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Since the advent of internet telephony, many residential offerings have evolved to compete with traditional local and long distance telephone service providers. These services save households money by using the public internet to bypass traditional local loops and long distance lines. They send voice calls by converting analog signals into digital packets that travel over the internet. This type of transmission is called Voice over Internet Protocol or Voice over IP (VoIP). The packets are then re-combined at their destination back into voice so that you can converse with your called party.

There are three typical VoIP services in use today:

1. Analog Telephone Adapter (ATA) An analog telephone adapter (ATA) allows you to connect a standard telephone to the Internet. It essentially converts analog signals from your traditional phone into digital data to transmit over the Internet. ATAs are simple to use, easy to set up, inexpensive, and are a great alternative to traditional home phone lines. Many major VoIP providers like Vonage supply ATAs for free when you sign up for their services.

2. Hosted IP Phone Service Hosted IP phone services use a central IP softswitch that IP telephones connect to over the internet. IP phones have the same appearance as normal telephones, but instead of having a traditional phone jack, they have an Ethernet connector. These phones connect directly to your Internet router and contain all of the necessary technology to directly handle the IP phone call; no conversion is necessary. The hosted provider provisions the IP phones to connect to their IP Phone switch so that they can route your voice calls over the internet to your called party.

3. Computer-to-Computer Using VoIP to make calls from computer to computer was the earliest form of internet telephony. You just need the software, a headset with microphone or speakers with a microphone, a sound card, and a good internet connection. Typically there is no charge to make these calls, and the software can even be downloaded for free. Common services include Skype and Yahoo! Messenger.

So how do businesses take advantage of VoIP?

Some businesses subscribe to VoIP services through providers like Vonage or local cable TV companies like Comcast. By connecting the analog trunk ports of their current phone system directly to the VoIP service providers ATA, businesses can convert their calls to VoIP and save on local and long distance charges. These services disconnect your phone system from the public switched telephony network (PSTN) and connect it to the provider's IP softswitch for call routing over the internet.

Another popular business VoIP service that is rapidly developing is SIP trunking. Session Initiation Protocol (SIP) trunking is a service offered by an Internet Telephony Service Provider (ITSP) that also allows businesses to connect their IP PBX or traditional PBX directly to the internet. SIP trunking services disconnect your phone system from the PSTN and connect it to a SIP softswitch which is also connected to the internet.

The SIP softswitch will determine if your call is being made to a PSTN number or to another SIP enabled phone system. It will then route your call through the Internet to wherever it is directed. SIP trunking will allow your phone system to handle as many phone calls as traditional analog and digital T1 services and can dramatically reduce local and long distance costs by routing appropriate calls over the public internet.

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