A cloud phone system, also called hosted PBX or UCaaS (unified communications as a service), delivers your business phone service over the internet. The provider runs the phone system in its own data centers, and your team uses desk phones, apps or both.
How a cloud phone system works
Your phones connect to the provider over the internet using VoIP. Call routing, voicemail, auto-attendants and extensions all live in the provider's platform, so there is no PBX box to maintain in your office. You manage users and settings in a web dashboard.
Features most systems include
- Auto-attendant and call routing by time or department
- Voicemail with email delivery
- Mobile and desktop apps
- Call queues and ring groups
- Call recording and analytics (often on higher plans)
- Integrations with CRM and chat tools
Cloud vs on-premise phone system
| Cloud | On-premise PBX | |
|---|---|---|
| Hardware | Phones only | PBX server plus phones |
| Upfront cost | Typically lower | Typically higher |
| Scaling | Add users in a dashboard | May need hardware and licenses |
| Maintenance | Provider handles it | Your IT team or a vendor |
| Internet dependence | High | Lower for internal calls |
How to choose a provider
- List your must-have features, such as queues, recording or integrations.
- Count users, locations and peak simultaneous calls.
- Check your internet capacity for those calls with the bandwidth calculator.
- Ask about uptime commitments, support hours and number porting.
- Confirm emergency calling support for every location.
- Compare total cost per user, including add-ons, taxes and device costs.
For a buyer-focused version, see our VoIP phone system checklist for small business. If you already own a PBX, SIP trunking may fit better.
Frequently asked questions
Is a cloud phone system the same as VoIP?
It is built on VoIP, but adds the hosted phone system, features and management on top.
Do I need new phones?
Often you can use IP desk phones, softphone apps or an adapter for analog phones, depending on the provider.
What happens if the internet goes down?
Calls over the internet stop unless you have failover, such as forwarding to mobile numbers or a backup connection.
