In order to connect computers using TCP/IP as the network protocol, all participating computers require a valid and unique IP address. If a remote site does not have its own IP address (such as the individual workstation of a telecommuter), the device assigns it an IP address for the duration of the connection, so enabling communications to take place.
This type of address assignment is performed during PPP negotiation and is used only for connections via WAN. In contrast, the assignment of addresses using DHCP is (usually) used within a local area network.
Note: Assignment of an IP address is only possible if the device can identify the remote site by its call number or name when the call arrives, i.e. authentication was successful.