IP telephony, also known as voice over IP, represents a fundamental technology shift in telecommunications. It is the cornerstone of convergence (i.e. the integration of data, voice, and video solutions onto a single voice over IP network), and promises significant new communications efficiencies and capabilities.

Telephone conversations traditionally rely on a method of transmission called TDM (Time Division Multiplexing), in which each communication requires a dedicated slot on a circuit. The circuit slot is established when the call begins and is freed when the call ends.

An IP telephony solution, on the other hand, allows telephone conversations to travel over the same IP networks used for data communications. IP telephony is much more efficient with respect to broadband usage because conversations are “bundled” in the IP networks, with all communications flowing through the same circuit. Each bundle is routed by virtue of its address of origin and destination; a server-based “call manager” on the end-user side acts as the switch.