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Internet Protocol or IP phones are devices that use the Voice over IP technology (VoIP) to make telephone calls over the Internet. With such devices, the ordinary public switched telephone network (PSTN) system is not required. The cost of making a phone call using an IP phone works out much cheaper than the regular phone network since you pay only for the Internet bandwidth and not per call.

Voice over Internet Protocol is a method for converting analogue audio signals into digital data that can be transmitted over the Internet. IP phones are specialised instruments that look just like normal phones with a handset, cradle and buttons. The difference is that, instead of having the standard RJ-11 phone connectors, IP phones have an RJ-45 Ethernet connector. IP phones connect directly to the router and have all the necessary hardware and software to handle an IP call. VoIP calls can also be made using Wi-Fi phones if a Wi-Fi hot spot is available.

A typical IP phone will include hardware like speakers, ear phones, a microphone and keypad. The IP phone also includes display hardware, a general purpose processor (GPP) to process application messages, a digital signal processor to process RTP messages, converters to convert voice to digital data and back again, Ethernet or wireless network hardware to send and receive messages and a battery or DC source.

Most of the features common with regular phones are also available with IP phones. These include caller ID, dialling using name/ID, locally stored and network-based directories, conference and multiparty calls, call park, call transfer and call hold, as well as applications like weather reports and live news.

The limitation of an IP phone is that it needs an Internet connection and a power source. IP phones are therefore more vulnerable to outages than PSTN lines. IP phone conversations can become distorted, garbled or lost due to disturbances in the transmission. Also VoIP is susceptible to malwares, viruses and hacking (though this is very rare). Moreover, if a user is using the PC to make the call, any overload of the PC processor can affect the call. Broadband VoIP phones (also called hard phones) have overcome this problem by communicating directly with a VoIP server, VoIP gateway or another VoIP phone, so they do not require a PC or software running on a PC to make or receive VoIP phone calls. A hard phone is considered by many as the best solution for IP telephony.