Internet Technology Explained

How Does Skype Work? [Technology Explained]

Stefan Neagu 30-07-2009

skypeSkype, like many other VoIP (Voice over Internet Protocol) clients available, has changed the way we think about communication and keeping in touch with loved ones over great distances.


Whereas as little as five years ago, most people still had to rely on obscenely expensive mobile and PSTN (Public Switched Telephone) networks to carry their voice over short and long distances. Today, everyone seems to be using in one way or another VoIP.

As a reader of MakeUseOf and probably a geek, you must have asked yourself at some point – how does Skype work?


Skype, one of the most comprehensive multi-platform VoIP applications, running on a Macintosh

VoIP owes its versatility to another fantastic technology, the Internet. Instead of sending signals via a PSTN network, be it analog or digital, a VoIP application usually uses SIP (a variation of the standard TCP/IP protocols) to create data packets, and sends them on the same network you use for email and web surfing.


By using data packets, the technology can be used to carry more than the standard mono voice your old telephone does; VoIP can carry text, images, live video and high quality stereo sound as well as ‘screen sharing’, depending on the speed and reliability of your internet connection.

With the continually expanding broadband users market, more people are able to use VoIP without investing in a separate physical connection or contracts.

How Does Skype Work? [Technology Explained] 3270899917 faac49b0d4 b

A Tesco VoIP phone designated for home use. It connects to an ethernet port on the router and the landline for emergency calls.


The journey starts at the receiver, which can range from specialized hardware appliances like the ‘Skype-phones’ and Cisco VoIP phones to software applications installed on other mobile terminals or computers. All devices must be capable to send and receive data packets via an IPv4 network. Your voice is captured and transcoded from the analog format that the microphone captures, into a digital format, then passed on to a compressor that minimizes the size of the audio stream enabling transfer on slow connections.


An VoIP enabled phone disguised as an old-style PSTN machine. These are becoming more common in businesses as a simple measure to reduce costs of long distance calls and provide improved security via encryption protocols.

The audio stream is then divided into small pieces, each small enough to fit in a packet, which is stamped with the destination address and sent through the network.  Since VoIP uses SIP as the means to spread, it is inherently prone to its negative sides, which are quite a few, since it was never engineered to support live conversations; VoIP is susceptible to stutter and latency.



Gizmo, a multi-platform VoIP application, a worthy competitor to Skype.

The receiving end must reconstruct the packets sequentially for ideal reproduction, which does not happen on most public networks, which are prone to congestions during peak hours. Latency and packet loss can render the receiving end to be unable to reconstruct the complete audio stream resulting in blank audio space for short periods.

Although it’s much more versatile than traditional PSTN communications, VoIP has been criticized by many as being unreliable, especially in emergency situations where electrical power is absent or intermittent. Supporting hardware such as wireless routers need electricity at all times to function properly. Most people in the United States still keep a landline for emergency situations, which can provide enough direct current to power most analog phones without any additional power sources.


Emergency services have strongly objected to the use of VoIP for emergency calls due to the inability to locate the caller within a reasonable area. For example, a user connected to the office VPN network would appear to be in the server building instead of the real location.


A Skype-phone, like the one pictured above, will connect to any available WiFi access point to access the internet. Similar applications will run on select SIP-enabled mobile phones, like the Nokia N70 (it can also use the native mobile carrier data network if available).

In ideal situations, where a broadband connection and electricity are available at all times, VoIP technology provides an incredibly cheap and comprehensive way to communicate, mitigating roaming charges that traditional service providers require for long distance calls. Many consumer VoIP service providers offer free calls within their user base of Internet connected clients (computer-computer, skype-phones and other terminals). They also offer to interconnect with traditional networks for low fees. Some, like Skype, even offer standard telephone numbers than can be dialed from any telephone and which redirect to your Skype enabled device.

There are many VoIP service providers, and reviewing the capabilities of each would take an entire article. Besides Skype and Gizmo, you should also check out Vonage and this comparison list.

