Published : December 14, 2022A hosted phone system, also known as a cloud-based phone system, has transformed the way businesses communicate by leveraging the internet to make and receive calls.
With the rise of remote work and the need for flexible, cost-effective solutions, hosted phone systems have become increasingly popular and more familiar.
In fact, 31% of businesses currently have implemented a hosted VoIP system in their offices.
Although hosted, cloud-based phone services are extremely popular among small business owners everywhere. Many need a clearer understanding of a hosted business phone system and how to set one up. Let us see how it works.
When transitioning to a hosted phone service, ensure that your internet connection is robust and reliable to avoid any potential disruptions in service. Additionally, consider implementing Quality of Service (QoS) settings on your network to prioritize voice traffic and maintain call clarity during peak usage times.
What is a Hosted Phone System?
A hosted phone system is a cloud-based communication solution where the service provider manages the entire phone infrastructure offsite.
This setup eliminates the need for on-premise hardware, reducing the need for maintenance and IT support. Businesses simply connect their devices to the internet to access the phone system.
The majority of the hosted phone systems today use Voice over Internet Protocol (VoIP) technology, which is why it is also referred to as VoIP phone systems.
Virtual VoIP phone services make managing company communications easier than ever. Without requiring servers or other equipment to be maintained in your office, VoIP cloud data centers allow your teams to make and receive phone calls from any device with a dependable internet connection.
Types of Hosted Phone Systems
Basically, a hosted business phone system can be classified into two categories. These categories are:
1. Cloud-Hosted Phone System
A VoIP data center is virtually connected to your company via the internet by the cloud phone system. Every employee is registered with a SIP dedicated server and has their login. It offers every phone feature you require, including video conferencing and voicemail.
Cloud phone systems offer advanced features, including video conferencing, automated attendants, voicemail to email, and more. It’s also the most approachable management platform in terms of management.
2. PBX SIP Trunking
With these hosted PBX solutions, you can retain the on-premise PBX you already own.
Additionally, you can transmit business emails across the internet with SIP trunks. A SIP trunking is a virtual phone line that uses packet switching to send business communications over the Internet.
Your communications are divided into data packets in this manner, which are then translated back into audio data.
A virtual Private Branch Exchange (PBX) or hosted business phone system offers all the advantages of traditional phone systems without the high cost of hardware. In addition, hosted phone systems require no additional capital except for the initial setup cost for compatible handsets, routers, and switches.
Traditional PBXs and VoIP can also be used with phone hosting services. SIP trunking enables you to convert your current IP PBX phone system into an internet-based phone system.
: Best Cloud Phone Systems for UK BusinessesHow Does Hosted Phone System Work?
If you haven’t used a hosted phone before, it could appear confusing. But don’t worry, it’s actually quite simple.
VoIP (Voice over Internet Protocol) and cloud-based technology enable hosted telephony services to connect to public switched telephone networks (PSTNs). Here’s a simplified overview:
- Internet Connection: Your phones connect to the internet, which serves as the backbone for your phone system.
- VoIP Server: The VoIP server manages all inbound and outbound calls, converting voice calls into digital data packets.
- SIP Trunking: For businesses using PBX SIP trunking, the SIP protocol facilitates the connection between your on-premise PBX and the cloud-based server.
- Advanced Features: The cloud server provides various features such as call forwarding, auto-attendant, and video conferencing, which can be managed through an online portal.
Advantages Of Hosted Phone System
Hosted phone solutions provide a number of advantages over traditional phone systems and on-premise PBXs. These include:
1. User-Friendly & Low Maintenance
Hosted phone systems are incredibly easy to set up and manage. With no need for extensive hardware or complex installations, businesses can get started quickly.
Additionally, because the service provider handles maintenance, updates, and security, businesses can focus on their core operations without worrying about phone system upkeep.
2. Enhanced Protection & Security
Hosted phone solutions come with built-in security measures such as encryption, firewalls, and automatic updates. Service providers ensure that all communications are secure, protecting sensitive business data from cyber threats.
