Core Issue
The severe static was caused by insertion of the Compand-type a-law command inserted under the Voice-port 0/0.
Resolution
Remove the Compand-type a-law command.
This command is only relevant for digital technologies since the Digital Signal Processor (DSP) needs to be informed of the compression type that has been used for the digital bit stream that is being received. However, for analog ports the local codec is performing the bitstream compression and expansion (compand) and always uses the u-law compand type. Therefore, the DSP always expects a u-law bit stream from an analog port codec and if that is overriden to a-law poor voice quality results.
The u-law (mu-law) compression standard is commonly used in North America and A-law is used throughout most of the rest of the world, including Europe and Australia. u-law takes 14 bit data values and compresses them to 8 bits. A-law takes 13 bit data values and compresses them to 8 bits.
Refer to following link for more information
Troubleshooting Hissing and Static