A system and a method are disclosed which utilizes the standard communication devices at the users' premises and a standard LAN communication in order to enable utilization of IP communication possibilities such as V/FoIP calls, SMS and MMS messaging and video communication over IP network. The system includes a single Local Server and multiple Endpoint Interface Units. The Local Server connects the LAN to the external IP communication and each Endpoint Interface Units connects the communication devices to the LAN. According to the preferred embodiment all communication between the Local Server and the Endpoint Interface Units is established using a layer 2 communication protocol which improves the data transport capabilities of any given network and lowers the overall costs of the system's implementation. In a second embodiment the data processing procedure is performed on an external server which establishes a VPN communication with each Local Server.