Hosted phone systems are a modern-day communication solution that operates over the internet, often synonymous with terms like cloud PBX, virtual PBX, or hosted PBX. They fall under the broader umbrella of VoIP (Voice over Internet Protocol), which simply means sending voice calls over the internet.

Hosted Phone Systems vs. Other Types of Phone Systems

Sorting through the jargon in business telecommunications can be confusing, with terms that sometimes seem interchangeable but actually refer to different things. We’ll clarify the distinctions between hosted phone systems and other phone system options, helping you avoid any mix-ups so you can make the right choice for your business.

Landlines/Traditional Systems

Traditional landline systems, also known as Public Switched Telephone Network (PSTN), operate on a network of copper or fiber-optic cables. Unlike hosted phone systems that transmit calls over the internet, landlines use physical wired connections.

This old-fashioned system is reliable but lacks the flexibility and advanced features hosted or VoIP systems offer. For instance, hosted phone systems allow for remote access, easy scalability, and integration with other business applications, which are not typically available with traditional landlines.

VoIP Systems

Voice over Internet Protocol (VoIP) is a technology that enables voice communications and multimedia sessions over the internet. Hosted phone systems are a subset of VoIP systems, with the key difference being where the hardware and software are housed and managed. In a hosted phone system, the service provider manages these components off-site, relieving the business from the maintenance burden.

VoIP is a broader term encompassing other setups like on-premise VoIP, where the business manages the hardware and software on-site. Both hosted phone systems and other VoIP setups offer cost-efficiency, advanced features, and flexibility compared to traditional landlines. However, hosted formats stand out for their ease of management and lower upfront costs.

On-Premise Solutions

On-premise phone systems require the hardware and software necessary for the phone system to be housed and managed on-site within the business. This contrasts with hosted phone systems, where a service provider manages these components off-site. On-premise solutions often entail higher upfront costs due to the purchase of hardware and software. Additionally, they require in-house expertise for setup, maintenance, and troubleshooting.

Unlike hosted systems, on-premise solutions don’t inherently offer remote accessibility, and you may need additional hardware or software to add this feature. Hosted phone systems, on the other hand, are designed for remote access, with the service provider taking up the responsibility for maintenance, updates, and troubleshooting. This means you get a more hassle-free solution if your business is lacking in-house technical expertise.

Cloud-Based Solutions

Cloud-based solutions are services and applications hosted online rather than on local servers or personal computers. This encompasses many services, including data storage, email, and phone systems. Hosted phone systems are a type of cloud-based solution specifically focused on providing telephony services. They operate over the internet, with the service provider managing the necessary hardware and software off-site.

Virtual Phone Systems

Virtual phone systems are a type of telephony solution that primarily caters to remote workers or businesses without a fixed office space. They provide a professional phone presence without requiring physical phone lines or hardware. Calls can be forwarded to employees wherever they are, on whatever device they have at hand.

While hosted phone systems and virtual phone systems both operate over the internet, hosted phone systems offer a wider range of features and can come with physical desk phones, making them more suitable for established businesses with office spaces. On the other hand, virtual phone systems are more lightweight, focusing on providing basic telephony functions with the flexibility of remote operation.

Call Center Software

Unlike hosted phone systems, which provide general telephony services, call center software is specifically tailored for handling large call volumes and providing enhanced customer service functionalities. It provides tools for routing calls to the appropriate agents, monitoring performance, and managing customer interactions. It can also be integrated with hosted phone systems to extend functionality.

SIP Trunking

SIP (Session Initiation Protocol) trunking is a technology used to enable the provision of voice and other unified communications services over the internet. It connects a PBX (Private Branch Exchange) to the internet, replacing traditional telephone lines. While hosted phone systems and SIP trunking both operate over the internet, they serve different purposes.

Hosted phone systems provide a complete telephony solution with a range of features managed off-site by a service provider. In contrast, SIP Trunking is a technology that can be used alongside a PBX, whether on-premise or hosted, to enable internet-based voice communications. It’s a component that can be utilized within a hosted phone system rather than a type of phone system itself.

Office Phone Systems

Office phone systems are comprehensive telecommunication solutions that facilitate voice communications within a business environment. They can include a variety of setups, such as traditional landlines, VoIP systems (including hosted and on-premise solutions), and PBX systems. The primary goal is to provide seamless communications both internally among staff and externally with customers and clients.

