Here, we will try and provide a high level overview of the VoIP varieties and clear some muddy water myths.
When it comes to telecommunications there are many varieties. In the past is was straight forward. The local telco brought in copper wiring and it was connected to your on-premise phone system. The term "VoIP" has been confused with the term "Hosted". They are actually two different products, yet they are the same. We will explain using the following diagrams.
In this diagram you are viewing a "Hosted VoIP Solution". The main phone system / processor is in the cloud. It is not owned or maintained by the client. It is owned and controlled by the Hosted Provider. In this case, Litecom.
Next, is a diagram of an "On-Premise VoIP Solution". These systems can use either Local Telco provided telephone service or "SIP Trunks". SIP Trunks are VoIP lines traversing the internet and are more cost effective than traditional telco lines. All phone programing resides on-premise in the PBX. It is controlled, programed and maintained by the CPE Vendor.
No matter which solution, they both carry the technical term "VoIP". This is determined by the physical connection type of the phone.
There is really much more to it than that, but "In A Nut Shell".
Non VoIP service is known as Time Division Multiplexing. It is refered to as "TDM", also known as Old Traditional Phone Service, POTS (P.O.T.S. Plain Old Telephone Service) or, The Old Stuff. Any time you here someone say, "You are running TDM", this is what they are referring to. It also refers to what service you may be interfacing your on-premise system to. TDM Systems are in fact "Digital" Systems. We will not get into the full detailed explanation here.