What is a VoIP Server: How It Works & Step-by-Step Setup Guide

A VoIP server is a key part of today’s communication systems. It allows voice, video, and data to travel over the internet instead of old phone lines. This makes your communication more flexible, cost-effective, and easy to expand. 

In this blog, we will explore VoIP servers in detail, analyzing how they function, and their benefits for both businesses and individuals. 

What is a VoIP server? 

A VoIP server, or Voice over Internet Protocol server, is a crucial component in current communication systems. It functions by converting vocal signals into digital data packets, which are then transmitted across internet networks. 

This method ensures immediate voice interaction over data networks, removing the need for traditional telephone lines. The VoIP server provides the central point for managing calls, routing them between various devices and endpoints such as computers, smartphones, and VoIP-enabled phones. 

It also integrates with other communication tools and systems, providing advanced features such as call forwarding, recording, conferencing, and more.

How VoIP Servers Work?

Here’s a simplified explanation of how VoIP servers function:



Call Setup Process

The call setup process in a VoIP system involves several steps, primarily assisted by SIP (Session Initiation Protocol) signaling. 

When a call is made, the VoIP server registers the user’s credentials and authenticates them.  This ensures that users can only make calls with the appropriate permissions. 

The SIP server then routes the call to the recipient, establishing a connection for the conversation.

Media Handling and Codec Management

Once the call is established, the VoIP server handles the media transmission. This involves converting voice signals into digital data using codecs. Different codecs are used depending on the quality and bandwidth requirements. 

The media server within the VoIP system ensures that the audio data is transmitted efficiently between the caller and the recipient. Standard codecs include G.711, G.722, and Opus, which vary in their compression rates and audio quality levels.

Related Reading: VoIP Codec Bandwidth Chart

Call break up and Logging

After the conversation ends, the VoIP server terminates the call and logs the details. This includes call duration, participants, and any errors encountered during the call. These logs are essential for monitoring the system’s performance and diagnosing issues.

How to set up a VoIP server at Home and Office 

Basic Requirements

To set up a VoIP server, you’ll need some essential components:

1/ Hardware:

To set up a VoIP server effectively, you must first gather some essential hardware components. The core requirements include a reliable server that can handle multiple voice data transmissions at the same time. 

Additionally, you’ll need network interface cards (NICs) to ensure a reliable and high-speed connection to the internet. Quality routers and switches are also crucial to manage the traffic between devices efficiently.

Related Readings

2/ Software:

In addition to the necessary hardware, the right software is vital for operating a VoIP server. You will need a VoIP server application, such as Asterisk, FreeSWITCH, or 3CX, which will manage call setups, media handling, and call termination. 

This software should be installed on your server and configured to meet the unique requirements of your business. 

Additionally, you may require SIP client software for the end-user devices to enable them to connect to the VoIP server. 

3/ Network Infrastructure:

This includes a fast and reliable internet connection with sufficient bandwidth to handle multiple simultaneous calls without a decline in quality. A high-performance router is essential for prioritizing VoIP traffic and minimizing latency. 

Additionally, switches should support Quality of Service (QoS) to prioritize voice data packets over other types of network traffic, ensuring optimal call quality and reliability. 

Ethernet cabling should preferably be Cat5e or higher to support gigabit speeds, and the entire network should be secured with firewalls and VPNs to protect against unauthorized access.

Step-by-Step Setup Guide

1/ Installation:

Firstly, download the installation package from the website of your chosen software. As you proceed with the installation, you’ll be directed to configure some fundamental settings. 

This includes setting up the network interfaces, defining SIP trunks, and configuring user accounts. After the installation is complete, verify the setup by connecting a SIP client and making a test call.

2/ Configuration:

Log into the VoIP server’s administrative interface, and navigate to the network settings to properly set the server’s IP addresses and network interfaces. 

Next, set up SIP trunks which are necessary for connecting your VoIP server to external phone networks, allowing for the transmission of calls. 

This involves entering credentials provided by your SIP trunk provider. After setting the trunks, create user accounts for each team member, assigning them unique SIP extensions and credentials. 

This is crucial for authenticating users and managing call routing. Finally, configure call routing rules to define how incoming and outgoing calls are processed, ensuring the system directs calls efficiently.

3/ Testing:

To ensure the VoIP server is functioning correctly, you must conduct a complete series of tests. Start by performing basic connectivity tests to confirm that your SIP clients can successfully register with the VoIP server. 

