There are many advantages to using Voice Over IP protocol for your business phone service.  Most providers offer many more features than traditional phone service providers and VoIP can save you significant money.  There are many choices available in the market for VoIP service and many phone companies to choose from.  Broadly speaking, these providers can be broken down into three categories; Device-based, Software-based and Cloud PBX providers.  A fourth category not discussed here are the residential VoIP providers.  Generally, you should consider the type of service which will serve your business needs best and then consider price and reputation before choosing a VoIP service provider.  Cost and features can vary widely in the marketplace.

Device-Based VoIP Providers

Device-based VoIP providers generally send you a device into which you will plug your traditional analog phones.  If you are technically adept, installing these devices and wiring them into a premise based system (PBX) is possible.  Most users, however, plug a phone directly into the provider’s equipment.  Many of the features offered by these systems are built into the equipment they send you.  Features such as voicemail, auto attendant (virtual receptionist), music-on-hold, conference calling and call forward are often standard.  One disadvantage of these systems, because the features are built into a device that is located on premise, is that they do not function when your Internet service is down.  Another disadvantage is that your features are limited to those supported by the provided equipment.  Examples of this type of VoIP service providers are Ooma Office and MagicJack.


  • Most services offer inexpensive calling plans with unlimited domestic calling
  • No charges per phone
  • Easy to install in small offices


  • Limited feature set,
  • Phone service is highly dependent on Internet service uptime,
  • Difficult to expand as your company grows,
  • Not well suited for larger offices and not expandable to multiple locations

Software-Based VoIP Providers

Software-based VoIP services are very common. This is perhaps the most popular type of VoIP service worldwide in terms of the number of users because they offer the ability to make international calls between users for free.  Connecting to landline phones is also possible but can be costly because the connections are billed on a per minute basis.  Some service providers offer monthly plans.

These services work via a software application that emulates a phone called a softphone. Applications can run on PCs or Android and iOS smartphones.  Audio quality is highly dependent upon the speed of your Internet connection though.  If you are using an Android or iOS application, calls can be completed using your mobile data service.  Getting started with these services is very easy — usually you can be up and running in minutes.  There is no equipment necessary assuming you already have a computer or smartphone. Software-based VoIP services are well suited to the individual user but don’t offer many business-class features such as internal extensions, ring groups or shared line appearance.  Examples include Skype, WhatsApp, Google Voice, Grasshopper.


  • Free calling between users
  • portable (not tied to a physical phone)
  • easy to install and get going quickly
  • Good for the individual user or SOHO use


  • Can be expensive to call landlines
  • call quality can suffer depending upon Internet connection
  • limited business-class features
  • not easily expandable to multiple users

Cloud PBX Providers

This is the most popular type of VoIP service chosen by businesses from single line coffee shops to the largest Fortune 500 companies.  These services are tailor made to serve businesses by offering a long list of cloud-based features while cutting the cost of traditional phone service.  Most service providers offer unlimited domestic calling and deeply discounted international rates. Cloud-based systems also offer savings on equipment as VoIP phones are directly connected to the Internet and are built on industry standards, thus you are not tied into buying expensive premise-based (PBX) systems and proprietary phones.  Additionally, the list of features available is not based on the equipment you buy but rather the service plan you choose as all features are software-based.  Still, equipment is required and often comes with upfront costs.  Most service providers also offer web-based smartphones and apps for you Android or iOS devices so that you can take your phone system wherever you go.  Some popular features include SMS enabled business phone lines, sharing one phone system across multiple locations and the ability to program the phone system via a web portal.  Examples include Gabbit, RingCentral and 8×8.


  • Inexpensive compared to traditional phone service
  • Feature rich
  • Expandable access multiple locations and most features are not dependent upon your Internet service.


  • Requires equipment purchase and installation
  • Setup and initial programming can be challenging