The core technology used in a videoconferencing system is digital compression of audio and video streams in real time. The hardware or software that performs compression is called a codec (coder/decoder). Compression rates of up to 1:500 can be achieved. The resulting digital stream of 1s and 0s is subdivided into labeled packets, which are then transmitted through a digital network of some kind (usually ISDN or IP). The use of audio modems in the transmission line allow for the use of POTS, or the Plain Old Telephone System, in some low-speed applications, such as videotelephony, because they convert the digital pulses to/from analog waves in the audio spectrum range.

What is the software that performs audio and/or video compression?