Short for Inter-Asterisk eXchange, IAX is the native Asterisk PBX protocol and is now supported by many VoIP platforms. It has a number of advantages over SIP including bandwidth efficiency, it uses a single UDP port, 4569, so it slides through NAT with ease, and since it is a binaryprotocol, it is more difficult to attack. Despite these advantages IAX is not supported as widely as SIP, and it also puts a heavier load on your server because all traffic must pass through the server.
See also "VoIPowering Your Office: Defeat the Pesky NATs of VoIP With IAX" on VoIPPlanet.com.
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