Better start with a simple sample
Let us start with a simple sample from a coinphone (phonebox) in London (UK) to our office in Wiesbaden (DE).
If you are at a coinphone in London (UK) and you want to call RDE here in Germany in our office, you dial a special "local call" number inside London followed by your PIN. Now your call from the British Telecom´s coinphone with its huge local "digital voice switch" will be switched to a MAX TNT gateway located (for example) in the BT data center.
The MAX TNT forwardes your code to a (PC based) server with a gatekeeper software and a validation-database. If your authentification is ok, this information is passed back to the MAX TNT and you hear a new dial tone.
Now you may dial the foreign number "0049 611 950310" (country code, (0)area code, RDE phone number), which is forwarded to the gatekeeper server again. The gatekeeper server looks at its "destination lookup table" for "0049" and selects the internet route to Germany and forwardes this number to the other MAX TNT gateway in Frankfurt in Germany.
The MAX TNT in Frankfurt makes a short authentification request back to the gatekeeper in London and if it is ok, it forwardes the rest of the dial infomation "0611 950310" to the German Telecom´s voice switch. This switch dials our number, (notice the leading "0" added for internal German long distance calls) and you will hear our German dial tone.
When we answer the phone, the connection will be established.
The way
Your analogue voice is transmitted locally to the British Telecom´s voice switch, converted digitally and transferred to the MAX TNT. All this is passed through an ISDN pipe with a fixed bandwidth.
The MAX TNTs DSP board (with its 96 channels) is compressing your voice in little 20ms (milliseconds) blocks and is packing these digital infomations in IP packets. Because of the known route, these packets with source and destination in its header information are transported over the internet to the MAX TNT in Frankfurt.
The Frankfurt MAX TNTs DSP board is decompressing the packets and assembling the stream to the original speech and transferring this (digital) speech to the dedicated ISDN port of the Deutsche Telekom´s voice switch, to go to Wiesbaden (in a pipe) to our switchboard. RDE´s (little) corporate "voice switch" is converting the digital speech in old analogue technology and sending this "sound" to my earphones.
The way back
The return way of my voice is similar, going over ISDN and the Deutsche Telekom to the Frankfurt MAX TNT, then over the internet to the MAX TNT in London and straight forward to the British Telekom directly to the coilphone to your ear.
So we have 2 local loops and one long-distance IP connection over public internet lines. At the end, you can save money for the long-distance over public internet.
The billing system:
The gatekeeper receives an information from the beginning of this action to create a record in its customer database, then stores the beginning of the real voice connection (when I did answer the call) and the final timestamp when connection was ended from one side.
What the financial controller works out with this data, thats a part of the calculation.
Advantages
What the sales people pray:
Its cheap. - is it really cheap ? In May 2005 you save almost nothing connecting to the near ends of the world. Inside the EU, the telcos did cut their prices a lot. From Germany, I am calling the US and Canada for 3,5 Euro-Cent per minute retail (!). Call by call saves another cent, but has some noise on the lines.
Secondly, I will have the same IP phone "number" as my e-mail. So you need the gatekeepers name and the "number" and that world wide. (The number must not be a real number, but your e-mail.)
Ok, that sounds good.
If we talk about the far end of the world, that means Africa, India and Far-East and South America, then it makes sense. Here you can save a lot of Pounds or dollars per minute.
So I pay about 1.80 Euro to call Sout Africa over German Telekom, thats 2.1 US dollar per minute. That´s a lot. In most of these countries the telcos are part of the government and much restricted (and others say corrupted).
Disadvantages
There are some topics you should know about.
The internet is public. Most of the intercontinental lines are shared lines. That means high traffic within the rush-hours, super speed over the night (at their time zones).
So during the rush-hour there is a delay time (or latency) for each packet and your VOIP connection is cut in packets. And the VOIP packets must be received in order and in time, all the time, no exception.
If you watch a web page from Norway on your screen, some hundreds of milliseconds are not important. If you talk to a human, everything over 170 milliseconds is no more acceptable.