SIP • Last Updated 5/15/2024

The ultimate guide to understanding VoIP networks

A VoIP network allows you to place calls over the internet instead of a traditional phone line.

Kelsie Anderson

By Kelsie Anderson

VoIP network hardware

Originally developed in 1995, Voice over Internet Protocol (VoIP) technology has expanded from a method to save money on long-distance calls to a crucial tool that allows businesses to conduct both internal and external communications.

Nearly a third of all businesses currently use VoIP systems to communicate. And that market is expected to grow from around $120 billion in 2023 to $145 billion in 2024, with expanding coverage opportunities in the Asia-Pacific region driving demand.

As more organizations continue to adopt VoIP systems, it’s critical to understand what VoIP is and what its advantages are over traditional phone lines. In this post, we’ll do a deep dive into everything you need to know about VoIP networks, covering everything from how they work to how to set one up.

First, what is VoIP, and how does it work?

VoIP (Voice over Internet Protocol) is a technology that allows users to make voice and video calls over the internet instead of traditional telephone lines.

With VoIP, voice data is transmitted over the internet in digital packets—just like any other data—then converted back into an analog signal at the receiving end. This method allows for high-quality voice and video calls to be made from anywhere in the world, as long as there’s an internet connection.

So what is a VoIP network?

While traditional phone systems use a circuit-switched network to transmit voice signals, a VoIP network leverages the internet.

VoIP networks actually consist of two different types of networks:

  1. A local area network (LAN) that connects VoIP capable devices to the telecom carrier.
  2. A wide-area network (WAN) operated by the carrier that transmits audio signals to the call recipient’s device.

Most of the time, the term “VoIP network” refers to the local network that connects VoIP phones to the carrier network. This local network is the one you can build yourself, giving you the most control.

Outside of the two different networks, there are several other components that make up a VoIP network:

  • VoIP phones or softphones are devices or software applications that allow users to make and receive VoIP calls.
  • VoIP gateways convert digital data packets into analog signals that can be transmitted over traditional phone lines.
  • VoIP servers manage call routing, user authentication, and other network functions.

How does a VoIP network work?

Traditional phone calls are connected through the Public Switched Telephone Network (PSTN). The PSTN transmits analog audio signals through copper telephone cabling.

Conversely, modern VoIP networks are packet-switched networks that transmit audio signals as data packets from one VoIP device to another. VoIP calls connect through a private network operated by your telecom carrier, the public internet, or some combination of the two.

When you make a call on a VoIP network, your voice is first picked up by a microphone and converted into digital data. This data is then broken down into small packets, each with its own identifier. These packets are like individual envelopes that contain pieces of your voice data. The receiving VoIP device then converts the data back into an audio signal.

How do a LAN and WAN come into play in a VoIP network?

The LAN—the internal network connecting your VoIP devices to your carrier network—is the same type of network you’d use to connect computers to each other at home. The LAN that connects VoIP phones to your telecom carrier is usually built on an Ethernet infrastructure. Most commercial buildings are outfitted with the Ethernet cabling needed to build a local VoIP network. However, it’s relatively easy to run Ethernet cable if you need to.

When you make a call from a VoIP phone number, the call’s data packets are transmitted over digital networks. Once the call data leaves your local VoIP network, it moves onto your carrier’s VoIP network—the WAN.

Ideally, your telecom carrier owns and operates its own, private packet-switched network. This type of network provides the best call quality and reliability. Conversely, connecting calls through the public internet involves many intermediary networks that your telecom carrier doesn’t control. Transmitting call data over so many different networks can compromise call quality, reliability, and security.

Regardless of how your telecom carrier connects calls, the connection path looks like this:

VoIP call diagram

You and your development team have direct control over your local VoIP network. However, your carrier’s network also affects how well your VoIP service works. While you should always monitor your own LAN, it’s also wise to evaluate your VoIP provider and learn about their network before signing up for their VoIP service.

Benefits of using a VoIP network

VoIP networks offer several advantages over traditional phone systems. Let’s take a look at some of the primary benefits of using VoIP technology over landlines.

Cost savings

A primary consideration for businesses is the cost-savings of a VoIP network compared to traditional landlines. Since VoIP calls are made over the internet, there are no long-distance charges or per-minute fees. This pricing model can result in significant cost savings for businesses, especially those that make a lot of long-distance calls.

When it comes to setup, the savings are also considerable. Traditional landlines require tons of equipment: a private branch exchange (PBX) system, adapters, routers, phone sets, copper wire, and more. In comparison, VoIP networks require relatively little equipment. Coupled with the pay-as-you-go plans providers typically offer, VoIP is the obvious winner in terms of cost-effectiveness.

