What is hosted VoIP?

A complete guide to hosted Voice over Internet Protocol

If you want to learn about hosted VoIP (Voice over Internet Protocol), look no further than this handy guide. We’ll answer all your questions on the subject—but just in case you’re only here for a few specific answers, here’s what we’ll be covering:

The more technology grows and develops, the more creative business solutions get.

In particular, the world of business communications is constantly evolving. Having a desk phone just isn’t enough anymore, especially when everyone you do business with uses a softphone, mobile phone, and/or SMS for their communications.

So how do you stay on top of the trends and find a business phone system that’s cost-effective, efficient, modern, and universally useful?

As it turns out, the answer is deceptively simple: All you need is a business VoIP solution.

Let’s back up for a second, though. What exactly is a VoIP service, and what makes VoIP solutions so useful? We’re going to look closely at what VoIP technology is and how it can benefit your business.

What is a VoIP phone system?

The only difference between a “regular” telephone system and VoIP phone system is that Voice over IP uses the internet instead of a telephone network to make phone calls.

Some VoIP phone systems are just standalone voice communications solutions. Others are part of unified communications suites, meaning they're bundled with:

  • Video conferencing
  • Messaging functionalities
  • SMS
  • Email
  • Audio conferencing

And more, all on the same platform.

How does VoIP calling work?

Old-fashioned phones use copper wires and plain old telephone service (POTS) to connect calls. Traditional mobile telephony works by having phones send radio waves to a local cell tower, which then connects to the cellular network to transmit calls in the form of the sound waves.

Plenty of things can interfere with your cellular connectivity, including the physical distance between you and your nearest cell tower.

VoIP calling is much simpler, and comes with fewer connection issues.

VoIP systems convert your analog voice sounds into digital signals instead of radio. Those digital signals are then delivered to the person you're talking to in the form of data over your broadband connection.

What is cloud VoIP?

Cloud-based VoIP is Voice over Internet Protocol that's deployed with the help of cloud technology. With this setup, your call routing is processed in a data center. In other words, it’s managed off-site, by an external company.

Cloud VoIP - sometimes used interchangeably with the term "hosted VoIP" - is cheaper than its alternative (on-premises VoIP). That makes it more viable for small businesses, which typically have more budget constraints.

The thing that distinguishes the two types of VoIP calling is where the call routing is initiated. On-premises VoIP relies on a switch that gets installed in your office. This setup's entirely feasible for large businesses and enterprises, since they’ll be able to afford the equipment necessary to meet the demands of their VoIP tools. The same can't be said for more modestly-sized companies.

What is a VoIP business phone?

Essentially, a VoIP business phone is an office phone that works with Voice over IP. It comes in different forms:

  • IP phone - it looks like a standard landline or office desk phone, but actually connects to a VoIP phone system instead of POTS
  • Softphone or VoIP app - this is software that you can download on your personal computer or your smartphone so you can access your VoIP service through more mobile devices

There are other configurations for VoIP phones, but these two variations are the most common.

What are hosted VoIP services?

Hosted VoIP services provide communications solutions using hardware that’s located outside of the users' environment. In other words, hosted VoIP phone systems work via equipment that’s located outside your actual office.

Often, a VoIP service provider will be hosting that equipment. They usually store them in their data center(s). This allows hosted VoIP providers to let you use their service without needing to install expensive hardware in your office, which is especially useful for smaller businesses or organizations that don’t want to dedicate a lot of resources to the maintenance of their VoIP solutions.

Benefits that using hosted VoIP solutions provides

VoIP services come with a lot of pros and just a few cons. Some of the most important advantages of opting for hosted VoIP services include:

  • Cost savings, since you’ll already have internet connectivity and only need to pay a set fee each month to use your new phone system
  • Fixed pricing that doesn’t change when you make long distance calls
  • Compatibility with either the IP phones you already have or your mobile devices and personal computers
  • Easy call management with any features you might need, including caller ID for all incoming calls
  • High flexibility, since you can connect with any of your coworkers in the world at any time - at little to no additional cost to either party
  • High scalability, since you don’t need to install extra hardware to scale up, so it’s much easier, faster, and cheaper

Top 3 uses for hosted VoIP solutions

The flexibility of hosted VoIP solutions means they're suitable for lots of different situations. Three of the most useful ones, in no particular order, are:

1. International calling

No matter where you and your co-workers or customers are located, the best VoIP providers won’t charge a high international calling rate. That means inter-country calls won't cost much more than local ones, and that VoIP is suited for any business that might need to make or take international calls.

