A closed-loop voice-over-Internet-Protocol (VoIP) system has a local and a remote VOIP application. Each VOIP application monitors incoming packet arrival times and durations of audio data in the incoming packets to estimate bandwidth. The bandwidth estimates are forwarded to the other VOIP application. The forwarded bandwidth estimates are compared to a sending bandwidth. When the bandwidth estimate is above the sending bandwidth, compression and audio-frame decimation are reduced to improve voice quality. When the bandwidth estimate falls below the sending bandwidth, audio compression and decimation are increased to improve efficiency. Packet size can also be increased. Congestion estimates can also be sent with the audio data, causing packet transmission to pause until congestion ends. Incoming packet latencies are compared to a moving average to determine the congestion estimate, while bandwidth estimates are made by comparing packet audio duration to time between packet arrivals.