VoIP & Communications

What is VoIP? Business phone systems and unified communications explained

VoIP explained for UK business buyers: how calls travel over the internet, what unified communications adds, features, costs and what you need to run it.

By Dig IT SolutionsUpdated 8 September 20267 min read

Short answer

VoIP (Voice over Internet Protocol) makes phone calls over an internet connection rather than a phone line. Speech is converted into data packets, sent to a hosted platform and delivered to the person called. For a business it means a cloud phone system that works on desk phones and apps anywhere, with features a PBX could not offer.

VoIP has replaced the landline as the default way UK businesses make and receive calls, and with the PSTN being switched off in January 2027 it is about to become the only way. This guide explains what VoIP is, how it works, what unified communications adds, what a business gets from it and what it needs to run properly.

VoIP in one paragraph

Voice over Internet Protocol carries telephone calls as data over the internet rather than as electrical signals on a copper line. A microphone in a handset, headset or phone captures speech, the device digitises and compresses it into small packets, the packets travel over your internet connection to a hosted platform, and the platform delivers them to the person being called, whether they are on another VoIP system, a mobile or a traditional line. At the other end the packets are reassembled into sound. All of this happens in a fraction of a second.

For the business, the consequence is that the phone system is no longer a box in the building. It is a service in the provider's data centres that any authorised device can connect to from anywhere with a decent connection.

Hosted VoIP vs on-site VoIP

There are two ways to run it:

Hosted (cloud) VoIP. The platform is operated by a provider. You pay per user per month, manage settings in a web portal and have no phone server to maintain. This is the right choice for almost every business of up to 250 people. Dig IT deploys 8x8.
On-site IP PBX. A VoIP phone server in your own comms room, connected to the internet through SIP trunks. More control, more to maintain, still a single point of failure in one building. Mostly found in larger organisations or where a recent PBX is being kept for a few more years. Even then, the PBX remains a single point of failure in one building and needs patching, maintenance and eventual replacement, which is why most businesses that price the two options over three to five years choose hosted.

The comparison with the traditional network is in PSTN vs VoIP.

What unified communications adds

Unified communications (UC) is what happens when calling is bundled with everything else people use to talk to each other. A modern hosted platform includes:

Voice: calls, extensions, queues, auto-attendant, voicemail-to-email, call recording.
Video meetings: one-to-one and group, screen sharing.
Team chat and presence: messaging and seeing who is available before you transfer a call.
Mobile and desktop apps: the same extension and number on a laptop and a phone.
Integrations: Microsoft Teams, Microsoft 365, CRM and helpdesk systems, so a caller's record appears on screen and calls are logged automatically.
Analytics: calls by hour, missed calls, wait times, calls per person.

VoIP is the engine. UC is the vehicle around it. For most SMEs the distinction is academic because the platform they buy is a UC platform.

Handsets, softphones and Teams

People connect to the platform in three ways, and most businesses use all three:

IP desk phones plug into the network and look like the phones staff are used to. Reception, hire desks and anyone on calls all day usually want one.
Softphones are the platform's app on a PC or Mac, used with a headset. Hybrid workers and anyone who already spends the day in front of a screen tend to prefer this.
Mobile apps put the extension on a smartphone, presenting the business number on outbound calls and keeping call records in the platform rather than on a personal phone.

Where a business already lives in Microsoft Teams, the platform can integrate so that external calls are made and answered inside Teams while queues, routing, recording and reporting stay on the VoIP side. Dig IT configures this as part of most 8x8 deployments alongside Microsoft 365 and Teams.

What a business gains

Area	Traditional PBX and lines	Hosted VoIP and UC
Where you can answer	At your desk	Anywhere with internet, same number
Adding a user or site	Engineer, hardware, weeks	Licence and configuration, minutes
Cost model	Line rental per line, call charges, maintenance	Per-user subscription, bundle usually included
Features	Basic transfer and voicemail, extras cost more	Queues, recording, auto-attendant, analytics, integrations included
Visibility	A bill	Reports on every call
Continuity	Dies with the building	Divert to mobiles, work from anywhere
Multi-site	Separate systems, chargeable inter-site calls	One system, internal calls free
Future	Withdrawn January 2027	Standard

The practical outcomes: fewer missed calls, staff reachable on the business number wherever they are, a professional front for small teams, one system across several sites, and data to manage the phones with. Our article on how VoIP improves customer experience walks through those in detail.

What it costs

Hosted VoIP is subscription priced per user per month. Observed UK market ranges run from about £5 for a basic seat with limited calls to £30 or more for a seat with a full UK call bundle, recording, Teams integration and analytics. One-off costs cover IP handsets, headsets, porting your numbers and any router, switch or cabling work the network needs. Ongoing extras include international calls outside the bundle, additional numbers and call recording storage beyond the included allowance. Longer contract terms lower the per-user price and sometimes include handsets, at the cost of flexibility if headcount changes. The full breakdown, including the hidden costs, is in how much VoIP costs in the UK.

