When I first started using Asterisk, I was unhappy with the GSM codec. It sounded more like a bad mobile phone, than a land line. I know VoIP isn't perfect, but I knew there had to be a happy medium.

After GSM, I tried ulaw. Ulaw is nice, but takes up 153Kbps, compared to GSM's 51Kbps. I wanted something that sounded better than GSM, but didn't take up the bandwidth of Ulaw. The answer to that solution is G729a.

G729a is a non-free codec that uses a fraction of the bandwidth that Ulaw does, but sounds almost as good. The down side to this is.. it costs $10 per channel and and uses a great deal more CPU cycles. Despite the negatives, the bandwidth savings over Ulaw is too great to ignore. I've taken to using G729a for all Internet based calls. Ulaw continues to be fine for local networks, etc.

Update: For those of you who want to test g729a without paying for the license, you can do so by grabbing the g729a codecs for this location: http://kvin.lv/pub/Linux/Asterisk/. Please note, this may not be legal in your country. Once your determine g729a is right for you, be sure to properly license your channels.