Moreover, most business VoIP providers with a decent reputation employ identity management software that is highly effective.
3. Work from Anywhere
One of the biggest advantages of a hosted phone system is the ability to work from anywhere. With remote access, employees can make and receive calls from any location as long as they have an internet connection.
This flexibility is essential in today’s hybrid work environment, where businesses need to stay connected regardless of where their employees are located.
Did You Know?
About 16% of companies are already fully remote, operating without a physical office.
4. High Scalability
The business phone system in place for your company should be flexible enough to change as it grows.
With a hosted PBX, adding lines is simple, so you can add lines in case a new campaign or product launch generates a lot of calls. The lines can also be simply removed after the campaign or launch is over.
5. Cost-Efficient
VoIP phones are quite affordable. As you never have to pay for more than you need, you won’t waste your valuable resources. Furthermore, there are no costly installations or maintenance costs because the entire procedure is done online.
The monthly cost of a hosted PBX phone system is typically apparent and well-defined. In addition, you can keep your existing equipment, saving your business time and money during installation and system use.
Disadvantages of Hosted Phone Systems
Virtually everything in life has drawbacks, and hosted phone services are no exception. Thus, you should be aware of the following VoIP service drawbacks:
1. Internet Connection Must Be Reliable
Your VoIP service will suffer if your internet connection is slow. This is because VoIP devices require low latency on your network. After all, they require less bandwidth than one can expect.
You should have a minimum of 100 kbps of upload and download bandwidth available for each ongoing conversation in order to ensure adequate VoIP voice-call quality. That means you would require 1 Mbps if 10 people were making calls at the same time.
2. Jitter & Latency
In addition to speed, other problems with Internet-based technology include jitter and latency. When interacting online, every message—such as an email, audio file, or video—is divided into data packets.
When these data packets are incorrectly reassembled or face transmission delays, they become jittery and late. Likely, these issues are not even in your network; major internet backbones modify data routes to provide traffic with the fastest path to its destination.
5 Best Hosted Phone Systems
Hosted phone solutions ensure reliable communication, allowing employees to remain connected from any location. Businesses can easily adjust to changing communication needs when there is seamless scalability.
Let’s take a look at the top phone hosting services.
1. CallHippo
CallHippo is among the best-hosted phone systems tailored for the communication needs of startups and small enterprises. This solution is available as a mobile app and web application and enables support, marketing, and sales teams to conduct international calling.
With a monthly subscription model that charges companies only for active users and virtual phone numbers, CallHippo offers scalability. It also gives agents access to an Android app so they can easily make and receive calls while on the go, reducing the chance of missing crucial business calls.
Key Features
- Call routing
- Auto-dialer
- Call recording
- Outbound call center
- Global connect
- IVR
- Voice customization
Pros
- The platform provides easy access via API.
- The tool allows you to call countries that are not supported by other tools.
- The user can invite customer support to join us in real-time via Zoom for immediate assistance.
Cons
- Sometimes, the dialer faces problems.
- Users can face issues while using WhatsApp.
Pricing
- Starter – $18 Per user/Month
- Professional – $30 Per user/Month
- Ultimate – $42 Per user/Month
*Pricing as of 23-08-2024.
2. Dialpad
Dialpad is an AI-powered hosted business phone system that provides organizations with the latest VoIP telephony technology. Dialpad is a single platform that can be accessed from any internet-enabled device and includes meeting, video, message, and voice features.
By utilizing modern cloud telephony technologies like WebRTC and the Opus codec, it guarantees excellent VoIP call quality and takes advantage of the most recent developments in the industry.
Key Features
- Assessment management
- Call scripting
- Predictive dialer
- List management
- Voicemail transcription
- Training management
Pros
- The platform allows you to transfer data from computer to mobile seamlessly.
- The tool offers excellent sound quality during calls.