Hosted phone systems are a type of office phone system that offers the added advantage of cloud-based operation, allowing for remote accessibility, easy scalability, and a lower upfront cost compared to traditional or on-premise solutions.

The main distinction is where the hardware and software are housed and who manages them. In hosted phone systems, these are managed off-site by a service provider, whereas other types of office phone systems require on-site hardware and management.

Multi-Line Phone Systems

Multi-line phone systems allow for multiple phone lines, each with a unique number, on a single system, and it can handle multiple calls simultaneously. They can be found in both traditional and VoIP setups, including hosted phone systems. The difference lies in the technology used to manage these lines.

In traditional setups, multi-line systems require physical wiring for each line, while in hosted phone systems, this functionality is achieved digitally over the internet. Hosted phone systems provide a more modern, flexible, and scalable approach to handling multiple lines without the need for extensive physical infrastructure.

Hybrid Phone Systems

Hybrid phone systems combine features of traditional landline systems and VoIP technology. They allow businesses to use VoIP technology while retaining their existing landline infrastructure. This can be a cost-effective way to introduce the benefits of VoIP, such as lower call costs and advanced features, without a complete overhaul of the existing phone system.

Compared to hosted phone systems, hybrid systems can offer a middle ground, providing some of the modern features of VoIP while retaining a level of familiarity and offering a use for existing infrastructure. However, they may not provide the same remote accessibility and ease of management as a fully hosted solution, where the service provider takes care of maintenance and updates off-site?.

How Hosted VoIP Phone Systems Work

Hosted VoIP phone systems transmit voice communications over the internet rather than traditional telephone lines.

Here’s a high-level overview of how they work:

  • Cloud Hosting: The core components of a hosted VoIP phone system, including the servers and switches, reside in secure data centers off-premises, commonly referred to as the cloud.
  • Subscription Model: Businesses subscribe to the service monthly, gaining access to the telephone service without needing on-site hardware or software.
  • Internet Connection: Calls are made and received over a stable internet connection. Each user requires a device such as a desk phone, computer, or mobile device with the necessary software or application to access the system.
  • Automatic Connection: Upon setup, devices automatically connect to the hosted system’s servers and switches, making it easy to use the phone system.
  • Maintenance and Updates: The service provider handles maintenance, updates, and troubleshooting.
  • Unified Communications: Hosted VoIP phone systems often come with a range of features beyond simple voice communication, such as video conferencing, instant messaging, and integration with other business applications.
  • Scalability and Flexibility: You can easily add or remove users and choose the features and integrations you need, offering a system that can easily grow with your business.

Everything You Need to Set Up and Use a Hosted VoIP Solution

Setting up a hosted VoIP solution is relatively straightforward, but certain requirements and steps need to be addressed to ensure a smooth setup.

Here’s what you need to know:

  • Internet Requirements: A stable, high-speed internet connection is crucial for a hosted VoIP phone system. The quality of voice calls is directly related to your internet bandwidth and stability.
  • Devices and Hardware: Hosted VoIP solutions can be used with traditional desk phones with an analog telephone adapter, softphones, or mobile devices.
  • Bring Your Own Device (BYOD): Hosted VoIP solutions often support a BYOD policy, allowing employees to use their own devices, like smartphones or laptops, to access the phone system. This can reduce hardware costs and provide flexibility for remote workers.
  • Implementation Steps: Choose a VoIP provider that fits your needs and budget. Configure your settings and user accounts, then set up your devices. Train your team on the system’s features and conduct a quick test to ensure quality. Finally, monitor performance and manage user accounts, seeking provider support as needed.
  • Customization: Hosted VoIP solutions often come with various customizable features and integrations, allowing you to tailor the system to your company’s needs.
  • Support and Maintenance: Ensure you have access to support services provided by the VoIP service provider for troubleshooting, maintenance, and updates to the system.

Pros and Cons of Hosted Phone Systems

Like anything, hosted phone systems have their own advantages and drawbacks. Understanding these can help you make an informed decision based on your specific needs and circumstances.

