Cell tax refers to the relatively low ratio of data payload (48 bytes) to header size (5 bytes) in an ATM cell. Compare this with Ethernet frames, in which the ratio can be as high as 1500:26. While cell tax may not be in issue for applications that generated data in small discrete quantities, for applications involving bulk data transfer (such as downloading images), cell tax leads to a significant decrease in useful data throughput compared with other technologies operating at the same wire speed.
A packet-switched IP network, in conjunction with careful provisioning and congestion control techniques that are cognizant of TCP, offers extremely scalable technology for supporting a wide range of both non-real and real-time applications. This scalability and flexibility is causing the communications world to focus on the use of IP networks to provide the traditional "Internet" applications, as well as applications that were traditionally carried by circuit-switched telephone networks. IP packet switching is necessary for many large corporations and progressive carriers as the underlying technology for large networks of the future.
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