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Simply put, voice over IP (VoIP) technology, or IP telephony, as it is often called, is a system for transmitting telephone calls over data networks, such as the ones that make up the Internet.
While VoIP technology is set to revolutionize communications, and is already being used by a number of traditional telephone companies to connect their regional offices, on a smaller scale it can also be a useful solution for businesses looking to trim their telephone expenses.
The advantages of using VoIP technology are simple: its use can result in huge savings on the amount of physical and resources required to communicate by voice over long distances. It does so by working around circuit switching architecture, one of the fundamental drawbacks of traditional telephone networks.
Traditional circuit switching-based telephone networks operate by opening a circuit between two points, identified by their telephone numbers. This circuit remains open, and transferring at its full capacity for the duration of the call, until somebody disconnects it by hanging up. Much of this capacity is wasted during a normal telephone conversation, because while the line is working at full capacity, not all of each user’s time is spent transferring data, or talking. Normal telephone users, of course, spend much of their time listening, or receiving data. Furthermore, during the course of a normal phone call, there is often dead air. All of these things are wasted capacity.
Data networks operate in an entirely different way. They communicate through packet switching, a much more efficient scheme for exchanging data. Instead of keeping a circuit open constantly, they send and receive data only as needed, a bit at a time, in data packets. By doing so, packet switching-based data networks free up network resources, as well as the resources of the computers sending and receiving information.
VoIP technology uses packet switching to minimize the amount of resources used in a telephone connection by exchanging the information in packets over a data network. This allows several phone calls to use the space that just one call would have occupied in a circuit-switched network.
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