Pros:

  • Cost-Effectiveness: Hosted phone systems usually have a lower upfront investment as the service provider manages the essential hardware and software off-site. The subscription-based pricing model can also be more manageable for small to medium-sized businesses.
  • Ease of Setup and Use: Setting up a hosted phone system is usually straightforward, requiring minimal technical expertise. The service provider manages most of the technical aspects, making it easy to get started?.
  • Remote Accessibility: Employees can access the phone system from anywhere with an internet connection, making hosted phone systems an excellent choice for businesses with remote or mobile workforces?.
  • Scalability: The system is easy to scale, allowing you to add or remove users and adjust the features you need as your business grows.
  • Maintenance and Updates: Maintenance and updates are handled by the service provider, ensuring the system stays up-to-date and secure without any effort from you.
  • Unified Communications: Many hosted phone systems offer a range of unified communications features like video conferencing, instant messaging, and integration with other business applications, providing a comprehensive communications solution.

Cons:

  • Internet Dependence: The service’s quality and reliability depend on a stable internet connection. Poor internet connectivity can lead to dropped calls or lower call quality?.
  • Limited Customizability: While hosted phone systems offer a range of features, there may be limitations in customizing the system compared to an on-premise solution. Some businesses might find that the available features do not fully meet their unique needs?.
  • Potential for Lower Quality: The voice quality can be lower than traditional landline systems, especially if there is insufficient bandwidth or network congestion.
  • Latency and Jitter: VoIP technology, which underpins hosted phone systems, can experience latency and jitter, which affects the clarity and timing of voice communication.
  • Data Security Concerns: Hosting sensitive data off-site might raise security concerns, especially if you operate in a heavily regulated industry. However, reputable providers have robust security measures in place to mitigate these risks.

Is a Hosted Phone System Right for You?

Determining whether a hosted phone system is the right fit for you depends on a few things, such as your business’s size, operational needs, technical capabilities, and budget.

Here are some scenarios where alternative solutions might be more appropriate:

  • Established Infrastructure: If your business already has a substantial investment in an on-premise phone system with a significant remaining lifespan, migrating to a hosted solution might not offer enough benefits to justify the switch.
  • Customization Needs: Businesses with highly specific or unique telecommunication needs might find on-premise solutions more fitting as they offer more customization than hosted systems.
  • Control and Security: Companies in highly regulated industries or those that need very secure data might prefer on-premise solutions that provide greater control over data handling?.
  • Internet Reliability: In areas where internet connectivity is unreliable or slow, the performance of hosted phone systems might be subpar, making traditional or on-premise solutions more reliable options.
  • Technical Expertise: Businesses with in-house technical expertise might find on-premise systems more manageable and cost-effective in the long run as they can handle maintenance and updates internally.
  • Cost Considerations: While hosted phone systems usually have lower upfront costs, an on-premise system might be more cost-effective if your business can manage the system in-house.
  • Scalability: The scalability of hosted phone systems is very beneficial for rapidly growing companies or those with seasonal staffing needs. However, if your business size and structure are relatively stable, an on-premise solution might suffice.

Features to Look for in a Hosted VoIP Provider

When considering a hosted VoIP provider, it’s essential to compare their features to ensure they meet your business’s communication needs.

Standard Features:

  • Call Management: Includes call forwarding, call hold, call transfer, and voicemail.
  • Auto Attendant: Automatically greets callers and directs them to the appropriate extension based on their selection.
  • Conference Calling: Enables multi-party calls, which is great for team collaboration.
  • Call Recording: Enables call recording for monitoring and training purposes.
  • Caller ID: Displays information about the incoming caller.

Additional Features:

  • CRM Integration: Some providers offer integration with Customer Relationship Management (CRM) systems to streamline operations.
  • Advanced Analytics: Offers insights into call data to help improve communication efficiency.
  • Mobile Applications: Enables the use of the phone system on mobile devices.
  • Video Conferencing: Offers video meetings for enhanced collaboration.
  • Instant Messaging: Provides chat functionality for quick communications.

What Hosted Voip Provider Do We Recommend?

Our favorite hosted VoIP provider is Nextiva. It offers robust features that cater to modern business communication needs. Nextiva provides an intuitive platform that simplifies setup and daily use, so managing communications is a breeze.

This provider offers standout features, such as advanced analytics, CRM integration, and excellent customer support, providing a well-rounded, user-friendly solution for businesses of all sizes.