A hosted PBX uses IP communications which allows businesses to make calls over the internet. There are three ways this works. It can transport data over the Public Switched Telephone Network (PSTN), over the Internet (this is helped along with VoIP technology) or a combination of both.
An example of the way it works is by plugging your phone directly into your VoIP enabled modem. The VoIP enabled modem uses the internet to send and transfer data. Information travels over the IP network and is bounced to the cloud, where it gets shuffled to your voice providerís date centre, a.k.a your server. The call is then pushed back out into the cloud and delivered to the end caller or the network they use.