Hosted VoIP

Hosted Voice over Internet Protocol (VoIP) is a business VoIP model where the equipment, servers, and services are hosted by the VoIP provider.

How does hosted VoIP work?

The hosted VoIP manages calls and routes them to and from the subscriber’s existing telephony system and equipment. Hosted VoIP is also frequently referred to as managed VoIP and can save companies from the potentially expensive costs of having to invest in VoIP equipment and manage the system.

As with all VoIP (or Internet telephony) solutions, hosted VoIP services use packet-switched telephony to transmit calls over the Internet as opposed to the circuit-switched telephony used by the traditional Public Switched Telephone Network (PSTN), although in some hosted VoIP cases calls from the subscriber are routed over the PSTN to the hosted VoIP PBX system.

Who uses hosted VoIP?

Sometimes referred to as “cloud telephony,” hosted VoIP is a popular alternative to traditional telephone systems. The primary benefit of the technology is that it gives businesses more flexibility in how they communicate with customers and employees while reducing costs.

The technology is also popular with consumers who use the internet-based service as a replacement for traditional landline telephones. Hosted VoIP is also commonly used by small businesses and startups.


Take a look at dozens of hosted VoIP options including reviews and free trials.

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The history and evolution of hosted VoIP

The concept of VoIP was first proposed in the 1960s by Paul Baran, an American computer scientist. Baran was one of the original members of the team that created the ARPANET, the predecessor of the internet. Baran proposed the idea of transmitting data via a series of nodes and switches, which he called “message blocks.” The nodes would be connected over a network of communication lines. The message blocks would be transmitted through the network via a series of switches. The switches would be controlled by a set of algorithms. Baran’s idea was never implemented, but some of the features of the system were later incorporated into the ARPANET. 

The first VoIP system was built in the late 1960s by AT&T. The system was called “Picturephone” and was used as a videoconferencing system. AT&T also built the first digital switching system, which allowed the company to incorporate the Picturephone into its telephone network. The Picturephone was never a commercial success, and the service was shut down in the late 1990s. In the early 1990s, the Internet Engineering Task Force (IETF) was formed to help develop the internet. The IETF released the first version of the Internet Protocol (IP) in 1981. The first VoIP system to use the IP was the Internet Phone, which was developed by the Swedish company Netrix Telephony. The service was released in 1995 and could be used with a Netrix Telephony terminal. The service was popular in Sweden, but it was never released in the United States. 

The first VoIP system to be released in the United States was the Internet Phone from Net2Phone. The service was released in 1997 and was available to anyone with an internet connection. The service was popular with consumers, but it was expensive and the company struggled to make a profit. The company filed for bankruptcy in 2002. The first commercial VoIP system was released by Cisco in 1996. The service was called Cisco Call Manager and was available to large businesses. The service was popular with businesses, but it was expensive. Cisco later released a cheaper version of the service, called Cisco CallManager Express. The service was popular with small businesses, but it was eventually discontinued. 

The first VoIP system to be released to the public was the Skype software for Windows. The software allowed users to make free VoIP calls over the internet. The software was released in 2003 and quickly gained popularity. Skype was later released for Mac and Linux. The software was also released for mobile devices. The software was popular with consumers, but it was also popular with businesses. Skype was later acquired by Microsoft in 2011. The first commercial VoIP service was released by Vonage in 2005. The service was popular with consumers, but it was expensive. Vonage was later acquired by Verizon in 2009.

In 2006, Skype released SkypeOut, which allowed users to make calls to traditional landline and mobile phones. The service was popular with consumers, but it was expensive. Skype eventually released SkypeIn, which allowed businesses to receive calls over the internet.

Vangie Beal
Vangie Beal
Vangie Beal is a freelance business and technology writer covering Internet technologies and online business since the late '90s.

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