In-band signaling

In-band signaling, also known as channel associated signaling (CAS), refers to the practice of carrying signaling information in the same channel, or band, that is used to carry user information. This occurs only in networks that provide switched services (either packet or circuit). Examples of in-band signaling include signaling on a POTS service. In-band signaling is typically simpler to implement because it uses the same network infrastructure used by user traffic. However, it also makes some (or all) of the signaling network available to the user, which makes fraud and error more likely. It also consumes some of the bandwidth, reducing the amount of bandwidth available to the user.

Out-of-band signaling
Out-band signaling refers to the practice of carrying signaling information in a different channel, or "band," than the one that is used to carry user information. This occurs only in networks that provide switched services (either packet or circuit). Examples of out-band signaling include D-channel signaling on an ISDN BRI, or PRI, and SS7 in the PSTN. It does not consume bandwidth available for data.