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Telephony is the technology associated with the electronic transmission of voice, fax, or other information between distant parties using systems historically associated with the telephone, a handheld device containing a speaker or transmitter and a receiver. With the arrival of computers and the transmittal of digital information over telephone systems and the use of radio to transmit telephone signals, the distinction between telephony and telecommunications has become difficult to find. However, we believe that telephony does connote voice or spoken and heard information predominantly and it usually assumes a point-to-point (rather than a broadcast) connection. It also tends to assume a temporarily dedicated connection.

Internet telephony is the use of the Internet rather than a traditional telephone company infrastructure and rate structure to exchange spoken or other telephone information. Since access to the Internet is available at local phone connection rates, an international or other long-distance call will be much less expensive than through the traditional call arrangement.

On the Internet, three new services are now or will soon be available:

• The ability to make a normal voice phone call (whether or not the person called is immediately available; that is, the phone will ring at the location of the person called)
• The ability to send fax transmission at very low cost ( at local call prices) through a gateway point on the internet in major cities
• The ability to leave voice mail at a called number

Some companies that make products that provide or plan to provide these capabilities include: IDT Corporation ( Net2Phone), Netspeak, NetXchange, Rockwell International, VocalTec, and Voxspeak. Among uses planned for Internet phone services are phone calls to customer service people while viewing a product catalog online at a web site.

While Internet telephony is still relatively new technology, it is poised to reshape the way people use the telephone. One of the most obvious applications for Internet Telephony is point to point toll-free calling. If you spend a lot of time on the phone, particularly on international calls, you can use Internet telephony to dramatically decrease the cost of your phone bill. Until recently, using the Internet for phone calls meant accepting some pretty severe compromises in sound quality, and meant using a tin can arrangement where you would use your PC’s sound card as a telephony device.

To make use of PC to PC Internet telephony all you need is a copy of Microsoft Netmeeting, which can be downloaded from the web. Netmeeting is a free Internet telephony program from Microsoft. To run this program you will need Windows 95/98 or Windows NT PC with a soundcard, speakers, and a microphone. You will also need (at least) a 28.8Kbps dial-up Internet connection. With Microsoft Netmeeting, you will be able to place Internet phone calls to other Netmeeting users. With Netmeeting you will gain a good understanding of the quality of service you should expect when using IP telephony over the unmanaged Internet.

Another very popular Internet telephony software program is VocalTec Internet Phone.

You can place phone calls to any other Internet telephony user in the world and you only pay the cost of connecting to your local ISP.

Unless you have a dedicated Internet connection and keep NetMeeting running all the time, you will need to schedule your Internet telephone conversation beforehand, so that you and the person you are calling are both logged in to NetMeeting when you attempt to contact one another.

Do not expect the same "quality of service" that you get when you pick up your regular phone and place a call. Depending on your type of Internet connection, the time of day, network congestion, and other factors, you will experience delay, drop-outs, and imperfect voice quality. Although this is a problem, the service is free.

Just because you’re interested in Internet telephony it doesn’t mean that everyone in your address book is. You can’t expect everyone you want to call to have a multimedia PC with Internet telephony software installed. That’s where PC-to-Phone Internet telephony comes in.

With PC-to-Phone Internet Telephony you can call any regular telephone number in the world from your PC. The way PC-to-Phone Internet telephony works is that your call is carried over the Internet to a "gateway". At the gateway, your call is converted between the Internet and the standard telephony network.

There are a number of companies that specialize in providing this type of service. Two of the most well known companies in this area are IDT and Delta Three.

You can call regular telephones anywhere in the world from your PC at greatly reduced rates.

Quality of service is still an issue but it is getting better all the time.

Through the use of special PC expansion cards or other hardware, you can improve the quality and comfort of PC-to-PC or PC-to-Phone Internet telephony.

One such device that can be used in this way is the Quicknet Technologies Internet PhoneJACK. Quicknet Technologies’ Internet PhoneJACK changes all of this by providing PC users with the ability to place and receive Internet calls using an ordinary handset or headset. The Internet PhoneJACK makes this possible by simulating an actual phone line (with dial tone, Touch-Tone detection, ringing, etc). You simply connect a telephone handset or PBX to the card, and it thinks it is connected to an actual phone line.

