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TDM is a multiplexing technique that divides a circuit into multiple channels based on time. The technique is associated with telephone company voice services. T1 and T3 circuits are divided into multiple channels using time division multiplexing. The most common TDM circuit for business users is the T1 line (1.544 Mbits/sec). It consists of 24 multiplexed 64-Kbit/sec voice channels. Each channel may carry a single phone call, or the entire circuit may be dedicated to data.

Time division multiplexing was designed to delivery a steady stream of data, i.e., digitized voice. The data rate for each channel is exactly what is need to carry a digitized voice-64Kbits/sec. The techniques used to arrive at this figure are discussed under "NADH (North American Digital Hierarchy)."

While companies have long used TDM circuits for both voice and data, TDM circuits are not ideal for data because data tends to be bursty. The repeating time slots do a good job at delivering the streaming bits of digitized voice, but data bursts fill up the slots unevenly. When there is no data to send, bandwidth goes unused. When data bursts, there is usually not enough bandwidth.

A TDM network is a private network because the TDM links are dedicated for the traffic of the customer that leases the lines. No other users share the links. For real-time data services, bandwidth and latency are predictable. The customer usually maintains all the endpoint equipment and gets full use of the line to deliver any type of information they want to send (data/voice/video).

Since TDM circuits are point-to-point links, multipoint metropolitan and wide area network that require full interconnection must be built with multiple circuits, as shown in the following illustration (see book).