What it needs to work well

VoIP reliability is a network question. A call uses around 100 kbps in each direction, so bandwidth is rarely the issue. What matters is that the connection is stable (latency under about 150 ms, jitter under about 30 ms, packet loss under 1 percent) and that voice is prioritised over everything else. In practice:

A business-grade fibre or SoGEA connection, ideally with a 4G or 5G backup on the router.
Quality of service configured on the router and switches.
Desk phones on Ethernet, on their own VLAN, powered over Ethernet from switches that can supply it.
Tested cabling.
A UPS on the comms cabinet.

This is why Dig IT's VoIP and business phone systems service starts with a network assessment rather than a handset catalogue, and why it sits alongside our infrastructure and networking work. The detail is in is VoIP reliable for business calls.

Security and emergency calls

Security

Because VoIP runs over the internet it needs the same discipline as any other cloud service. Business platforms encrypt calls and signalling and support multi-factor authentication. The controls that matter are yours: change default passwords, restrict international dialling, limit admin accounts, keep apps updated, and manage the devices staff use. Toll fraud, where a compromised account is used to dial premium-rate numbers overnight, is the most common VoIP incident and is entirely preventable.

Emergency calls

UK VoIP providers must provide 999 access and hold a registered address for each number so calls can be located. Keep the address correct for every site and update it when people move. Ofcom's guidance on moving landline phones to digital technology also covers what providers should offer customers who rely on a landline during a power cut.

Who uses it

Hosted VoIP now suits organisations from five people to several hundred. Almost every kind of business we support: accountancy and legal practices that need call recording and a professional front, estate agents whose negotiators are out all day, plant hire and construction firms with depots and site staff, clinics that need appointment lines and queues, golf clubs and leisure venues with several departments on one number. Our guide to which businesses benefit most from VoIP covers each in turn.

Getting there

Moving from landlines is a planned project rather than a swap: audit lines and devices, test the network, choose the platform and handsets, port the numbers, run in parallel and cut over. Most single-site businesses take four to eight weeks, with most of that time spent waiting for the number port rather than doing anything disruptive. The old lines stay live until the port completes, the new platform is built and tested in parallel, and callers notice nothing on the day. The steps are in how to switch from a landline to VoIP, and the deadline that makes it urgent is in our PSTN switch-off guide.

What to do next

If you are still on analogue or ISDN lines, or on a hosted platform that was never set up properly, the useful first step is a conversation about how your calls are handled and what the network can support. Talk to an engineer and we will give you a straight assessment.

Frequently asked questions

What is the difference between VoIP and unified communications?

VoIP is the technology for carrying voice calls over the internet. Unified communications (UC) is a platform that combines VoIP calling with video meetings, team chat, presence, voicemail and integrations into one application. Most hosted business phone systems are now UC platforms, so a business buying VoIP usually gets the rest as part of the subscription.

Do I need special equipment to use VoIP?

You need an internet connection, a router that can prioritise voice traffic, and something to talk into. That can be an IP desk phone, a headset with a softphone app on a PC, or the app on a mobile. Most businesses mix desk phones for reception and heavy users with apps for everyone else. On-site phone servers are not needed with a hosted platform.

What does VoIP cost per user in the UK?

Observed per-user subscriptions for hosted business VoIP typically fall between about £5 and £30 a month, depending on the call bundle and features. Basic seats with limited calls sit at the lower end, seats with UK call bundles, recording and Teams integration in the middle, and contact-centre seats at the top. Handsets, porting and any network work are one-off extras.

Is VoIP call quality as good as a landline?

On a business-grade connection with quality of service configured, VoIP uses HD voice codecs and sounds clearer than an analogue line. Poor quality comes from the network: congested broadband, a router with no prioritisation, phones on Wi-Fi or faulty cabling. Fix those and the platform is not the limiting factor. Test at the busiest time of day before going live.

Is VoIP secure for business calls?

Business platforms encrypt signalling and media, support multi-factor authentication and monitor for fraud. The risks come from configuration: default passwords, open international dialling, too many administrators and unmanaged devices. Put VoIP inside your normal IT security regime and it is considerably more controllable than the analogue lines it replaces.

Can VoIP work with Microsoft Teams?

Yes. Platforms such as 8x8 integrate with Teams so staff can make and receive external calls from the Teams client using the business number, while call routing, queues, recording and reporting stay on the VoIP platform. It gives businesses that already live in Teams a single application for chat, meetings and phone calls without relying on Microsoft's own calling plans.