There are four main CODECs used in VoIP. These are G.711, G.729a/b, G.726, and G.723.1.
G.711 is a 64kbps PCM encoding. It uses the most bandwidth and does not offer any compression. It has the best voice quality, as voice signals are transmitted without any loss due to compression. It is also the most fault-tolerant CODEC. If one packet is lost, it will not represent any noticeable amount of disruption to the conversation, as it does not contain a lot of voice data. G.711 has the least processing delay of any CODEC as it does not have to compress the samples, simply sending them along the network uncompressed. This is only recommended for high-speed (100Mbps) LAN implementations, as it does require a great deal of bandwidth. Attempting to transmit G.711 across low-bandwidth pipes will result in undesired jitter.
G.726 can compress data down to 40, 32, 24, or 16 kbps. It uses ADPCM encoding which works by looking at the difference between the previous sample and the current sample, and only sending the difference. It uses less bandwidth than G.711, but sacrifices voice quality.
G.729a/b is able to compress data down to an 8kbps stream. It uses CS-ACELP encoding which works by matching sound patterns in the voice sample to a codebook. It then sends the code (not the sample) across the network, where the receiving end looks up the code and reproduces the sound based on the code. G.729 has near-toll quality sound, meaning that it is almost as good as using an analog phone. It also uses a technology called silence suppression to further increase bandwidth savings. Silence suppression is quite simple – in any conversation there is usually only one end talking, so half of the bandwidth would be zero noise. To deal with this, G.729 sends a silence signal to the other end, which plays a white noise to indicate that there is no voice coming from the other end. G.729 offers the best balance of quality and bandwidth savings, and is the most commonly implemented CODEC in VoIP.
G.723.1 is a standard that covers two encoding rates. It can operate at 5.38kbps using CS-ACELP encoding, much like G.729. It can also operate at 6.4 kbps using MPMLQ encoding. MPMLQ also uses a codebook to translate voice signals into data, but uses a different compression scheme. G.723.1 has the lowest bandwidth requirements, but at the same time has the lowest voice quality of the different CODECs.
So that is a summary of the different CODECs used for VoIP. G.711 is the CODEC of choice when bandwidth is not an issue, and G.729 is the CODEC of choice when bandwidth is an issue.
It should also be noted that transcoding may occur from one CODEC to another as the voice signal is carried across the network. For example, internal communications on the high-speed LAN may be in G.711, but the signal may need to be transmitted at a higher compression rate using G.729 when it is sent across the WAN. When transcoding occurs, there is additional delay caused while the signal is converted. As such, it is generally a good idea to use one CODEC for the entire network. As such, it is recommended to use the most optimal CODEC for ALL parts of the network, not for each segment.