Access to advanced features

Another benefit of using a VoIP network is the advanced call management features that come with it. VoIP systems typically offer features such as call forwarding, voicemail, caller ID, and call waiting. These features can help businesses stay organized and provide better customer service.

While you can access these features via a traditional landline system, they’re typically more expensive and require more equipment and setup than they do with a VoIP solution.


Finally, VoIP networks also allow for greater flexibility in terms of where and how you can make calls. With traditional phone lines, you’re tied to a specific location and phone number. With VoIP, you can make calls from anywhere in the world as long as you have an internet connection.

This flexibility means you and your employees can take your business on the go and work remotely without having to worry about missing important calls or racking up long-distance charges.

VoIP network requirements

If the benefits of VoIP have you sold on setting up your own VoIP network, you’ll need to make sure your existing network can support the specifications required by VoIP. Below, we’ll take a look at the factors you’ll need to consider to leverage VoIP for your business.

A broadband internet connection

If you consult just about any resource on VoIP technology, you’ll read that an internet connection is sometimes considered the only requirement for VoIP calling. There are a few other requirements we’ll discuss, but other VoIP resources aren’t wrong. If you don’t have an internet connection, you can’t use VoIP.

115Kbps (0.115Mbps) worth of connection speed per VoIP line

While VoIP calls don’t require a ton of bandwidth, a slow internet connection will cause call quality and reliability issues. For reliable, high-quality calling, you’ll need to maintain a relatively fast internet connection.

100Kbps is enough for a single VoIP line. However, it’s best to add 15% to your bandwidth calculations to account for network overhead and variances in network performance.

Additionally, it’s best to upgrade your internet connection once you’re using 80% of your total bandwidth. Maxing out your connection capabilities will cause performance issues.

Network security and encryption

Your telecom carrier should protect your call data while it’s on the carrier network. However, you also need to protect your local network. Luckily, plenty of networking equipment offers hardware encryption, and there are many options to choose from for security software.

WiFi networks are highly vulnerable to cyberattacks. So if you have a wireless network, you’ll need to be extra cautious about security. You should always verify that your wireless network and wireless devices use password protection—or, better yet, certificate-based authentication.

A hardwired connection for each VoIP device

Hardwire connections are more reliable and secure than wireless connections. If you’re building your own VoIP network, it’s wise to use wired connections from the start. That way, you don’t have to transition from a WiFi network to a wired network later on.

There’s nothing wrong with including a WiFi connection for mobile devices. However, it’s unwise to depend on a wireless network for all VoIP communication.

Use these criteria to determine which internet connection plan you’ll need, and what internal networking components will be best for setting up your VoIP network. Once you know what you need your functioning network to be capable of, move on to setting it up.

A VoIP carrier

Even though VoIP calls connect through the internet, you still need a VoIP service provider to purchase VoIP phone numbers and place calls.

To select the carrier that’s right for your business, you should first make sure the VoIP carrier has phone numbers for the geographic regions you need to call.

Next, if you have phone numbers you need to bring over from your existing carrier, find out how long the process of porting numbers from your old carrier will take. Some carriers use archaic porting processes that can put your phone numbers out of commission for weeks. A modern carrier should be able to port phone numbers much more quickly.

You should also find out what type of network your VoIP carrier uses. The best VoIP carriers operate their own IP (Internet Protocol) network to give you the best call reliability and quality. If your carrier has its own network, it’s also much easier for them to help you troubleshoot connection problems.

Finally, check out your VoIP carrier’s control panel. It should be easy to provision new VoIP numbers from your carrier and configure your existing VoIP numbers. The last thing you need is to fight with your carrier’s user interface whenever you need to make changes.

Setting up a VoIP network

Once you’ve determined that your existing network can support VoIP, network setup is relatively simple. We’ll go over each of the steps below in more detail.

1. Decide on your setup type

The first step in setting up your VoIP network is to decide whether an on-premise or hosted setup is best for your business. This decision will determine the equipment you need and the amount of setup required.

If you opt for a hosted solution, your VoIP provider will take care of the hardware and software for you. All you’ll need is a reliable internet connection and VoIP phones for your employees. With this setup, you won't have to worry about maintenance or upgrades, as the provider will handle those as well.

An on-premise system will require you to set up the hardware and software yourself. Especially if you’re building a network from scratch, you’ll likely have to do some hardware installation and cable routing.

The good news is that manual labor will be the bulk of the work. Most modern networking hardware is relatively easy to configure and get connected. While this type of setup can be a bit more complicated, it ultimately gives you more control over your network.

2. Get the right equipment

Once you've decided on the type of VoIP setup you want, it's time to start thinking about the equipment you'll need. If you're using a hosted solution, you'll need to purchase VoIP phones for your employees. These phones are designed specifically for use with VoIP, so they're different from traditional landline phones.