Placing a call is then as simple as picking up the phone and dialling a number. Receiving a call is as simple as answering a ringing telephone.

You are able to carry on an Internet telephone conversation using a regular telephone handset/headset. This is much more comfortable and often required in an office environment where using your PC speakers would disturb co-workers. Also these devices have additional processing power that will reduce the amount of delay that is common on Internet telephone calls. When a device such as the Internet PhoneJACK is used on both ends of an Internet telephony conversation, you can expect to receive about a 30% to 40% quality improvement.

These devices will reduce the amount of delay that is introduced by the PCs at both ends of the conversation (it actually takes more time than you might expect for a PC to process the audio stream before placing it on the Internet and receiving it from the Internet). They will not reduce the delay introduced by the Internet itself (due to distance, routing, network congestion, etc)

Internet telephony gateways extend the cost savings benefits of Internet telephony to anyone with a phone connected to the PSTN. The concept is straightforward. Internet telephony gateways take voice (or even a fax transmission) from the circuit switched PSTN and place it on the packet-switched Internet and vice versa. As the gateways are local to both the calling party and the called party, expenses for using the PSTN are minimal. The Internet is used for the long distance transmission. Internet telephony gateways can be used to provide phone-to-phone, phone-to-PC, or PC-to-phone communication.

Here’s how a phone-to-phone connection works. The caller connects to an Internet telephony gateway over the PSTN. In an office setting, callers may simply dial a specific extension or precede the phone number they are dialling by a special string of digits. The Internet telephony gateway answers the call and prompts the caller to enter the phone number (including country code and area code) of the party they wish to call. The Internet telephony gateway will then look for another gateway that is local to the called party. The second gateway will attempt to locate the called party by placing a local PSTN call. Once the connection is established voice travels from the PSTN on and off the Internet between parties.

As phone-to-phone connections require two gateways that are located sufficiently far from one another, Internet telephony gateways are being deployed at present for specialized purposes. One such purpose is inter-office communication for organizations that have remote branch offices. Additionally, there are a number of consortiums (also known as Internet Telephony Exchange Carriers), such as ITXC and TransNexus that find Internet Telephony gateway service providers around the world who will cooperate with one another.

The use of Internet telephony gateways for PC-to-phone communication is becoming increasingly popular. Many organizations are starting to allow web surfers with Internet telephony software to connect directly to agents in their call center by using an Internet telephony gateway. The Internet telephony gateway feeds calls from the Internet directly into their ACD system.

Some of the well known providers of Internet telephony gateway products are VocalTec, MICOM, and Vienna Systems.

Even when the telephone world catches up with voice and data integration, IP will maintain a role. There are several reasons why Internet phone calls are cheaper than the traditional circuit-switched calls. Some of these advantages are temporary and will disappear, while others will persist.

• Bandwidth utilization. Using modern technology, Internet phone applications compress the audio signal to between 5 and 30 times smaller than that of a normal phone call, reducing bandwidth needs.
• Silence suppression. Another way to compress voice signals in IP telephony applications is to suppress the transmission of silence. In most phone conversations, one or both parties is usually silent at all times.
• Internet economics. Because of its history and nature, the Internet has not developed sophisticated per-unit billing practices or capabilities. Instead, most service providers and users rely on fixed-rate billing models that are not well suited for high-bandwidth, high use applications. Low-level Internet users may, then subsidize heavy users of IP telephony.
• Competition. Every strata of the Internet is characterized by intense competition, where many entrants are willing to endure losses (and significant negative cash flow) to compete at the earl stages of this emerging industry. The phone industry, by contrast, is monopolistic, or oligopolistic, and heavily regulated worldwide, with attendant inefficiencies and market distortions.
• Quality of service. The phone network was designed to guarantee a high quality of service even at high rates of utilization. The Internet, in contrast, provides only best –effort service. Internet service can be significantly degraded at high utilization.
• Running duplicate networks. In many installations, particularly at home, the same physical network is used for both voice and data. While it is possible to get a second line, it can be expensive. Combining voice and data on the same physical network saves this cost.