A hosted IP based telephone service, primarily for voice, where the switching equipment is owned and operated by another company. The customer is responsible for paying a recurring monthly expense for the use of the equipment and transmissions and may or may not be responsible for the IP phones on their premises. While traditional Centrex service is offered by the phone company, IP Centrex may be provided by the phone company or another service provider.

The key component in providing this service is the Feature Server. The leading providers of Features Servers are Broadsoft, NetCentrex (now part of Comverse), Sylantro and Tekelec (following their acquisition of VocalData).