IP telephony refers to the real-time transmission of voice signals encapsulated in data packets and transported over a dedicated data network or the public Internet. Through the use of Internet Protocol (IP), analog voice signals are converted into data packets, which are sent over the same data networks used for general computing. Because voice signals travel as data packets — just like packets containing e-mail, document files or web pages — you no longer need a separate voice network to handle telephone calls.

This is the essence of "new world" telephony: the convergence of data and voice. Simply stated, data is data, and voice is data, too! IP telephony is a breakthrough, enabling technology that offers tremendous opportunities for both businesses and individuals to save money and take advantage of "killer apps" that are possible only in a converged data and voice framework. To understand why IP telephony is such an efficient, cost-effective means of transmitting voice signals, it's helpful to know something about “old world” telephony.

Old World

The phone system as we know it has not changed much over the last century. Almost all calls are still placed on the public switched telephone network (PSTN). The "last mile" to your home or office still terminates in a central office (CO), and COs are connected by trunk lines. All calls are point-to-point connections that are "nailed up" for the duration of the call, consuming full bandwidth of the line — even during periods of silence. This is inherently inefficient.

New World