VoIP works by first converting your analog voice into digital format (1 and 0), cutting the digital signals into packets, sending them over your existing data network and reconverting them to voice at the destination. The benefit of a digital format is that it can be controlled. It can be routed, modified, condensed, expanded and saved. Digital signals are also more noise tolerant than analog.

• Caller picks up the phone and hears a dial tone;
• Caller dials a number, which is mapped to an IP address of the recipient;
• Call setup protocols are invoked to locate the recipient and send a signal to produce a ring;
• Destination phone rings;
• The caller answers the phone, starting a two way conversation;
• Audio transmission is encoded, travels over IP network and is decoded;
• Conversations end, call tear down occurs and billing performed.