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Flexibility
With VoIP, you can make a call from anywhere you have broadband connectivity. Since the IP phones or ATAs broadcast their info over the Internet, they can be administered by the provider anywhere there is a connection. So business travelers can take their phones or ATAs with them on trips and always have access to their home phone. Another alternative is the softphone. A softphone is client software that loads the VoIP service onto your desktop or laptop. The Vonage softphone has an interface on your screen that looks like a traditional telephone. As long as you have a headset/microphone, you can place calls from your laptop anywhere in the broadband-connected world.

Price
Most VoIP companies are offering minute-rate plans structured like cell phone bills charged per month. With the elimination of unregulated charges and the suite of free features that are included with these plans, it can be quite a savings.

Most VoIP companies provide the features that normal phone companies charge extra for when they are added to your service plan. VoIP includes:

Caller ID
Call waiting
Call transfer
Repeat dial
Return call
Three-way calling

There are also advanced call-filtering options available from some carriers. These features use caller ID information to allow you make a choice about how calls from a particular number are handled. You can:
Forward the call to a particular number
Send the call directly to voicemail
Give the caller a busy signal
Play a "not-in-service" message
Send the caller to a funny rejection hotline

With many VoIP services, you can also check voicemail via the Web or attach messages to an e-mail that is sent to your computer or handheld. Not all VoIP services offer all of the features above. Prices and services vary, so if you're interested, it's best to do a little shopping.
Now that we've looked at VoIP in a general sense, let's look more closely at the components that make the system work. In order to understand how VoIP really works and why it's an improvement over the traditional phone system, it helps to first understand how a traditional phone system works.

The Standard Phone System: Circuit Switching
Existing phone systems are driven by a very reliable but somewhat inefficient method for connecting calls called circuit switching.
Circuit switching is a very basic concept that has been used by telephone networks for more than 100 years. When a call is made between two parties, the connection is maintained for the duration of the call. Because you are connecting two points in both directions, the connection is called a circuit. This is the foundation of the Public Switched Telephone Network (PSTN).

Here's how a typical telephone call works:

You pick up the receiver and listen for a dial tone. This lets you know that you have a connection to the local office of your telephone carrier.
You dial the number of the party you wish to talk to.
The call is routed through the switch at your local carrier to the party you are calling.
A connection is made between your telephone and the other party's line using several interconnected switches along the way.
The phone at the other end rings, and someone answers the call.
The connection opens the circuit.
You talk for a period of time and then hang up the receiver.
When you hang up, the circuit is closed, freeing your line and all the lines in between.

Let's say that you talk for 10 minutes. During this time, the circuit is continuously open between the two phones. In the early phone system, up until 1960 or so, every call had to have a dedicated wire stretching from one end of the call to the other for the duration of the call. So if you were in New York and you wanted to call Los Angeles, the switches between New York and Los Angeles would connect pieces of copper wire all the way across the United States. You would use all those pieces of wire just for your call for the full 10 minutes. You paid a lot for the call, because you actually owned a 3,000-mile-long copper wire for 10 minutes.

Telephone conversations over today's traditional phone network are somewhat more efficient and they cost a lot less. Your voice is digitized, and your voice along with thousands of others can be combined onto a single fiber optic cable for much of the journey (there's still a dedicated piece of copper wire going into your house, though). These calls are transmitted at a fixed rate of 64 kilobits per second (Kbps) in each direction, for a total transmission rate of 128 Kbps. Since there are 8 kilobits (Kb) in a kilobyte (KB), this translates to a transmission of 16 KB each second the circuit is open, and 960 KB every minute it's open. So in a 10-minute conversation, the total transmission is 9,600 KB, which is roughly equal to 10 megabytes (check out How Bits and Bytes Work to learn about these conversions). If you look at a typical phone conversation, much of this transmitted data is wasted.

While you are talking, the other party is listening, which means that only half of the connection is in use at any given time. Based on that, we can surmise that we could cut the file in half, down to about 4.7 MB, for efficiency. Plus, a significant amount of the time in most conversations is dead air -- for seconds at a time, neither party is talking. If we could remove these silent intervals, the file would be even smaller. Then, instead of sending a continuous stream of bytes (both silent and noisy), what if we sent just the packets of noisy bytes when you created them? That is the basis of a packet-switched phone network, the alternative to circuit switching.

