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IP stands for Internet Protocol and is the standard protocol for transferring information over the Internet between computers and other devices. The same standard is normally used in local networks too. An IP address is the unique network address that a computer has in the network. An IP phone is a phone that, like a PC, is connected to the network/Internet. Like the PC, it has an IP address and the call is transmitted as data packets over the network. Calls can be made from an IP phone to other IP phones (without leaving the network) and to regular phones over the public telephone network.

SIP stands for Session Initiation Protocol and is a standardised protocol (communication regulations) for connecting phone calls via networks – in most cases via the Internet too. To make and receive calls, the phone has to be registered to a SIP switch. The switch can be a company PBX or be located with an IP telephony service provider. The SIP switch ensures that the call is connected to the right address within the network or sends the call to the public telephone network if the recipient is not registered as an IP telephone in the same SIP switch. An IP phone can be moved and used literally anywhere. The only requirement is for it to be connected to the network/Internet and have contact with the SIP switch where it is registered.