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What is IP Telephony (Internet Protocol Telephony)?

IP telephony, or internet protocol telephony, is a broad term for technologies that use internet protocol (IP) to exchange telephony data – like voice data, fax data, and any other type of data that is traditionally sent and received over the dedicated circuit-switched connections of the public switched telephone network (PSTN).

The primary advantage of using IP telephony is avoiding the tolls assigned by the PSTN, which means you save money. IP telephony providers can bundle data together on shared lines, allowing calls to travel as packets of data.

Eventually, this data arrives at the user in a coherent flow. The biggest challenge with IP telephony is to create that coherent flow. For example, instead of your voice data arriving at the recipient in a jumbled up mess, it arrives as a coherent, understandable message. Most of the IP telephony technologies unveiled over the years have focused on solving this problem.

IP telephony and Voice over IP (VoIP) are two words for the same general system. Today, however, VoIP typically refers to the actual services offered, while IP telephony refers to the technology that allows VoIP services to exist.

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Data Was Originally Sent Over Voice Telephone Circuits; Today, Voice Travels over Data Circuits

IP telephony exists because we’ve changed the way voice data and traditional data are transmitted.

Data was originally transmitted over telephone networks starting in the 1960s. By the late 1980s, that data typically traveled over digital voice circuits.

By the time the 1990s rolled around, the majority of international communications traffic had changed from voice to data. IP networks began to flourish. Businesses and consumers began to use IP for voice.

IP Telephony First Becomes Popular for International Calling

It didn’t take long for entrepreneurs to realize the enormous potential for IP telephony. Companies began to realize there was huge potential to use IP telephony for international calling.

Instead of paying costly fees to telecom providers, companies could transmit voice data computer to computer and avoid things like roaming charges and other fees.

One of the biggest advantages at this time was that IP telephony significantly cut down on the required minimum data connection to transmit voice traffic. New voice codecs reduced the digital requirement from the traditional 64 kbps used by PSTNs to 8 kbps for VoIP while maintaining a respectable level of quality. This reduced the bandwidth requirements for voice data transmitted over an IP network to just 1/16th of the data required by the PSTN’s digital voice circuits.

IP Telephony Uses Two Protocols

IP telephony uses two protocols: one protocol is used for telephony, while another is used for signaling.

The transport protocol is provided by UDP over IP for voice packets, while the signal protocol is provided by either UDP or TCP over IP.

Modern IP telephony circuits also have additional systems – like signaling commands that can establish and terminate a call, setup call forwarding, conference calling, call waiting, and other features.

The Rise of IP Telephony Service Providers in the Mid-1990s

During the mid-1990s, different service providers would differentiate themselves from one another using the features I just listed above. Typically, networks at this time were free but supported by advertisements. They allowed you to connect from PC to PC or from phones to PCs.

At this time, IP telephony providers varied widely from each other in terms of call quality. This became known as quality of service. Many providers gave no guarantee of quality of service (QoS) because users were using free, ad-supported networks.

Differences Between VoIP and PSTN Systems

PSTN systems are what we traditionally used to make telephone calls and transmit data over long distances. As mentioned above, this was primarily in use from the 1960s to 1980s.

Here are some of the notable differences between PSTN and VoIP or IP telephony systems:

  • PSTN uses dedicated lines, while with VoIP, all channels are carried over a single internet connection
  • All PSTN lines are 64 kbps in each direction, while compression allows VoIP to transmit 10 kbps in each direction as a minimum
  • Both PSTN and VoIP systems can be outfitted with features like call waiting, caller ID, etc. (although PSTN networks usually charge extra for these features, while VoIP networks include them in the monthly cost)
  • PSTN network upgrades require changing out physical hardware or lines, while VoIP upgrades typically only require additional bandwidth or software upgrades
  • Long distance is typically extra with PSTN systems, while VoIP systems include it as part of the regular monthly price
  • Certain PSTN lines (like hardwired landline phones without an adapter) remain operable during a power outage, while VoIP systems will cause you to lose phone service during a power outage if a backup generator is not in place
  • 911 emergency calls can be easily traced to your location with PSTN lines, while VoIP systems may not allow tracing to a specific geographic location

Today, IP telephony is such a ubiquitous force that many of us forget the world’s data was once transmitted primarily over voice lines – instead of voice being transmitted over data lines.

Editor’s Note: Looking for information on VoIP Phone Systems? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need:



About Johnson Hur

After having graduated with a degree in Finance and working for a Fortune 500 company for several years, Johnson decided to follow his passion by embarking on a path to the digital world. He has over 8 years of experience with large companies setting marketing strategy.

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