VoIP uses packet switching to make telephone conversations over the Internet possible.

Packet switching

Let's assume that you and your friend are both using an ATA to make a VoIP phonecall. Here is the way such a telephone conversation works, using VoIP and packet-switching over the Internet:

1. You pick up the phone and as a result the ATA receives a signal.
2. The ATA returns a dial tone. This lets you know that there is an Internet connection present.
3. You dial the phone number of your friend. These tones are converted by the ATA into a digital packet and stored temporarily.
4. This phone number data packet is sent to your VoIP provider. The providers check the packet.
5. Your provider identifies the packet and knows which phone you are trying to reach and the IP address of your friend. Then your friend's ATA will get a signal and his telephone will start to ring.
6. As soon as your friend picks up his phone, a connection is established between your ATA and your friend’s ATA. This means that both ATA's 'know' that they can expect data packets from each other. The Internet treats the transport of those packets in the same way as an e-mail or a web page. Basically two connections are set up: one to receive packets and one to send packets.
7. During your conversation with each other, packets are sent and received from both sides. The ATA's are converting the digital packets to an audio signal.
8. At the end of the phone call you put down the phone and the ATA will end the connection.

The big advantage of making a packet-switched phone call is that it uses existing networks and techniques.

Future

Despite all the advantages of VoIP, it will take at least another 10 years before telephone companies will have switched entirely to VoIP. There are still a number of obstacles to overcome.