Next, make a series of test calls to verify call quality, including both internal calls between users on the same VoIP network and external calls to outside phone numbers.

Key components of a VoIP server

The key components of a VoIP server typically include:

Hardware vs. Software VoIP Servers

VoIP servers can be hardware-based or software-based. Hardware VoIP servers are dedicated devices designed specifically for managing VoIP traffic. 

They offer high reliability but can be expensive. Software VoIP servers, on the other hand, run on general-purpose computers or cloud infrastructure. They are more flexible and cost-effective, making them ideal for small businesses.


Core Components

SIP Server:

  • Handles call setup, routing, and termination.
  • Manages user registrations and authentications.

Media Server:

  • Manages the transmission of audio and video data.
  • Ensures clear communication between endpoints.


  • Stores user information, call logs, and configuration settings.
  • Enables quick access and retrieval of data for system management.

Types of VoIP Servers

1/ On-Premises VoIP Servers:

On-premises VoIP servers are hosted within the business’s physical location. They offer complete control over the system and data but require significant upfront investment in hardware and maintenance.

2/ Cloud-Based VoIP Servers:

Cloud-based VoIP servers are hosted on remote servers that are managed and maintained by third-party service providers. They offer scalability and reduced maintenance costs. Businesses pay a subscription fee for access to the service, making it a cost-effective option.

3/ Hybrid VoIP Solutions:

They offer the benefits of both systems, providing flexibility and resilience. Businesses can manage critical functions locally while utilizing cloud resources for additional capabilities.

Features of a VoIP Server

1/ Call Management:

Call management functionalities are essential for a VoIP server, providing complete control over call operations. These include call routing, forwarding, and queueing, ensuring that calls are directed to the appropriate recipients efficiently. 

Additionally, auto-attendants and interactive voice response (IVR) systems allow for the automated handling of incoming calls, reducing the workload on human operators. 

Call recording features enable the storage and playback of conversations for quality monitoring and compliance purposes. 

VoIP servers also support conferencing capabilities, allowing multiple participants to join a single call, which is crucial for remote collaboration and meetings.

2/ Integration with Other Systems:

Integration with Customer Relationship Management (CRM) systems streamlines the process of maintaining customer interactions and records. 

By synchronizing call details automatically, CRM systems allow your service agents to quickly access relevant customer data, ensuring a highly efficient and personalized customer service experience. 

Additionally, integration with email platforms can enable features such as voicemail-to-email, ensuring important messages are never missed. 

Connectivity with collaboration tools like instant messaging or video conferencing applications further expands the capabilities of the VoIP system. 

3/ Security Features:

Here are the key security measures that should be integrated into any VoIP server:

  • Encryption: Enabling SRTP (Secure Real-Time Transport Protocol) and TLS (Transport Layer Security) secures voice and signaling data, stopping interception by harmful hackers.
  • Firewalls: Setting up firewalls to monitor and control VoIP traffic blocks malicious traffic between trusted internal and untrusted external networks.
  • VPNs (Virtual Private Networks): Using VPNs for remote VoIP server access ensures encrypted communications, protecting against unauthorized access and data breaches.
  • Access Controls: Enforce precise entry controls, including multi-factor authentication (MFA) and role-based access control (RBAC), and systematically limit permissions based on the user’s role within the organization.
  • Intrusion Detection and Prevention Systems (IDPS): IDPS identifies and addresses malicious activities in real-time by monitoring traffic, detecting suspicious behavior, and responding to threats.

Benefits of Using a VoIP Server


1/ Cost Efficiency:

VoIP servers reduce your communication costs significantly compared to traditional phone systems. Your businesses can save on long-distance charges and leverage internet connectivity for calls.

2/ Scalability:

VoIP servers offer significant scalability so that you can adjust your communication infrastructure according to your needs. This flexibility supports your growth and adaptation.

3/ Flexibility: 

VoIP servers support remote work and integration with various devices and platforms. Employees can stay connected regardless of their location, enhancing productivity and collaboration.

Related Reading: VoIP phone service for remote workers

What are the ways to keep a VoIP server secure? 

1/ Strong Authentication Protocols

Implementing strong authentication protocols is crucial for ensuring your VoIP server. This includes using multi-factor authentication (MFA), which mandates users to give multiple forms of verification before accessing the system. 

These categories typically include something the user remembers, such as a passcode; a mobile device used to receive a verification code; and data like fingerprints. 

