A videoconferencing and data collaboration system is disclosed, wherein user systems exchange A/V data along with other computer data via conferencing devices over a packet network. The conferencing devices are configured to process and transmit A/V data to other devices participating in a conference. Each transmitting conferencing device uses DSP to encode A/V for transmission to the packet network. Once A/V data using the DSP is received, each receiving conferencing device decodes the A/V data and forwards it to a respective terminal for viewing via the digital link. The conferencing devices also share computer data and files over the digital network, where user modifications are tracked by transmitting short messages that indicate key depression or mouse movement.