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Codec stands for compression / decompression. A codec implements an algorithm (like G.711) to encode information (e.g. the data representing the audio stream) before transmitting it over the network. Some codecs are also designed to reduce the amount of data (compression) required for transporting the information, saving bandwith required on the network.
If the country code is set to US the audio codec G.711 ulaw is preferred. All other country codes causes the audio codec G.711 alaw to be preferred.