The VoIP Phone System: Packet Switching
Data networks do not use circuit switching. Your Internet connection would be a lot slower if it maintained a constant connection to the Web page you were viewing at any given time. Instead, data networks simply send and retrieve data as you need it. And, instead of routing the data over a dedicated line, the data packets flow through a chaotic network along thousands of possible paths. This is called packet switching.

While circuit switching keeps the connection open and constant, packet switching opens a brief connection -- just long enough to send a small chunk of data, called a packet, from one system to another. It works like this:

The sending computer chops data into small packets, with an address on each one telling the network devices where to send them.

Inside of each packet is a payload. The payload is a piece of the e-mail, a music file or whatever type of file is being transmitted inside the packet.

The sending computer sends the packet to a nearby router and forgets about it. The nearby router send the packet to another router that is closer to the recipient computer. That router sends the packet along to another, even closer router, and so on.

When the receiving computer finally gets the packets (which may have all taken completely different paths to get there), it uses instructions contained within the packets to reassemble the data into its original state.

Packet switching is very efficient. It lets the network route the packets along the least congested and cheapest lines. It also frees up the two computers communicating with each other so that they can accept information from other computers, as well.

The Advantage
VoIP technology uses the Internet's packet-switching capabilities to provide phone service. VoIP has several advantages over circuit switching. For example, packet switching allows several telephone calls to occupy the amount of space occupied by only one in a circuit-switched network. Using PSTN, that 10-minute phone call we talked about earlier consumed 10 full minutes of transmission time at a cost of 128 Kbps. With VoIP, that same call may have occupied only 3.5 minutes of transmission time at a cost of 64 Kbps, leaving another 64 Kbps free for that 3.5 minutes, plus an additional 128 Kbps for the remaining 6.5 minutes. Based on this simple estimate, another three or four calls could easily fit into the space used by a single call under the conventional system. And this example doesn't even factor in the use of data compression, which further reduces the size of each call.

Let's say that you and your friend both have service through a VoIP provider. You both have your analog phones hooked up to the service-provided ATAs. Let's take another look at that typical telephone call, but this time using VoIP over a packet-switched network:


You pick up the receiver, which sends a signal to the ATA.

The ATA receives the signal and sends a dial tone. This lets you know that you have a connection to the Internet.

You dial the phone number of the party you wish to talk to. The tones are converted by the ATA into digital data and temporarily stored.

VoIP Terms
The central call processor is a piece of hardware running a specialized database/mapping program called a soft switch.

The phone number data is sent in the form of a request to your VoIP company's call processor. The call processor checks it to ensure that it is in a valid format.

The call processor determines to whom to map the phone number. In mapping, the phone number is translated to an IP address (more on this later). The soft switch connects the two devices on either end of the call. On the other end, a signal is sent to your friend's ATA, telling it to ask the connected phone to ring.

Once your friend picks up the phone, a session is established between your computer and your friend's computer. This means that each system knows to expect packets of data from the other system. In the middle, the normal Internet infrastructure handles the call as if it were e-mail or a Web page. Each system must use the same protocol to communicate. The systems implement two channels, one for each direction, as part of the session.

You talk for a period of time. During the conversation, your system and your friend's system transmit packets back and forth when there is data to be sent. The ATAs at each end translate these packets as they are received and convert them to the analog audio signal that you hear. Your ATA also keeps the circuit open between itself and your analog phone while it forwards packets to and from the IP host at the other end.

You finish talking and hang up the receiver.

When you hang up, the circuit is closed between your phone and the ATA.

The ATA sends a signal to the soft switch connecting the call, terminating the session. Probably one of the most compelling advantages of packet switching is that data networks already understand the technology. By migrating to this technology, telephone networks immediately gain the ability to communicate the way computers do.

It will still be at least a decade before communications companies can make the full switch over to VoIP. As with all emerging technologies, there are certain hurdles that have to be overcome.