Don’t forget to share your favorite applications and services in the comments. You should also check out How To Make Skype a Portable App How To Make Skype a Portable App Read More  and How To Get A Skype-In Phone Number For Free How To Get A Skype-In Phone Number For Free Read More .

Image Credits : fsse8info, Chung Huang, fsse8info, icherche

Related topics: Skype, VoIP.

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  1. Sean Zicari
    January 14, 2010 at 7:26 am

    Greetings. I enjoyed the technical overview that this articles provides. I have to say that I'm genuinely surprised at the quality and low latency of calls made through Skype. I was offering tech support to an individual, trying to get his microphone set up and ready for use with Skype. I was on the phone with him and on a Skype call with him, and once we finally got his microphone working I found that the timing between the phone and Skype was identical. Skype's call quality was easily as good, too.

    A day or so later, I was on a call with my business partner - we were both on cell phones. We switched over to Skype and found that our cell phones were delayed about .5 - 1 second, whereas the Skype call had the speed and quality of a land line phone. Needless to say, Skype is an impressive use of VOIP and P2P technologies.

  2. Lexi Wright
    August 24, 2009 at 4:14 pm

    I agree with Guy that VoIP systems continue to get better and better. The main problems of connection, tracking capabilities with 911 and privacy still stand, but are far less than what they used to be.

  3. Guy McDowell
    July 30, 2009 at 11:11 pm

    I like the article. By explaining that the call is broken into packets, I think more people will understand the inherent problems with VoIP. It's still a great technology, and really in it's infancy.

    Another problem with VoIP is that 911 dispatchers can't trace the call in case of emergency. Hopefully you have registered your home address with your VoIP provider, so 911 can find you if you go down before you can give an address.

    Expect VoIP to grow and get better though. Just my opinion.

  4. Jack Cola
    July 30, 2009 at 6:59 pm

    As JadoJodo mentioned, Skype uses the Peer-to-Peer network. Skype was originally going to be called Sky peer-to-peer, then shortened to Skyper, then the dropped the R due to domain names being taken.

  5. Franchu
    July 30, 2009 at 4:18 pm

    Some extra precisions from my side...

    SIP is not comparable to TCP/IP... actually SIP still uses quite often TCP/IP being an application layer protocol. Please check the Internet protocol suite tower or the OSI protocol layers structure.

    VoIP refers exclusively to voice communications, and hence the name

    SIP is only an initiation and session control protocol, for the actual audio/video streaming you use another protocol (usually something along the lines of RTP ). And those RTP packets are sent over UDP, as a missed packet doesn´t make much of a difference.

    As a final comment, I would like to say that even if the article is explained in layman terms which is very good for reaching a wide audience, it is always good to remain technically correct :)

    • Stefan Neagu
      July 31, 2009 at 12:52 am

      All good points. Thanks for your comment and vigilanc, Franchu.

  6. Adam
    July 30, 2009 at 3:22 pm

    For the love of [your diety here], don't get involved with Vonage if you ever think you might want to get out of it at some point. They make it hard if not impossible; their "retention" department is all about saying no to your cancel request, over and over again. Happily keeping your money all the while, too.

  7. JadoJodo
    July 30, 2009 at 2:22 pm

    This article, while a good guide to standard VoiP, incorrectly identifies Skype as a standard VoiP-via-SIP technology. While the general idea is the same, data is broken down into packets, the technology is not. Skype is based on the P2P framework, the same as those found in KaZaA, LimeWire, uTorrent, or any other P2P file-sharing program. This is what is so unique about Skype. While other VoiP providers must make-do with connection speed limitations, Skype is using the P2P network of its users to increase quality. This can be read about here.

    • Stefan Neagu
      July 31, 2009 at 12:32 am

      Yes, for the sake of simplicity I bundled Skype together with standard SIP VOIP services. But Skype has a directive to first try and establish a direct connection, and only users behind NAT are connected through supernodes. I don't believe speed is improved by routing packets through multiple hops, if anything, it decreases the reliability. I believe Skype doesn't use P2P for increasing speed.