Bonus: In many cases, a business VoIP system treats calls within your company's private phone network like a regular call, even if you and your colleagues are operating from different continents. This means no extra costs!

2. Unified business communications

Using your hosted VoIP solution as a phone service tool is great.

What’s even better is using it as part of a unified platform for your communication needs.

That way, you can talk to individuals, place conference calls, and handle other business communications in one place.

3. Contact center solution

There’s no better technology for a contact center than one that lets agents provide customer support to callers anywhere in the world. That’s why hosted VoIP is a great solution for call centers. It also helps that it incurs no extra charges for things like call forwarding or call recording.

That being said: VoIP is only one component of a good contact center setup. While Voice over Internet Protocol is fine for small-scale call centers, you'll want to invest in a more robust solutions suite for bigger operations.

What is PBX?

Private branch exchange, or PBX for short, is the term that’s used to describe the private phone networks that make up a business’ phone system. It's what allows departments within an organization to call each other quickly, or what companies use to set up phone extensions within departments.

There are two types of PBX: The traditional hardware-based kind, and the hosted version. We’re going to look at what distinguishes them from each other, as well as what makes hosted PBX different from hosted VoIP.

Traditional PBX

If you’re using wire-based phone lines to connect your on-premises PBX phone system, that means you’re using traditional PBX to run that system.

This technology has existed since the 1970s. It’s reliable, but outdated, and that’s not even bringing up how difficult it is to scale up a traditional PBX system. Since it’s based entirely on hardware, you’d need to install more wires and connect those to the system every time you want to add a phone line for a new employee.

Needless to say, traditional PBX is going out of style, particularly in fast-paced, rapidly growing businesses.

Hosted PBX

Much like hosted VoIP, hosted PBX services are phone systems maintained by the service provider. They focus on providing your phone services through the internet and minimizing the need for specialized hardware, making them much more scalable than their legacy counterparts.

Companies that choose hosted PBX can simply employ the solution and leave the technical maintenance to their PBX provider.

That also means hosted PBX is cheaper than traditional PBX.

Hosted VoIP vs. hosted PBX

You might be wondering what the difference is between hosted PBX and hosted VoIP. The trick is in the phrasing; it’s not so much one versus another.

Instead, hosted PBX works in tandem with hosted VoIP to provide solutions for companies.

VoIP is what makes calls over the internet possible. PBX is what makes a phone system work in the context of organizations (think of how your home phones work versus how your office phones work). Hosted PBX software can’t work without hosted VoIP; but that doesn't mean that basic hosted VoIP can support a full-fledged business with different departments.

It can be argued that hosted VoIP is a component of hosted PBX.

Which hosted VoIP provider is the best?

There are lots of VoIP service providers, each with their own benefits and drawbacks. That’s why it’s difficult to concretely declare one as the universal number one choice.

To choose the best provider for you, you have to know what you’re looking for. For example - if you know your conferencing abilities will be a priority, then it’s a good idea to pick a provider that focuses on that area.

With that said, certain providers are more flexible than others.

A great indication of flexibility is a provider’s ability to let you try their software for free. That way, you get to try out their services and see how well they suit your needs.

Hosted VoIP systems: The ideal communication tool

Modern solutions need to be scalable, adaptable, and universally useful—and hosted VoIP systems fit that bill perfectly.

It doesn't matter if you need a unified communications solution or if you’re just looking for a new option for telephony; you can find what you’re looking for in VoIP systems. They’re a flexible solution that’s compatible with all sorts of technology.

As an added bonus, hosted VoIP systems are just as useful to large companies as they are to the smallest startups. Anyone can benefit from saving on maintenance and scaling costs, after all.

So why not try it out? 8x8 offers a free trial of their business phone solutions, which uses hosted VoIP. Check out our plans and pricing or talk to our sales people.

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