What Is Hosted VoIP? Definition, Features, & Benefits

What Is Hosted VoIP? Definition, Features, & Benefits

You no longer need bulky, traditional on-premises telephony infrastructure to make calls and manage business communications. Hosted VoIP is the talk of the town now, and rightly so.

On-premises PBX systems are becoming obsolete and inadequate to meet today’s business needs. Hosted VoIP offers a more reliable, feature-rich, affordable, and integrated cloud-based alternative to traditional phone systems and VoIP servers.

Let’s find out what exactly hosted VoIP is, how it works, its main features, and how you can benefit from switching to a hosted VoIP provider.

What Is Hosted VoIP?

Voice over Internet Protocol (VoIP) is a telecommunications infrastructure that uses a high-speed internet connection to transmit voice and data.

Hosted VoIP is an internet-based telephony system that doesn’t need on-premises equipment to make and receive phone calls. Instead, communication is provided by a phone service provider in the cloud. 

Unlike a traditional phone setup, all you need is an IP phone or a softphone (app) to access business VoIP services. Any decent broadband connection will do, such as DSL, cable, fiber, and 4G/5G cellular data.

Hosted VoIP vs. on-premises VoIP

On-premises VoIP includes an in-house infrastructure. On the flip side, instead of building and maintaining a bunch of servers, a hosted VoIP solution takes care of everything in their data centers. This means you need far less hardware on-site and get far more zero-maintenance calling capabilities. 

Unlike on-premises VoIP servers, hosted VoIP gives your business full phone service over the internet from a trusted VoIP provider.

How Does Hosted VoIP Work?

In analog phone systems, one phone connects to another via the Public Switched Telephone Network (PSTN). The phone uses electrical signals to create audio signals in the receiver’s speaker.

Cloud-hosted VoIP converts voice signals into data packets and transmits them over the internet. When you subscribe to a hosted VoIP service and make a call, your voice is converted into digital data and sent over the internet to the VoIP service provider’s servers. 

From there, the provider connects the call to the recipient’s phone provider, whether a traditional landline or another VoIP device. This method allows you to make and receive calls using your internet connection without traditional phone lines and within seconds. It also offers more flexibility, scalability, and cost savings.

How a Hosted VoIP Phone System Works (Diagram)

If you already have a telephone system, you can still use the VoIP functions with Session Initiation Protocol (SIP Trunking).

How does hosted PBX work?

A PBX, or private branch exchange, is a business phone system. PBX solutions include call queuing, extension numbers, voicemail, and more. These features are supported by a complex hardware solution that IT professionals manage.

Unlike a traditional PBX, a cloud PBX service is entirely different—in a good way.

You get all the same features; just the VoIP company manages your hardware solution. 

Your phones do not connect directly to an internal server. They connect via VoIP servers hosted securely in the cloud. So, on top of typical PBX functionality, you can also integrate top-notch phone service between offices.

A virtual PBX service gives you all the benefits of a PBX without any of the hassles. If you already have one in place, you can read more about hosted PBX vs. SIP Trunking.

Hosted VoIP Features

Hosted VoIP offers all the essential phone system features. From call queues to auto attendants, it provides everything your team needs:

  • Auto attendant
  • Conference calls
  • Mobile app (softphone app)
  • CRM integration
  • Advanced call analytics
  • HD call quality
  • Toll-free phone numbers
  • Local phone numbers
  • Find me, follow me
  • Voicemail-to-email
  • Unlimited scalability

These are only a few calling features included with Nextiva’s VoIP plans. You can read our complete list of VoIP features here. 

The list doesn’t end there. If you’re looking for a platform that combines the capabilities of VoIP with other business communication services like video conferencing and business SMS, give UCaaS a try. Here’s what it is and some of its key features.

UCaaS functionality

Unified Communications as a Service (UCaaS) takes VoIP telephony to a new level. It integrates communication tools such as instant messaging, telephone, video conferencing, and email into one platform. 

Here are some features a UCaaS like Nextiva’s platform offers:

  • Team chat and instant messaging: Create notes, share files, and send messages, links, and attachments one-to-one or across teams in real time.
  • Video meetings: Conduct multi-participant or one-on-one video conferences within the company and with customers. 
  • Voice: Get advanced voice calling features like call recording, call forwarding, advanced call routing, and video and text.
  • Collaboration: Use integrated tools to collaborate on projects, send messages, and schedule meetings from one platform.
  • Cloud security: Get more control and security with internet-based hosting in a private cloud or secure data center.

With Nextiva, your staff can easily switch from chat messages to phone conversations and video meetings on the same platform. It increases productivity and offers you ways to connect through various communication channels.

UCaaS vs. hosted VoIP: Which is right for you?

UCaaS is a larger category with a range of communication tools and features (also VoIP) and isn’t a VoIP alternative. You’ll love it if you conduct extensive video meetings or have teams collaborating on projects. It’s meant for diverse and demanding communication needs. 

But, if you’re a small business or communicate primarily via PBX and voice calls (think a call center), UCaaS may be overkill. A hosted VoIP offering advanced voice-calling features is a better choice.

Benefits of Hosted VoIP

Hosted VoIP can sure sound complex, but it isn’t. It simply means a VoIP hosted in multiple redundant data centers with 99.999% reliability and uptime. 

When you switch to hosted VoIP, you’re not just “moving” your physical PBX to a virtual one but gaining more reliability and scalability, plus 24/7 support and monitoring. 

Below are some key benefits of hosted VoIP to help you choose.

