. To give you an idea, BT Cloud Phone, which is designed for smaller businesses, can comfortably support up to 4 people on the phone at the same time; and that's with just our standard BT Business broadband.

IP phone and software

To deploy VoIP you need to understand what hardware and software devices are involved in transmitting voice calls over an IP. At its most basic, you’ll need a VoIP phone system or a phone with a VoIP adapter, and VoIP software.

For anything more than a single user, you’ll be better off with one of our VoIP phone systems: BT Cloud PhoneBT One Phone, or BT Cloud Voice.

What are the advantages of VoIP?

There’s more to VoIP services than being able to have a conversation on the phone. Some of the main advantages of VoIP telephone systems for your business include:

  • Lower costs
  • Access to different features
  • More flexibility
  • Increased security
  • Perfect for hybrid working set-ups

Lower costs

VoIP is a cloud-based phone system which means you don’t have to buy or maintain hardware on your premises. From the get-go it means less hardware costs (you’ll just need a VoIP phone system and a router) and, if you’ve got more than one site, you don’t need to purchase duplicate hardware. What’s more, you don’t need to worry about maintenance or upgrade costs either, because that all happens in the cloud.

Cost-wise, VoIP also gives you the following benefits:  

  • No maintenance costs: Compared to a traditional on-premises phone system
  • Only pay for what you need: With an online management portal you’ve got complete visibility to be able to better control your costs
  • Only one network to manage: You’ll get your voice and data over the same internet connection, so you don’t need your old phone network
  • Long-distance calls: International call rates are typically a lot lower due to less infrastructure being needed to deliver calls
  • Grow with your business: Easy to add more ‘phone lines’ because the ‘lines’ are virtual and you don’t need an engineer out to manage an installation

Access to different features

VoIP is a dynamic service that enables you to have access to a multitude of new features that go beyond what a traditional office telephone could previously offer.

From mobile device integration which enables you to divert calls from your office phone to your mobile handset – giving you true on-the-go flexibility whether you’re on the move between meetings or working from home – to call management features like call-forwarding, transfers, voicemail and three-way calling.

VoIP provides powerful business collaboration features including audio conferencing, video conferencing and call monitoring and recording. VoIP also allows your business to sync and integrate your CRM with your phone system making life easier for your employees and your customers.

VoIP has the added benefit of virtual geographic numbers so your business can give the impression of being local even if it isn’t. This can save your business time and money by reducing the need for handsets and staff on the ground to resolve geographic issues.

For ease, BT’s hosted VoIP phone system can be accessed and run through an online management portal, making managing the system easy and convenient as you have all the control functions you need at your fingertips. 

More flexibility

VoIP provides the flexibility to take calls from both a desk phone as well as a computer or mobile, meaning you can utilise all the features of the office phone system wherever you are. In an age where hybrid working is central to business practice, having the flexibility to make calls from an office phone system even when you’re away from the office allows you to continue working without interruption. With such mobility, VoIP users are much less likely to miss important calls.

The shift to VoIP will also enable employees to share data and communicate over Instant Messenger in a safe setting, with less need to pay for an additional communications system.

The lack of flexibility around landline numbers will finally be resolved with VoIP. Where you may have previously lost your landline number if you moved outside your telephone exchange area; VoIP will allow you to keep your number wherever you go.

The opportunities to be flexible with VoIP are countless and it’s a huge upgrade from current systems which no longer cater for modern business needs and hybrid ways of working. 

Increased security

Security is paramount to operating a good and compliant business, and VoIP makes sure that security remains at the top of the agenda. Whilst traditional handsets are secure because they rely on office network security, VoIP brings communications into the present day – having the flexibility necessary to adopt a modern hybrid working approach. In a time where data breaches are on the rise, and companies are having to be more vigilant than ever to cyber threats, especially hardware attacks, the added protection that VoIP offers is crucial.

VoIP includes a number of features that improve call quality and security protocols, such as Secure Voice and SIP over TCP. In securing your VoIP system, you should work with trustworthy VoIP providers only.

