Telephone technology is (guess what?) changing.
A brief telephone history
Traditionally, telephone calls traveled via circuit switching. First they were switched by human operators and later by relays. At the start of a call, a circuit was set up from origin to destination, and then it was knocked down when the call was completed.
This meant that the cost of each long-distance call was high, since it tied up so much equipment and outside cable plant.
Late 19th Century: Electromechanical switches replace human operators
Necessity Is The Mother Of Invention
Almon Strowger, a Kansas City undertaker in the 1880s, was convinced that he was losing business to his competitor, who was married to a telephone operator whom he suspected was routing calls for undertakers to her husband (also an undertaker), instead of Mr. Strowger.
Mr. Strowger's clever remedy was a system of "step by step" rotary switches that, under command of a series of direct current pulses from a caller's telephone rotary dial (also his invention), could route calls without the need for a telephone operator.
Multiplexing shares rare bandwidth
Early in the development of telephone technology, multiplexing was employed to allow multiple conversations to travel on the few "long distance" lines that connected cities.
Time domain multiplexing allowed each conversation to have a slice of the available bandwidth. Multiple conversations shared the same cable, reducing the cost per call.
Engineers learned that if the multiplex switching were done quickly enough, conversations remained perfectly intelligible.
Relays were too slow, so vacuum tubes and later, transistors were used to multiplex and de-multiplex conversations.
The problem with simple multiplexing is that the valuable long distance line carries no information during conversation pauses, thus wasting a portion of that resource.
Today, most long-distance communications is done via packet-switching.
Three major changes in telephone technology have been underway for decades:
Digitization of analog signals (such as voice);
Replacement of copper cable by fiber-optic cable.
These changes began on long lines and are rapidly spreading outward to "the last mile" from the C.O. (telephone Central Office) to the home or office . . . and right inside the home or office.
Voice signals are sampled and converted to streams of 1's and 0's.
The next step is to chop the stream of digital data into manageable chunks of a few hundred or thousand bytes. These chunks are called packets. When it's created, each packet is assigned a unique identification number, an origin address, a destination address, and a time to live (which is defined by maximum number of routing "hops").
Each packet follows a route that may be different from the other packets that comprise the stream. At the destination, the packets are reassembled sequentially into a stream, and then converted back into an analog voice signal.
Today's telephony buzz word is VoIP (voice over internet protocol). Telephone carriers have been digitizing voice and then switching the resulting packets for decades. Now end users can afford this technology.
Eventually all information, including telephone traffic, in and out of homes and businesses will ride on i.p. packets. Part of this future means that proprietary dedicated PBXs will be replaced by open hardware and software. Among the advantages is that peoples' voices will interact with digital information such as customer history records. It also simplifies the job of providing one inbox for all (email, fax, voice) incoming messages.