A VOIP gateway is a hardware device which converts telephony traffic into packets of data for transmission over the internet. A VoIP gateway is different than an ATA, because an ATA (also called a VoIP box) converts one phone at a time; some of the largest VoIP gateways can support up to 256 calls at a time. There are analog gateways and digital gateways. There are also VoIP gateways that connect VoIP traffic to GSM or CDMA wireless networks. A VoIP gateway is a valuable tool for large offices that are making the switch to business VoIP services but have infrastructure in place that makes it expensive or impractical to switch entirely to VoIP.
If voice traffic is coming (originating) from an IP network, the VoIP gateway will decompress and decode the signal for transmission across the PSTN. If the call is coming from the PSTN, the VoIP gateway will encode the traffic to be used over IP.
Analog VoIP gateways connect between two and twenty four legacy phones. There are two types of analog gateways, FXO (Foreign Exchange Office), and FXS (Foreign Exchange Subscriber or Foreign Exchange Station). An FXS encodes a telephone for VoIP, and an FXO connects an entire line or hosted PBX to the POTS. In other words, an FXS connects one phone (per port) at a time, and an FXO works in tandem with an IP PBX in order to make (switch) phone calls to the PSTN. A digital VoIP gateway encodes digital devices, such as an ISDN or a PRI.
Why would someone use a VoIP gateway? One reason is cost. It can be very expensive to change over an entire office to VoIP. Besides the cost of new phones, there is the PBX infrastructure, the IT support costs, and the time and money it takes to train everyone on the new equipment. Also, despite every effort to keep servers up and running, sometimes they do fail. Many VoIP gateways have “fallback” modes to switch to the PSTN if the internet is unavailable. A business that relies heavily on fax machines may also be hesitant to discontinue their legacy phone service. For these reasons, some businesses favor a “hybrid” approach, combining their on-site equipment with VoIP gateways to get many of the advantages of VoIP while still retaining the reliability and familiarity of their existing equipment.