Before VoIP, it was expensive to have every phone line connect to a trunk – the thing that connected the phone to the PSTN – so lines would be shared. Internally, you would call from one room to another by calling their extension, which would usually have four digits. Let’s use an example: Lucy and Ethel work at Lucy’s Chocolates, in the same office. Lucy dials 0001 to call Ethel, and Ethel dials 0002 to dial Lucy; Ricky, calling from an outside line, dials 555-0001 to call Lucy.

With VoIP, and SIP in particular, those extensions get a lot further extended. You can set up “extensions” throughout several offices, regardless of where they are geographically. So, let’s take another example. Ralph, who owns Ralph’s Deliveries, wants to call Ed, who is working down the hall, and Alice, who is working from home. For Ralph, the experience is the same – pick up the phone and dial Ed’s or Alice’s extension.

Many business VoIP service providers offer unlimited virtual extensions. A virtual extension calls other extensions. So, let’s say Ralph has an office in Brooklyn, another office in Queens, his home, and his mobile VoIP app. Ralph’s two offices, home and mobile are all extensions. When Lucy calls Ralph, the virtual extension dials all of Ralph’s phones until he picks up. If Ralph wants to, he can have a separate line for each office. In fact he can have as many phone lines as he wants, if he chooses to pay for each number. But, each extension is, naturally, an “extension” of the first phone number, since the call is being forwarded automatically.

Why would someone want more than one phone number? The reason is to make receiving calls a local call. Lucy and Ethel are still using traditional phone services, so it makes good business sense for Ralph to have a local number for Lucy to call, and she won’t have to spend the money on a long distance call.

Let’s review. Within an office, one person calling another person dials an extension. In an older PBX, that would be four digits, and limited to the same building. In a hosted PBX, it can be three, four or five digits, and the extension can be anywhere in the world, including your cell phone. Each “DID” phone number corresponds with a line. If you have a phone number, incoming callers can skip past the auto attendant and call you directly.