Codecs are used to convert analog signals (human voice) to digital signals that can be transmitted over some network medium, such as CAT5, fiber, wireless, and so on.
Each codec uses a certain amount of network bandwidth. The amount of bandwidth you have available will determine how many calls you can have at one time before your calls start having problems. Let's say you have the standard $30/month DSL at your house. This can typically be 5MBps of download speed but only 700Kbps of upload speed. Sure, you can download files quickly, but you can't send them. This is an important concept with VoIP. Each codec will use a certain amount of bandwidth to pass the digital data along. The standard is ITU G.711, also called A-law or U-law. This has only a little bit of compression on the line and is used most often because of the call quality. Another popular codec is ITU G.729. This codec is one of the better ones with regard to call quality and bandwidth use. The biggest problem is that...