VOIP is a technology that allows users to make phone calls over the Internet instead of traditional phone lines. It encodes audio and video into digital signals that can be transmitted over broadband connections. While VOIP offers lower costs and additional features compared to traditional phone service, it also faces disadvantages like potential service disruptions during power outages and difficulties tracing emergency calls. The document discusses the history and workings of VOIP, compares it to traditional phone systems, and provides examples of hospitals adopting VOIP technologies.