Hosted voice-over-internet-protocol (VoIP) is a secure, inexpensive, internet-based communication service capable of supporting your entire business with minimal hassle. A hosted VoIP phone system likely includes all the communication features a business needs and then some and is a great choice for small businesses wanting to grow or maintain size. We break down how hosted VoIP works and how it can help your business stay connected.
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RingCentral
$20 per user, per month (paid annually)
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Zoom Phone
Starts at $10 per user, per month
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Nextiva
$18.95 per user, per month
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What Is Hosted VoIP?
Hosted VoIP is a type of internet-based telephony communication service offered and managed by a third-party provider to a business or client entity. These services pose an ideal solution for small businesses looking to find an inexpensive and unified solution for communication needs. Hosted VoIPs replace traditional landlines and the associated analog equipment with a cloud-based phone system. Any call made is converted into digital data packets and sent to the receiver via the internet. This process requires a physical server capable of handling the information, which—for a non-hosted VoIP—must be installed by your business somewhere on-site. However, with a hosted VoIP, you simply subscribe to a VoIP provider that has already set up any secure servers off-site you will need.
In essence, by subscribing to a hosted VoIP, you are essentially outsourcing equipment and infrastructure without losing any of the associated benefits. Using the internet, you simply need to connect your business to your hosted VoIP provider and you’ll be able to access any online communication services you need. It’s also a guaranteed way to save money. Hosted VoIPs are inexpensive compared to installing an analog phone system or any of the infrastructure needed for an on-site VoIP system.
How Does Hosted VoIP Work?
Hosted VoIP relies on the same infrastructure and methods used to distribute information on the internet. Let’s say that you make a call from your office using hosted VoIP. In the simplest scenario, your call connects to the internet via your office router which then transfers the data packet to the remotely hosted VoIP servers. The server processes and manages the call, routing and connecting it to its appropriate digital destination. Receiving a call works similarly, just in reverse. Calls can easily go to and from landlines as well, but this process involves the additional step of using a PSTN (public switched telephone network) to connect.
Since hosted VoIP requires a stable internet connection in order to function, it is important that your business has a secure and private IP network. You will also need plenty of bandwidth, and potentially a wired (not wireless) connection, in order for your calls to have the best quality and performance possible.
Features of Hosted VoIP
Hosted VoIP Has Many Services and Features
Hosted VoIP doesn’t play around when it comes to its suite of available services. While it comes with many standard phone features like conference calling, there is so much more made possible by VoIP’s internet-based technology. Though the exact selection can depend on the provider and how much you are willing to pay, the most advanced hosted VoIP offers every essential call center feature and more.
This makes it a powerful tool for any business to utilize. Many providers will also offer a variety of plans and services, so there’s no need to pay for a bunch of extra features you’ll never use: you can customize your plan to your exact (or close enough) business needs.
Hosted VoIP features can include, but are certainly not limited to:
- Sophisticated call management (including routing and screening)
- Unlimited calling
- Auto attendant
- Extension numbers and number changes
- Instant messaging
- Voice mail (including voice mail to text or email)
- Video conferencing
- Online fax services
Secure and Straightforward
Calls through servers go through advanced encryption, offering a high level of security for any of your conversations and messages. Once hosted VoIP has been installed at your business—a process that usually takes two to 13 days depending on the complexity of the install—you can begin using it immediately with no extra waiting time or fuss.
Saves Money
Since you aren’t investing in infrastructure and equipment, hosted VoIP is far less expensive than a non-hosted VoIP or other communication systems that requires the installation of specific equipment (like analog landlines). Nor will you need to pay a telephone company to make calls, meaning long-distance and international calls are either significantly cheaper or entirely free.
Likewise, with no maintenance or extra support fees, the only price you’ll be paying is the monthly or annual flat fee—which, for the range of features that hosted VoIP offers, saves money both upfront and across a long term. In fact, some basic services like Google Voice offer a free number and unlimited domestic calling.
Customer Service Is Provided
Routine maintenance and included technical support are all services that hosted VoIP providers should and usually will offer to your business as part of their VoIP package. Instead of having to hire an IT specialist to work on your server or a telephone repair service to fix your analog system, you can let your provider worry about any issues and maintenance needs.
Supports Unified Communications (UC)
Though the terms are often used interchangeably, unified communications—a term referring to a group of applications that facilitate real-time or non-real-time communication on a company-wide scale—is technically a service that builds off of an existing VoIP infrastructure. It is not possible to have UC without a VoIP, so if you’re interested in integrating UC into your business, you’ll need hosted VoIP first.
Good for Long-Term Business Growth
Hosted VoIPs are a great investment for small businesses with plans for growth. The suite of features, reduced cost and ability to support a remote or flexible employee base means that your business can keep up with larger companies. And if your business becomes big enough to necessitate it, adding in UC is pain-free with your pre-existing VoIP foundation. Many businesses, private and public, are turning to hosted VoIP to meet their communication needs, so the system as a whole is unlikely to go obsolete anytime soon—once you make the switch, you’re not going to have to worry about overhauling your communication services anytime soon.
Popular Hosted VoIP Providers
The best VoIP providers offer communication solutions and services that are flexible and can be customized to your specific business. RingCentral and Nextiva are both well-known hosted VoIP providers we rated highly. Both offer services that we’re confident work well for small businesses. On the other hand, if your business is dependent on the Microsoft ecosystem, Mitel is a provider that will integrate well with existing Outlook and Teams programs. Similarly, if you use the Google suite, then Google’s free VoIP service—Google Voice—is likely your best bet for seamless integration.
If none of these options (or the pricing models) seem worthwhile to you, a whole range of hosted VoIP providers available beyond these exist. Some even offer free service trials before you commit to making a final purchase. Make sure to look for a provider that will mesh well with the needs of the business, isn’t going to inflate or hide extra expenses in the contract, has a good reputation and offers dependable customer service.
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Frequently Asked Questions
What are the drawbacks of VoIP?
VoIP solutions rely on the internet, so if you have a slow or spotty internet connection, then you may experience outages and dropped calls.
Can I host my own VoIP?
Yes. If you have the technological and programming know-how, it is entirely possible to install and maintain your own VoIP (voice-over-internet-protocol) server. Note that you will need to invest in your own software and hardware, both upfront and in maintenance costs over time, so do not expect it to be necessarily as inexpensive as hosted VoIP.
How expensive is hosted VoIP?
The overall cost of your system will depend on factors like the service you choose, what plan you go with, how many lines you need and other extras. However, there are VoIP services on the market to meet virtually any business need and budget. There are free services that work great for solo workers and freelancers, while enterprise-level packages can easily cost thousands of dollars per month.
Is PBX a VoIP?
PBX (private branch exchange) and VoIP (voice-over-internet-protocol) are often used interchangeably. Technically, however, PBX refers to a unified private telephone network that can be used for internal and external communication. VoIP relies on the internet to send and receive calls instead.
