Several large and small business owners have come across terms like “hosted phone system” or “cloud phone system,” but not everyone understands these concepts. A hosted phone system is often confused with a VoIP phone system, but there are differences between them. 

This article will discuss what a hosted phone system is and how it can benefit your business.

What is a Hosted Phone System?

A hosted phone system is an internet-based device that is not within your company’s location. These phones are hosted by a VoIP provider that routes calls with clients’ phone numbers. This is done through a virtual communication protocol known as SIP.

This means your phone system’s servers are based at a data center rather than in your business premises. 

A hosted phone system offers you all the benefits of a traditional phone system without having to incur hardware costs except for the setup costs of routers, modems, and handsets.

How Does a Hosted Phone System Work?

A hosted phone uses the internet to send and receive voice messages through the IP network.

This data sharing happens thanks to a router that connects phone call traffic to your associated IP network. The connection is done securely over the internet or through a dedicated LAN.

When you receive an inbound call, your PBX system converts voice into digital packets, connects them to the IP network and then to the cloud host. From here, the caller is directed to the right person or department.

After picking up, the digital packets are converted back into voice messages, establishing a connection with the caller. 

Since everything happens on the internet, hosted phones require enough bandwidth and a stable internet connection. Bandwidth is basically how fast data can be sent across the network. You can run an online speed test to know your internet speed.

How Does a Hosted Phone System Work

What are the benefits of a hosted phone system?

Here are some key benefits of a hosted phone system:

1. Easy installation

A hosted phone system has a smooth installation process, and its setup is not complex, expensive, and tiresome like a traditional phone system. In addition, you do not need to leave the comfort of your office to start, as the installation and setup of a cloud-based system are online. This makes it a cheaper option too, which is also helpful for small businesses.

2. Cost savings

A hosted phone system is also cheaper because you don’t need to incur any hardware costs since it’s a cloud phone system. A cloud-based phone system uses an IP network that also saves maintenance costs. With a traditional phone system, you have to contact an engineer, whereas, with a hosted telephone system, your in-house staff can get the problem fixed with no additional costs.

3. Unified communications

Unified communication platforms help you communicate both internally and externally with a single interface. A hosted phone system provider can offer a comprehensive solution providing other features important to your business other than making calls. These can include video conferencing and instant messaging for your team members. This also saves costs as you don’t need to spend money on other tools with these special functions.

4. Flexibility

A hosted phone system allows you to pick anywhere you are. Whether you are a remote working team or you are on a trip far from your office, it matters less. Most hosted phone system providers have applications for their users. Your team only needs to download the application on their devices. The PBX provider routes the incoming or outgoing calls to your device, and you’re good to go.

5. Security

A data breach is a serious issue with its costs running into millions of dollars. Hackers can mirror phone systems and steal data or outrightly assume control of your system. However, hosted phone systems understand this, and they have vital identity management tools which provide layers of protection against cyber-attacks. Also, a hosted phone provider has strong encryption preventing hackers from eavesdropping on confidential business calls.

What are the challenges of a hosted phone system?

Now that you know the benefits, let’s look at the downsides of hosted phone systems. 

A hosted phone system needs power to work and so does the network infrastructure to have internet access. Without a reliable power source, it would be difficult to use the phone system effectively.

Regarding the internet connection, we already mentioned that it needs to be stable and have enough bandwidth. This is especially challenging for remote teams, as every team member is in charge of securing a strong connection and backup plans.

This means that a hosted phone system relies on two different power sources: the internet and electricity.

One last downside is that these phone systems are vulnerable to cyber attacks, a challenge that traditional systems don’t need to deal with.

Hosted Phone System Advanced Features

Here are some advanced features of a hosted phone system provider:

1. Voicemail to email transcription

Voicemail is an essential feature of your phone system. With the Voicemail to email transcription feature, you can have your voicemail messages transcribed after they are received and sent to your inbox. This way, you can read the transcription and know what the call was about without listening to the message.

2. Video conferencing

Most organizations are now working remotely, and the Video conferencing feature helps to connect in a nearly physical way with the team. A hosted phone system can also function as a conferencing tool, and you don’t need to install applications like Google Meet, Skype, or Zoom. Ensure to check this in whatever package you choose.

3. Call recording

Call recording helps you review interactions between your customer support team and the customers. With the tapes, you might discover loopholes in the inability of a rep to close sales or perhaps poor customer engagement behavior. This analysis gives the needed information on the necessary spots to make changes and improve customer interactions.

4. Security

The security of hosted phone systems is one of the genuine concerns of large and small businesses looking to dive into cloud-based phone systems. A feature to check is the provider’s uptime connection. ULTATEL offers encrypted communications, and 24/7 network monitoring to prevent and detect security issues right away.

5. Real-time analytics

A hosted phone system provides you actual-time call data that you don’t get on a traditional phone system. The call data include inbound calls, voicemail calls, international, internal/external, toll-free, missed, received total calls, etc. These call statistics help businesses to track growth and make informed decisions.

Final thoughts on Hosted Phone Systems

As you can see, hosted phones have tons of amazing features and benefits. Forget about  expensive installation and maintenance costs on traditional phone systems. 

Hosted phone systems include traditional PBX and Voice Over Internet Protocol (VoIP) and can do everything more efficiently and cost-effectively.

Be mindful to assess your needs and compare them to what each provider offers in terms of features, security, user-friendliness, etc. 

  • Hosted phone systems are easy to set up, and they can significantly reduce your costs
  • If you’re looking to offer remote work flexibility, hosted phones are the right choice
  • Hosted phones require a reliable internet connection and constant power supply or batteries.
  • Enjoy videoconferencing, call recording, voicemail to email and many other features
  • These phone systems will give you a secure network for communication