Telephones originally were connected directly together in pairs. Each user had separate telephones wired to the various places he might wish to reach. This became inconvenient when people wanted to talk to many other telephones, so the telephone exchange was invented. Each telephone could then be connected to other local ones, thus inventing the local loop and the telephone call. Soon, nearby exchanges were connected by trunk lines, and eventually distant ones were as well.
In modern times, most telephones are plugged into telephone jacks. Each jack is connected by inside wiring to a drop wire and then to a cable with other wires. Cables usually bring a large number of wires from all over a district access network to one wire center or telephone exchange. When the user of a telephone wants to make a telephone call, equipment at the exchange examines the dialed telephone number and connects that telephone line to another in the same wire center, or to a trunk to a distant exchange. Most of the exchanges in the world are connected to each other, forming the Public Switched Telephone Network or PSTN. By the end of the 20th century almost all were Stored Program Control exchanges.
After the middle 20th century fax and data became important secondary users of the network created to carry voices, and late in the century parts of the network were upgraded with ISDN and DSL to improve handling of such traffic.
Digital telephony is the use of digital technology in the provision of telephone services and systems. Almost all telephone calls are provided this way, but sometimes the term is restricted to cases in which the last mile is digital, or where the conversion between digital and analog signals takes place inside the telephone. Telephony was digitized to cut the cost and improve the quality of voice services, but digital telephony was then found useful for new network services (ISDN) to transfer data speedily over telephone lines.
IP Telephony is a modern form of telephony which uses the TCP/IP protocol popularized by the internet to transmit digitized voice data. Contrast this with the operation of POTS (an acronym for "Plain Old Telephone Service").
Computer Telephony Integration (CTI) enables computers to know about and control phone functions such as making and receiving voice, fax, and data calls with telephone directory services and caller identification. The integration of telephone software and computer systems is a major development in the evolution of the automated office.
CTI is not a new concept. Such links have been used in the past in large telephone networks but only dedicated call centers could justify the costs of the required equipment installation. Primary telephone service providers are offering information services such as Automatic Number Identification and Dialed Number Identification Service on a scale wide enough for its implementation to bring real value to business or residential telephone usage. A new generation of applications (middleware) is being developed as a result of standardization and availability of low cost computer telephony links.