If you're setting up an on-premise system, you'll need to purchase a PBX (private branch exchange), as well as VoIP phones, Ethernet switches, and routers. These devices will help to connect your phones to your network and ensure everything runs smoothly.

3. Set up your network hardware

With all the equipment you need for your VoIP network ready to go, it’s time to connect your hardware. Typically, this is just a matter of plugging in all your routers, switches, and access points. Often, the configuration process is automated. If not, most manufacturers provide configuration guides with their hardware.

If you need to purchase new hardware, ensure it’s capable of IP communication. (Most network hardware is.)

4. Connect to the internet

Once your equipment is powered up, you can connect your local network to the internet and check your internet speed. Make sure your internet bandwidth meets your business’s requirements based on the number of VoIP lines you plan to connect.

5. Test your connection

Now it’s time to test your network to ensure it’s working and has the capabilities you need for VoIP. If your internet connection is slow, there could be a problem with your local network. Even if your internet connection seems fine, it’s still wise to test your internal network to ensure it won’t be a bottleneck for making and receiving calls.

6. Connect and configure your VoIP devices

Connecting VoIP phones is usually as simple as plugging in an Ethernet cable. The process for configuring your VoIP phones will vary from manufacturer to manufacturer, so you’ll need to consult their setup guides when using their hardware.

Common VoIP network issues

Like any other network technology, VoIP is susceptible to various issues that can affect the quality of your business’s communication capabilities. Below are some of the common VoIP network issues.


Latency is the delay in the transmission of voice data over the network. Latency can result in a perceived delay in speech, which can make it difficult to have a natural conversation.


Jitter is the variation in the delay of voice data transmission over the network. These variations can cause voice quality to fluctuate, resulting in a choppy or distorted conversation.

Packet loss

Packet loss occurs when some of the voice data packets sent over the network are lost. These losses can cause gaps in the conversation, making it difficult to hear everything being said.

Bandwidth issues

As we discussed in our network requirements section, VoIP requires a certain amount of bandwidth to function properly. If not enough bandwidth is available, the quality of your conversations can be affected.

Network congestion

If there’s a lot of traffic on your network, it can result in network congestion. Network congestion can cause delays, packet loss, and other issues that can affect the quality of the VoIP conversation.

Firewall and NAT issues

Firewalls and NAT (Network Address Translation) devices can sometimes interfere with the transmission of VoIP data. This interference can cause issues with the quality of the conversation, or even prevent the conversation from taking place altogether.

These are just some of the common VoIP network issues. To ensure the best quality of VoIP communication, it’s important to have a reliable, stable network infrastructure.

Managing and Troubleshooting VoIP Networks

To decrease the likelihood of some of the common VoIP issues we discussed above, it’s critical to understand how to maintain your VoIP network. Managing and troubleshooting VoIP networks can be challenging, but with the right tools and knowledge, it's possible to ensure smooth communication within your organization.

Monitor your network regularly

Regular monitoring is one of the most important steps in managing a VoIP network. Monitoring can help you identify any issues before they become major problems. By regularly monitoring network traffic, you can determine if there are any bottlenecks or congestion points that might be causing quality of service issues. You can also ensure your network is secure by monitoring for any suspicious activity.

Create and implement quality of service (QoS) policies

QoS policies can help you prioritize traffic on your network, ensuring voice traffic is given priority over other types of traffic. By doing so, you can prevent latency and jitter, which can negatively impact call quality.

Invest in the right tools

Network diagnostic tools can assist you in identifying the source of problems on your network. These tools can help you pinpoint specific areas of your network that might be causing problems, allowing you to take targeted action to resolve the issue.

Plug it in, plug it in

It may seem overly simplistic, but even experts need a reminder to return to the basics sometimes. If you’re troubleshooting your VoIP network, check to make sure all of your equipment is properly connected and configured.

Start communicating with VoIP

Whether you build your own local VoIP network or outsource it, VoIP is the future of phone communication. The connection quality is almost always better than calls that connect through the PSTN. And for the convenience of growing businesses, VoIP phone numbers are easier to purchase and configure than traditional landlines.

However, it’s important to remember that your telecom carrier’s network and support is a critical piece of your VoIP connection. No matter how good your local network is, your VoIP calls will be unreliable and of lower quality if your carrier service is unreliable and low-quality.

Telnyx offers high-quality communication capabilities via our private, global, multi-cloud IP network. If you have connection issues, our team of experts is on hand to offer 24-7 support. With numbers available for purchase or porting in over 140 countries, you can make calls from almost anywhere, regardless of your team’s or customers’ locations.

Finally, our Mission Control Portal puts the power in your hands, allowing you to monitor and manage your communications processes with a user-friendly interface.

Talk with our team of experts to learn how Telnyx can provide you with quality VoIP services. Or get started with VoIP calling by signing up for a free Telnyx account.

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