- The platform offers AI-powered voice intelligence that provides real-time call insights.
Cons
- It is very difficult to mark a voicemail unread.
- The platform often faces issues with call routing.
Pricing
- Standard: $27/per user/per month
- Pro: $35/per user/per month
- Enterprise: custom pricing
- Free trial available
3. Aircall
Aircall is a hosted phone system for modern brands. The seamless integration of leading CRM and helpdesk systems allows effective and efficient communication between the sales and support teams.
Using analytics, administrators can get real-time insights, quickly integrate data from more than 100 countries, and modify team sizes according to seasonal demands. With desktop and mobile apps available, Aircall is a top choice for 15k+ international businesses.
Key Features
- Automated attendant
- Call tracking
- Call conferencing
- Communication management
- Call routing
Pros
- The UI on the admin and the end user side are both intuitive.
- Calls can be automatically transported to the CRM with notes.
- The tool offers seamless integration with over 100 business tools, including CRM systems like Salesforce and HubSpot.
Cons
- The platform occasionally faces call quality issues.
- Many times, calls don’t get logged through the API connection.
Pricing
- Essentials: $30/license
- Professional: $50/license
- Custom: custom pricing
- Free trial available
4. RingCentral
RingCentral is among the hosted phone solutions that enable users to handle business calls, voicemails, faxes, and text messages from any location. It gives businesses of all sizes the ability to improve communication between employees and their clients, partners, and coworkers.
One of the top features is the flexibility to work with preferred devices and places, which lets users add and remove people, manage groups and extensions, allocate phones, and carry out other administrative functions with ease. Employees can also use the platform to easily check business voicemail, send and receive faxes, and browse the company directory.
Key Features
- Automatic Call Distribution (ACD)
- Online voice transmission
- Call logging
- Contact management
- IVR
- Screen sharing
Pros
- The platform offers easy set-up for both office and remote employees.
- Users can mask their cell phone numbers.
- The platform offers a unified communications solution that combines phone, messaging, and video conferencing in one platform.
Cons
- Sometimes, the calls are misdirected.
- Users need to wait a long time for customer support.
Pricing
- Core: $20/user/month/paid annually
- Advanced: $25/user/month/paid annually
- Ultra: $35/user/month/paid annually
- Free trial available
5. Nextiva
Nextiva is a hosted business phone service that combines automation, intelligence, business apps, and communication. It provides better customer interactions. The platform simplifies access to essential data by combining multiple communication channels and enables enterprises to accomplish significant outcomes.
Nextiva’s automation and embedded intelligence-free up users to focus on helping customers, streamlining communication, and developing deeper connections with them.
Key Features
- Fax management
- SIP trunking
- Performance metrics
- Predictive dialer
- URL customization
- Call screening
Pros
- The platform allows you to download the app on your cell phone.
- The online administrator portal is user-friendly.
- The tool offers reliable, high-quality VoIP service with a focus on customer experience.
Cons
- The mobile app does not allow to delete voicemails.
- The platform often faces technical glitches and occasional issues with call quality.
Pricing
- Digital: $20/user/month
- Core: $30/user/month
- Engage: $40/user/month
- Power Suite: $60/user/month
: Cloud Hosted PBX Providers For Businesses10 Hosted Phone System Features You Need To Know
Here are ten important features you must look for in unified communications if you want to reduce costs and get more out of your investment:
1. Call & Voicemail Transcription
Voicemail is a typical VoIP feature, but you should also search for a provider that can convert voicemails into emails. This is because if you receive a lot of voicemails, it might be time-consuming to listen to them all and select the pertinent information.
However, if these emails were transcribed into text and sent to your email account, you could easily check and log them.
2. Call Recording
If you run a call center or offer customer support, call recording software can help you deliver great customer service. You can take notes during audio or video conferences and analyze the topics used later by listening to the recordings again.
Phone hosting services offer you the tools necessary to grow and improve your business by allowing you to record calls.
