Investor Relations

VoIP, "The Basics"

"VoIP" stands for "Voice Over Internet Protocol." Well, that probably doesn't help you all that much, so maybe this will: With the development of IP-based voice communications, the technology used to send data (text) over the Internet is now being used to transmit voice or, more specifically, your telephone conversations.

What are the benefits of employing VoIP technology? VoIP enables much higher volume of telecommunications traffic to flow at much higher speeds than traditional phone systems (circuit-switched systems) allow, and at significantly lower cost. The more efficient functioning of networks made possible through VoIP results directly in lower costs to the consumer.

VoIP networks also grant seamless integration of voice and data communications, giving customers easy access to a wide gamut of both types of services in a single package. So we're throwing that old phone circuit-switched system out the window, because the future of telecommunication is the integration of voice and data.

How is this done, technically speaking? The initial voice message is broken down into small fragments called "packets". Each packet is numbered and labeled with its point of origin address and its destination address. Then each packet is sent out separately into the network to reach its destination in the fastest way possible. Once all of the packets have arrived, they are reassembled and the original voice message is delivered. In a traditional telecommunications network, each telephone conversation holds up an entire line, a line that becomes unavailable to any other user for the duration of the conversation. In a VoIP network, several conversations can be conducted over the same lines simultaneously. That's because every packet sent occupies a given line for only a brief instant, so packets belonging to different conversations can be sent along the same line without blocking it up.

You want VoIP in laymen's terms? You got it:

Here's a helpful analogy. Imagine that it's only possible to travel from New York to Chicago by train. The number of people able to get from one place to another on a given day would be strictly limited to the number of seats on all the trains that travel from New York to Chicago on that day. Any malfunction on the tracks would result in suspension of services with nobody able to travel from New York to Chicago until the malfunction was fixed.

Now imagine that all the people trying to get to Chicago from New York, instead of waiting for an available train connection, get into their cars and disperse over the network of roads that stretches between the two cities. There is no longer a limit on how many people can travel between New York and Chicago, and since they do not have to wait for a train connection to be available, many will get to Chicago much faster than if they traveled by train. Also, any problems along the route can be avoided by taking detours onto other roads. The traditional phone network is the train system in this analogy, while traveling by car represents VoIP technology.

Understanding VoIP is a lot simpler than you thought?

 

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