The term VoIP refers to the transfer of Voice over the Internet Protocol (IP) of the TCP/IP protocol suite. Using "VoIP" technology we can make traditional telephone calls from either computer or phone to other computer or phone using both public switched telephone network (PSTN) and internet (which is packet switched network). All you need is an Internet connection for VoIP. This technology really changes everything because it allows people to receive phone calls from anywhere that an internet connection exists, just in the same way you can receive your emails anywhere that you can connect to the internet.

The term "VoIP technology" covers a range of technologies, including voice-over-IP (VoIP) and fax-over-IP services, which are carried over both the Internet and private IP-based networks. VoIP is part of packet voice, which includes voice-over-asynchronous-transmission-mode (ATM) and frame-relay networks, which run faster than IP but are less common. VoIP connects across combinations of PCs, Web-based telephones, and phones connected via public telephone lines to remote voice gateways. Because information travels in discrete packets, it doesn't need to rely on a continuously available switched circuit.

Uses of VoIP VoIP service is deployed in enterprise and service provider network for various reasons. Most of these can be categorized into following.

Ø Better bandwidth utilization by:
§ Using compression
§ Exploiting silence periods during conversations
§ Sharing of equipment for voice and data traffic (unified processing)
Ø Introduction of new services:
§ Conferences, distance learning, etc.

Working of VoIPThe basic steps involved in originating an VoIP call are conversion of the analog voice signal to digital format and compression/translation of the signal into Internet protocol (IP) packets for transmission over the Internet; the process is then reversed at the receiving end -- switching the digital format back to analog so the telephone call goes through as normal.VoIP calls originate on any broadband line: coaxial cable, DSL (Digital Subscriber Line), wireless or even satellite. The call is routed to the VoIP Company, where a computer converts the sound into data packets – similar to the packets used to transfer internet data such as email. Sending data by packets is far more efficient as it enables the same line to handle more information simultaneously. These data packets are sent through any of the Internet's multiple networks to a recipient of the call. The caller can receive the call via a wireless provider, a broadband provider, or a local phone carrier. In order to understand VoIP it is essential to have a complete understanding of what the difference between circuit switching and packet switching. A normal telephone uses circuit switching for phone calls, which involves routing of your call through the switch at your local carrier to the person you is calling. The connection of two points in both directions is known as circuit. Packet switching on the other hand is more efficient in transmitting data since small amount of data, which is called a packet, is sent from one system to another. In a VoIP system, once the called party answers, voice must be transmitted by converting the voice into digitized form, then segmenting the voice signal into a stream of packets. The first step in this process is converting analog voice signals to digital, using an analog-digital converter. Since digitized voice requires a large number of bits, a compression algorithm can be used to reduce the volume of data to be transmitted. Next, voice samples are inserted into data packets to be carried on the Internet. The protocol for the voice packets is typically the Real-time Transport Protocol (RTP).