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The Difference Between VoIP and PSTN Systems

Internet telephony isn't a new technology — it's been around for many years in one form or another, but only fairly recently has it become reliable and ubiquitous enough to be a serious choice for business. While Internet telephony was once an oddity often plagued for garbled and dropped calls, these days a well-planned and implemented VoIP system can provide call quality and reliability that rivals mobile phone or landline calls.

How VoIP Works

To understand how VoIP, short for Voice over Internet Protocol, works, it's helpful to compare it to how conventional phone calls operate. When you place a "regular" phone call using the Public Switched Telephone Network (PSTN), also known as Plain Old Telephone Service (POTS) you use what's called circuit-switched telephony. This system works by setting up a dedicated channel (or circuit) between two points for the duration of the call. These telephony systems are based on copper wires carrying analog voice data over the dedicated circuits.

This is in contrast to newer Internet telephony networks based on digital technologies. VoIP, in contrast to PSTN, uses what is called packet-switched telephony. Using this system, the voice information travels to its destination in countless individual network packets across the Internet. This type of communication presents special TCP/IP challenges because the Internet wasn't really designed for the kind of real-time communication a phone call represents.

Individual packets may — and almost always do — take different paths to the same place. It's not enough to simply get VoIP packets to their destination. Yhey must arrive through a fairly narrow time window and be assembled in the correct order to be intelligible to the recipient. VoIP employs encoding schemes and compression technology (see G.7xx for more information) to reduce the size of the voice packets so they can be transmitted more efficiently.

PSTN Versus VoIP: A Feature Comparison



  • Dedicated Lines
  • Each line is 64kbps (in each direction)
  • Features such as call waiting, Caller ID and so on are usually available at an extra cost
  • Can be upgraded or expanded with new equipment and line provisioning
  • Long distance is usually per minute or bundled minute subscription
  • Hardwired landline phones (those without an adapter) usually remain active during power outage
  • When placing a 911 call it can be traced to your location
  • All channels carried over one Internet connection
  • Compression can result in 10kbps (in each direction)
  • Features such as call waiting, Caller ID and so on are usually included free with service
  • Upgrades usually requires only bandwidth and software upgrades
  • Long distance is often included in regular monthly price
  • Lose power, lose phone service without power backup in place
  • 911 emergency calls cannot always be traced to a specific geographic location

DID YOU KNOW... How does one pronounce VoIP?

There are three popular ways to say it, with none being a definitive "right" way. All are correct.

  • Some people will use the full acronym, pronouncing each letter "V-O-I-P".

  • Some people will use use the first two words combined with IP (pronounced as separate letters). This is actually more like a phrase "Voice-Over-I-P".

  • Some will say the acronym as a word, just as it sounds (like void only with a p at the end) "voyp".

To avoid the situation completely, if you're not comfortable  using the term VoIP in a conversation, you can simply say.....
"Internet telephony".

Parts of this article originally appeared on SmallBusinessComputing.com.
You can read the full version here in "VoIP: A Primer for Small Business".

Key Terms To Understanding  VoIP:

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