1) Significant cost savings

Businesses can reduce phone costs by up to 50% with VoIP softphones. In fact, VoIP can help small firms reduce startup costs by up to a whopping 90%! 

If you currently use a landline business phone solution, you can save big by switching to hosted VoIP. Hosted VoIP gives you all the features of a business phone plan for less without installing and constantly maintaining the on-site equipment.

For instance, Nextiva’s basic plan starts at $18.95 per line per month and includes unlimited nationwide calling, free online faxing, call routing, and more.

You can also save on other business apps, as Nextiva provides a full suite of tools, including sales and customer service CRM, surveys, analytics, website chat, and more.

A screenshot showing how Nextiva app helps save VoIP costs

2) International calls start at $0.01

Do you have offices, users, and customers in other countries? Hosted VoIP is the solution for you.

VoIP platforms like Nextiva offer international calling rates starting at $0.01. (No joke!)

Nextiva's cheap international calling rate list

Thinking about using an on-premises setup like a landline to make international calls? You’ll rack up expensive bills and need constant maintenance to make quality calls. Costly, time-consuming, and stressful.

A hosted VoIP can save a lot on your business phone bill. Compared to traditional phone lines, hosted VoIP calls are often of higher quality. While analog calls travel over local phone lines, VoIP calls are carried over the internet, resulting in higher-quality phone calls with more bandwidth.

With a VoIP platform like Nextiva, domestic long-distance calls are free and included in your monthly plan.

3) Unified communications

Streamlining all communication channels into a single platform greatly helps your teams.

Your teams typically split their workday between inboxes and platforms. 

Imagine how much more productive they could be in one feed. That’s the reality with a unified approach. Because it’s so useful for businesses, the UC market is rapidly growing, forecasted to reach $167 billion by 2025.

4) Third-party integrations

You already use several different tools for your business to get things done. Most companies have CRM, email marketing tools, and analytics software in their tech stack. Connecting your existing business tools with a hosted VoIP system is easy. 

Integrating calls with traditional phone systems is much more complex and time-consuming. You need extra hardware and specialized software to bridge the gap.

Since Voice over IP is digital, integration is much simpler. For example, automatically sync call data with your existing CRM software using Nextiva’s integrations with helpdesks like Zendesk and ServiceNow and CRMs like Zoho and HubSpot.

Some top integrations Nextiva offers

5) Advanced contact center tools

Hosted VoIP has ushered in a new era of customer service. Customers expect companies to operate around the clock. Sending customers to a voicemail no longer cuts it. This is why businesses, even small businesses, use contact centers as a service where agents respond to questions via email, phone, or text.

Previously, businesses had to establish an office, run dozens of telephone lines, and hire an IT person to stay on top of it. Now, a hosted VoIP platform can provide end-to-end functionality without massive costs. You can ramp up agents in record time with nothing more than a VoIP softphone.

Check out Nextiva’s VoIP call center solutions for a more in-depth explanation.

6) One VoIP phone number, more mobility

A cloud VoIP phone system makes it easier to maintain VIP customer relationships. With the “find me follow me” feature, incoming calls will reach the right person, no matter where they are. The feature automatically rings the office desk phone. If unanswered, it tries the business cell phone. 

Finally, it might ring the home number.

All your customers have to remember is your office phone number. You can also use a business phone app to make calls on the go. NextivaONE app works on any device and integrates with the same analytics and CRM as VoIP. The best part is that you can use your office phone number from your mobile phone.

Ways to download NextivaOne app

Migrating to Hosted VoIP? Choose Nextiva

If you’re just starting your hosted VoIP journey or have an existing PBX you want to integrate with VoIP but need to know how, turn to Nextiva. You’ll get dedicated onboarding and migration support at every step.

Nextiva is a top-hosted VoIP provider and unified communications solutions for businesses. But don’t take our word for it!

  • In Gartner’s recent Voice of the Customer report, Nextiva was named Customers’ Choice in 2 categories and rated 4.5 out of 5 for support experience and product capabilities. That’s not all.
  • More than nine of ten businesses recommend Nextiva on GetVoIP from over 2,995 reviews – the highest among key VoIP providers.
  • A 99.999% uptime is enterprise-level system availability. Nextiva also offers HIPAA-compliant Hosted VoIP solutions so that you can focus on patients, not IP phones.
  • Nextiva conducts regular security testing and invests millions to scale its network. We pair that with award-winning customer service so businesses can focus on what matters: customers.

Whether setting up the new VoIP system, transferring existing data, or training your team, Nextiva offers a smooth transition to hosted VoIP so you can use it without interruptions.

FAQs About Hosted VoIP

Can I host my own VoIP?

Yes, you can host your own VoIP if you have the budget and technical knowledge to install and maintain the hardware and software needed. However, it’s time-consuming and expensive. A better alternative is a hosted VoIP that gives you all the good VoIP features without the hassle of maintaining the underlying architecture. It saves you money and time and is easy to scale.

What are the disadvantages of hosted VoIP?

Hosted VoIP requires a reliable, stable, and fast internet connection. If you don’t have one, you’ll likely experience network jitter, poor call quality, and dropped calls. Having a trusted hosted VoIP provider is also essential for the same reasons. An unreliable VoIP connection can hurt your business and put off customers.

Which is the best hosted VoIP provider?

Nextiva. It’s reliable, scalable, easy to use, simple to set up, and offers plenty of VoIP features and great customer support. Nextiva even has dedicated onboarding and migration teams to help you transition to hosted VoIP.

Upgrade your phone system to Nextiva
and see why it’s the #1 Hosted VoIP system.