2/ Regular Software Updates

Consistently updating the server software is essential to maintaining the security and functionality of your VoIP system. 

Regular updates ensure that the server is protected against the latest VoIP vulnerabilities and performance issues, reducing the risk of attacks and improving overall system stability.

3/ System Monitoring for Unusual Activity

Routinely monitoring the VoIP server for any unusual activity is essential. This involves tracking call patterns, analyzing usage logs, and setting up alerts for irregularities. 

Constant observation is essential for detecting possible security incidents or suspicious actions immediately, allowing for fast intervention to address risks and minimize dangers. 

Best open-source VoIP server for small businesses

For small businesses, open-source VoIP servers offer cost-effective solutions with reliable features. Some of the best options include:

1/ Asterisk Server:

Asterisk is a powerful, open-source VoIP server platform offering a range of features ideal for small businesses. It functions as a core for various communications applications, handling VoIP calls, conferencing, and call distribution. 

Asterisk supports multiple VoIP protocols, including SIP and IAX, allowing integration with different telephony systems. Its robust call management capabilities include automated attendants, IVR systems, and complex call routing and queuing. 

This ensures efficient management and direction of incoming calls, enhancing customer service and operational efficiency.

2/ FreeSWITCH:

FreeSWITCH can handle a broad range of communications applications, from simple IP PBX systems to complex call centers and conference servers.

Its advanced routing capabilities enable efficient call handling, including advanced call forwarding, queuing, and interactive voice response (IVR) systems. This ensures that incoming call traffic is managed effectively,  optimizing customer experience and operational productivity.

FreeSWITCH also excels in integration options, connecting with CRM systems and various other business applications. This allows automatic call logging, real-time data access, and enhanced coordination across different communication platforms. 

3/ 3CX:

3CX offers a full suite of powerful communication tools that streamline and enhance business operations.

One of the most noticeable features of 3CX is its simple installation process and user-friendly management interface.

Its server can be implemented either on local hardware or via cloud-based solutions, allowing your business to customize its communication infrastructure to its specific operational needs and preferences.

3CX also supports multiple VoIP protocols, such as SIP, ensuring connectivity with a varied range of IP phones and gateways. Its advanced call management features include call forwarding, automatic attendants, call queuing, and conferencing. 

3CX server can easily connect with popular CRM systems and various business applications, enabling automatic call logging, click-to-call, and real-time access to customer data. 

Security features include SRTP encryption for voice data, HTTPS secure provisioning, and strong access controls. These security measures ensure that all communications are protected against unauthorized access and eavesdropping, maintaining the confidentiality of your business conversations.

Frequently Asked Questions 

Q1) Do you need a server for VoIP? 

Ans: Yes, a server is typically required for  VoIP services to enable call management, routing, and signaling. Most commonly, this server is referred to as a VoIP server or IP-PBX (Private Branch Exchange. 

Q2) How to run a VoIP server? 

Ans: First, choose the appropriate server hardware and ensure it meets the necessary specifications for VoIP applications. Next, select and install suitable VoIP server software, such as Asterisk, FreeSWITCH, or an IP-PBX solution, which will manage call routing, signaling, and various telephony functions. Set up the server with proper settings including network configurations and security measures. Connect the server to your existing network infrastructure and test the setup with VoIP-compatible devices such as IP phones or softphones. 

Q3) What are the other names for a VoIP server? 

Ans: The other names for a VoIP server include IP-PBX (Internet Protocol Private Branch Exchange), SIP server (Session Initiation Protocol server), telephony server, and voice gateway.

Q4) Is it possible to run a VoIP server with my existing landline? 

Ans: Yes, it is possible to integrate a VoIP server with your existing landline through the use of an Analog Telephone Adapter (ATA) or a VoIP gateway.

Q5) Is it possible to set up a free private VoIP server using only a home internet connection? 

Ans: Yes, it is possible to set up a free private VoIP server using a home internet connection. Open-source VoIP server solutions like Asterisk can be installed on a home server or even a personal computer. 

Q6) What is VoIP and Why do I need it?  

Ans: VoIP routes voice communications and multimedia interactions via IP networks. Beyond the usual telephony benefits, VoIP allows for the integration of voice communication with other digital services, such as instant messaging and video conferencing, providing a unified communication platform. It also supports remote work by enabling employees to connect to the office phone system from anywhere with an internet connection.

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