Hosted VoIP 101

By Jerry Olsen
Updated: August 16, 2011

Whether you run a small, large, or medium-sized business, you may have heard about VoIP technology. In addition, you may have wondered how VoIP (Voice over Internet Protocol) works. In order to understand a little about hosted VoIP, it’s essential to start with a definition of the tecnology, and then talk about the hosted model. The following is a brief summary of the basics.

Put simply, VoIP is a revolutionary way to make phone calls from your computer. In technical terms, VoIP is a method for turning analog audio signals into digital data so that it can transmitted over the Internet. As long as you have the right equipment (e.g., a VoIP phone, high-speed Internet connection, and a computer), you can make local and long distance calls for free. With a basic understanding of VoIP and how you can benefit from it, you’re ready to learn about hosted VoIP.

What is Hosted VoIP ?

When it comes to hosted VoIPs, there are two standard methodologies: premises-based VoIP, and network-based VoIP. Both options are defined as follows:

Premise-Based VoIP

With a premise-based system, the business owns and operates its telephony system—usually a private branch exhange (PBX) for small businesses, or an IP PBX for larger businesses. This type of system involves a large capital investment upfront, as well as internal information techology resources in order manage and maintain it.

Network-Based VoIP

A network-based system is an outsourced model, meaning that you hire someone to do the work for you. This type of VoIP system is a good fit for smaller businesses that lack the funds/resources involved in owning and operating an in-house (or premises based) system.

Regardless of which model (premise-based or network-based) you choose, your business only needs to make a small investment in telephone sets and other equipment that is compatible with VoIP. With a hosted system, you don’t have to worry about operating, maintaining, or upgrading your network to support VoIP.

What are the Benefits of a Hosted VoIP Service?

Hosted VoIP offers flexibility for supporting branch offices, remote workers, and new business sites.

As you set up new offices for your business, all you need is new handsets for your phones. Given the fact that a hosted VoIP system is very reliable, your phones will always work, regardless of how busy the phone lines get. With VoIP technology, you can always take advantage of the latest features and functions. This newer technology also allows smaller businesses to keep up the pace with larger businesses and competitors as well.

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