3. Messaging
Incorporated messaging allows employees to send instant messages directly within the platform.
Finding a provider that can provide both chat and SMS is vital, as chat is used internally, in groups, or 1:1, whereas SMS is used with your team members. This is because sending an SMS allows you to connect instantly with anyone.
4. Video Conferencing
Integrated video conferencing capabilities allow teams to connect face-to-face remotely. This feature supports virtual meetings, team collaborations, and client presentations, all without the need for separate video conferencing software.
Your team can utilize your virtual PBX as a conference tool without the need for additional video conferencing add-ons like Google Meet, Zoom, etc. Just be sure, or check again, that the feature is present.
5. Auto-Attendant
The auto attendant phone system answers incoming calls on your behalf in order to deliver excellent call routing.
Customers who use an auto attendant are greeted courteously and then offered options for how to answer their call, including automatic self-service, which eliminates the need for them to wait to talk with someone.
6. Uptime Reliability
A hosted phone system with high uptime guarantees ensures that your communication platform is available whenever you need it. This feature is critical for maintaining business continuity and preventing costly downtime.
You must make sure your potential phone system is dependable and trustworthy before considering advanced functions. In practical terms, that means that assistance is always available and that uptime is 100%, or as near to that as possible.
7. In-Built Analytics & Reporting
In-built analytics and reporting tools provide valuable insights into call volumes, durations, and agent performance. By analyzing this data, companies can identify trends, improve customer service, and optimize operational efficiency.
These metrics help businesses optimize their communication strategies and identify areas for improvement.
8. Interactive Voice Response (IVR)
IVR systems allow callers to navigate menus via their voice or keypad. This self-service feature improves call routing efficiency and improves the customer experience by directing calls to the right department quickly.
You can accomplish this by providing various options in the script for the customer to select.
9. Automatic Call Distribution
The ACD feature routes incoming calls to the most appropriate agent based on criteria such as availability, skill level, or department. This feature ensures that calls are handled promptly, improving response times and customer satisfaction.
ACD can also distribute calls evenly among agents, preventing overload and optimizing workflow. With advanced ACD systems, businesses can customize call-routing strategies.
10. Integration with Third-Party Apps
You can integrate your current software with the top unified communications systems, such as Microsoft 365, Salesforce, Zendesk, and so on.
Integrations enable the integration of your hosted phone system and additional communication channels into the integrated app, leading to a single interface that fulfills all of your needs.
Make the Switch to Hosted Phone Systems
The future belongs to hosted phone systems. The days of your office being an enigma of twisted wires and outdated equipment that needs to be replaced annually are long gone.
Consider hosted VoIP as one of the UCaaS platforms, which includes all the tools your business needs to optimize business communications in one place instead of many disparate tools. With this approach, you can get better scalability, a fixed monthly fee, and no upfront installation costs.
FAQs
1. Can I keep my existing business phones if I switch to a hosted business phone system?
That’s right! If you intend to use mobile devices, you can utilize an application for iOS & Android. If you decide to use older desk phones, you will require an Analog Telephone Adapter (ATA), which lets you make calls over the Internet with a traditional phone.
2. Should you choose Traditional Phone Systems or Cloud PBX?
Cloud PBX systems are generally more flexible, scalable, and cost-effective than traditional phone systems. They also offer advanced features and the ability to work from anywhere, making them ideal for modern businesses.
3. How much does a hosted phone system cost?
The cost of a hosted phone system varies depending on the provider, features, and the number of users. On average, businesses can expect to pay between $15 and $50 per user per month for hosted phone services.
Updated : May 22, 2025
Dharmik Joshi is a seasoned writer with a strong background in business management and content marketing. With hands-on experience in creating content for VoIP and telephony solutions, he has developed a keen understanding of the technical and business aspects of these technologies. Dharmik ensures that complicated ideas are communicated in an engaging and clear way, having helped to the introduction of various VoIP products.
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