The TCP header compression
subscribes to the Van Jacobson Algorithm, which is defined in RFC
1144. TCP/IP header compression lowers the overhead generated by the
disproportionately large TCP/IP headers as they are transmitted
across the WAN.
TCP/IP header compression is protocol specific and compresses only the TCP/IP header, which leaves the Layer 2 header intact to allow a packet with a compressed TCP/IP header to travel across a WAN link.
It is beneficial on small packets with few
bytes of data, such as Telnet. Cisco header compression supports
X.25, Frame Relay, and dial-on-demand WAN link protocols.
Because of processing overhead, header
compression is generally used at lower speeds, such as 64-Kbps
links.