All of these features allow your business to run smoothly without having to worry about what security measures need to be put in place. Gone are the days where employees need to make work calls from their personal phone numbers, as VoIP can keep them connected and ensure all of their calls are protected. 

On-premises vs hosted VoIP services

On-premise and hosted VoIP systems have different benefits that are tailored to various business needs, so it is important to reflect on the solution that best supports your activity and communications.

On-premise phone systems are installed in a fixed business location and the main advantage is that you have full control and customisation of the system, which is maintained by your company’s IT department. This is best for larger companies with high communication needs.

Hosted VoIP is great for businesses of any size from SoHo to large business. It’s cloud-based and not fixed to a particular business location. Also, an IT department isn’t required for maintenance, which will typically be managed by your service provider.

Compare on-premises and hosted VoIP phone systems



On-premises phone system

Hosted VoIP phone system





Fixed to business location

Flexible, cloud-based

Number of users

5 – 20,000

1 – 500+

Ideal for

Larger businesses who require more control and customisation of their phone system

Small and growing businesses, hybrid working


Engineer and IT install

Self or engineer install


Managed by your internal IT department

Managed by your service provider


Fully customisable, option to upgrade as your business needs change

Automatic updates

Easy to add users

Cloud-hosted so easy to move locations

Cost options

Purchase or lease 

Pay per user, per month

Is VoIP or a landline better for your business?

Traditional landlines which rely on the PSTN are being switched off in 2025, which means that they’re no longer a future-proof option, making VoIP a better solution for your business.

Switching to VoIP comes with an array of benefits including lower costs, new collaboration features, true flexibility to aid remote working, and increased security options designed to keep up with the most modern threats. Whether you’re running a small business or a large enterprise, there are VoIP options that will suit you and help future-proof your business communications.

Our VoIP examples

BT offers a number of VoIP products that can be tailored to suit your business.

BT Cloud Voice

BT Cloud Voice is a cloud-based phone system, suited for businesses of 5 – 99 employees. The system has built-in collaboration features including screen sharing and instant messaging.

This solution was perfect for Drayton Medical Practice, who look after 18,000 patients across 3 sites in North West Norwich. After implementing BT Cloud Voice they were able to reduce three different phone systems into one – Cloud Voice. As a result, they cut call wait times considerably and, in a year, their scores for ‘ease of getting through’ on the National GP Patient Survey rose by 18 per cent.

BT Cloud Phone 

BT Cloud Phone combines traditional BPX systems with the financial benefits that come from cloud-based VoIP, making it ideal for small businesses. This plug and play system gives all the benefits of a VoIP system without the cost of one.

BT One Phone

BT One Phone is the crossover from business landline to mobile, giving users the power of their desk phone wherever they are. Using BT’s simplified app and online portal, businesses can easily manage all of their business mobiles and calls from one place, and all you need is a SIM card.

Yorkshire-based plumbing company Plumbcare, who employ 30 field engineers and 10 call handlers, switched to One Phone to help them manage costs. Previously, they were juggling multiple contracts for their landline, mobile phones and broadband. However, cost and simplicity weren’t the only benefits; the team loved the fact that it worked like a regular phone system and that they were able to get hold of anyone in the directory at the push of a button.

With a diverse range of features and benefits to allow for maximum flexibility in the UK and abroad, the One Phone is designed to be simple and easy to use.

BT Cloud Work

Cloud Work is a unified communications platform designed for growing businesses of 10+ employees. The platform has full flexibility and business integrations available and a simplified call management system in place.

Keen to find out more about our VoIP solutions? Visit our VoIP systems page to get in touch and see the full breakdown of our products.

VoIP in a nutshell

Voice over Internet Protocol, or VoIP, is a great way for smaller businesses to make and receive calls over the internet.

If your business has up to four users, all you’ll need to make VoIP calls is:

  • Standard BT Business broadband
  • A VoIP phone or a phone with a VoIP adapter
  • VoIP software

Larger businesses will require:

  • Fast BT Business fibre broadband
  • A VoIP phone system

If your business is growing, adding extra lines is easy and inexpensive. And if you’re moving premises, you don’t need to change your phone numbers as they’re not tied to the local exchange.


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