Voice Over IP or VoIP (sounded “voy’p”) is simply voice conversations that traditionaly went over a phone line now go over your network.  Phones in a VoIP system become “nodes” on your network as a computer is a “node” on your network.  In fact, computers can become voice over IP phones themselves with the use of special software know as a softphone.

When making a call using a VoIP phone or device, the voice signal is digitized or coded into a network protocol using what is called a Codec.  A Codec is a software routine that encodes the audible sounds made when talking into a digital stream that can be transmitted over a network.  Some Codecs are designed to reduce the amount of network bandwidth they use, usually at the cost of the quality of the sound that is received.  When bandwidth is not a problem codecs are able to convert the sounds and maintain a much richer quality.

VoIP is able to save costs to an organization because most all orginazations need a network anyway for thier computers to communicate with.  Conversations within the same company’s network can be transmitted at no additional cost, no matter when in the world either end of the call happens to be.

Hardware costs for a VoIP system are also significantly less than traditional phone systems.  The entire VoIP phone system can run on 1 fairly inexpensive computer or they can be hosted elsewhere so your organization has only the need to buy phones and connect them to your network.  No other hardware is required saving even more money on the front end.

I hope this helps clarify what a Voice Over IP system does and what it can mean to an organization in terms of saving money, time, space, maintenance, and the cost of the service itself.