(fa'net'ik' al'fa'bet) n.

1. in linguistics it refers to a standardized set of symbols used in phonetic transcription.
2. any of various systems of code words for identifying letters in voice communication.

i.e. used often in telephons conversations to clearly identify: part numbers, strings of computer language code, Email addresses, etc. so as to not confuse similiar sounding letters or homonyms.

ex.: "... my Email address is IanC@123.com..."
ex. con't: could be misundertood as: ENC@123.com
ex. still con't: so to clarify, one could say: "... that's India Alpha November Charlie, at; numbers one, two, three, dot, Charlie Oscar Mike..."

There are numerous variations of Phonetic Alphabets. The official versions include:
English, American (ex-military), International, International (ex-aero), NATO & International Aviation, American (police), Italian and German.

Most comonly used is the NATO & International Aviation tabled here:

A - Alpha
B - Beta or Bravo
C - Charlie
D - Delta
E - Echo
F - Foxtrot
G - Golf
H - Hotel
I - India
J - Juliet
K - Kilo
L - Lima
M - Mike
N - November
O - Oscar
P - Papa
Q - Quebec
R - Romeo
S - Sierra
T - Tango
U - Uniform
V - Victor
W - Whisky
X - X-ray
Y - Yankee
Z - Zulu

It should also be noted that numbers are pronounced slightly differently. In particular four is pronounced fou-er to distinguish three from four, and nine is pronounce "niner" to distinguish "one" from "nine". Further, "five" is usually pronounced "fife". Sounds strange, but remember this is designed for static-y radios and to work across lots of different accents.

Thanks to NotFabio for the correction re fife.

In the field of linguistics, the particular alphabet used is the International Phonetic Alphabet or IPA, which has a symbol for each and every distinct sound that a human is capable of vocalizing, including "clicks" and other such glottal stops.
The use of "niner" in aviation and aerospace came about because "nein" (pronounced like the English "nine"), in German, means "no". There was the potential for a lot of confusion without the use of niner.
The official NATO phonetic alphabet, which is used to replace ABC for the phonetic equivalent.

A: Alpha
B: Bravo
C: Charlie
D: Delta
E: Echo
F: Foxtrot
G: Golf
H: Hotel
I: India
J: Juliet
K: Kilo
L: Lima
M: Mike
N: November
O: Oscar
P: Papa
Q: Quebec
R: Romeo
S: Sierra
T: Tango
U: Uniform
V: Victor
W: Whiskey
X: Xray
Y: Yankee
Z: Zulu

The NATO Phonetic Alphabet dates back to 1955, and is appoved by the ICAO (International Civil Aviation Organization), the FAA and the ITU amongst others. Its been noted that the british police use I:"indigo" instead of "india". "Beta" is only used within a Indonesian phrasebook. Other versions of the examples used in other countries and/or previous versions in no specific order can include such words as:
Beta, Ultra, Volvo, Alfa, Coca, Metro, Nectar, Siera, Union, Whisky and Extra et al.

(src: updated oct. 2000 - Columbia.edu)

Extension of phonetic alphabet: Norwegian letters.

Æ - Ærlig ("Honest")
Ø - Østen ("The East")
Å - Åse (a name)

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