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What Is Hosted VOIP? Why Should You Know About It?

Updated: June 26, 2013

The invention of the telephone changed the world nearly overnight. For the first time, people could speak to each other over vast distances with incredible ease. As quickly as the phone was available to the masses, it also became the nervous system of the business world, the indispensable tool it is today.

We’re seeing a similar change across the communications landscape, lead by the advances of Hosted VOIP. VOIP, which stands for Voice Over Internet Protocol, is one of the latest shifts in telecom technology, integrating the speed and accessibility of the Internet with telephone operations old and new.

As a result, VOIP is the leading choice for modern businesses.  Both carriers and companies of all sizes are finding that it can effectively handle the growing need for flexible, affordable and multi-channel communications.

VOIP and Traditional Phone - What’s the difference?

How does a standard phone work?

Traditional telephones have remained practically the same for over a century. The phone converts sound into electronic signals that are sent through a circuit. The signal reaches its destination and is converted back into sound on the other end. To reach their destination, signals travel from dedicated copper wires (phone lines) to the service provider’s switchboard which connects it to the appropriate line. In the case of long distance, the signal is converted and transmitted through digital networks, or microwave towers (partly why it costs more to call long-distance).

Many of the innovations to the traditional telephone have occurred at the margins of this basic setup.

How does VOIP work?

VOIP and traditional telephones are similar in one general sense—they both convert sound into electronic information and send it across long distances.

But that’s where the similarity ends. VOIP uses a more modern network while converting, sending and receiving information—the Internet. It doesn’t run information through dedicated telephone lines but rather sends data packets through the web to an IP address. By using the web, VOIP technology opens up the possibilities while avoiding many of the expenses.

There are two kinds of VOIP: On-Premise VOIP and the more recent cloud-based VOIP. Both technologies use the Internet to transfer call data but have other notable differences.

The different types of commercial VOIP

Cloud-based (Hosted) VOIP services

With Hosted VOIP service, a third party provides your company with all the equipment, software, operations and technical expertise to fully benefit from an IP-enabled phone system. There is no pressure on internal departments to deal with network management. Rates are calculated as a monthly subscription based on the number of users, with little to no initial costs. Since hosted VOIP is flexible, scalable and cost-effective it appeals to companies of all sizes and situations.

On-premise VOIP phone systems

On-Premise VOIP systems are installed and maintained internally by the business itself. All hardware - including servers, cables, routers, and phones - are handled by your IT staff. This type of VOIP system offers the most control over the network as it can be upgraded, customized or troubleshot from within the company. These systems are typically best for large enterprises that can handle the high initial costs of hardware and software and have a dedicated IT department.

Why should you know about Hosted VOIP?

It’s hard to imagine someone missing the VOIP buzz in their search for better telecom. Its growing popularity matches its value. Some may even say it is invaluable to the modern business world, outperforming traditional phone systems in just about every respect.

Here’s a quick look at what hosted VOIP can do for your business.

Increased Productivity

  • Anytime, Anywhere Network Access
  • Comprehensive Call Routing
  • Sales and Support Software
  • Mobile Phone Integration

Easy Scalability

  • Add/Subtract Users Anytime
  • Add/Subtract Features Anytime

Full Support and Upgrades

  • 24/7 Support
  • Ongoing Upgrades

Reduced Initial Costs

  • No PBX equipment required
  • Less On-premise Equipment
  • Easier Configuration

Reduced Operational Costs

  • Easier to Manage Data Network
  • One Monthly Fee
  • VOIP + Data Options


Out with the old, in with the business VOIP

Traditional phone systems are on their way out, certainly for smart businesses across North America. The benefits and advantages of hosted VOIP are now well known and widespread with early adopters giving way to mainstream businesses. Like the traditional phone before it, VOIP has become the nervous system of the business world.


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