By Vijay, July 2, 2022

Despite VoIP’s meteoric rise over the past decade, Internet phones have a much longer and more storied history than most people realize.

To begin, VoIP’s origins can be traced back to Bell Laboratories about a century ago (Of course, it was called after the man who came up with the idea for the phone: Alexander Graham Bell.)

What links German electronic music, five-star hotels, and the American federal government to Voice over Internet Protocol?

Find out how Internet telephony went from being a specialized voice synthesizer to being adopted as the norm in business communication and business virtual phone lines, used by over a billion people daily.


1928: The Roots of VOIP Technology

The Bell Laboratory was founded in 1925 by AT&T and Western Electric’s technical divisions.

Bell Labs was established by AT&T with the mission of developing and perfecting technologies that would facilitate the company’s nationwide expansion of communication services.

Invented by Bell Labs researcher Homer Dudley in 1938, the Vocoder was the first electronic voice synthesizer. The Vocoder was first shown to the public during the 1964 New York World’s Fair, where its capacity to decode and replicate human speech sounds piqued visitors’ interest. The basic idea was comparable to modern packet transmission, which involves sampling a caller’s voice on one phone and recreating it on another.

When combined with the SIGSALY system, the Vocoder allowed for the transmission of secret messages during World War II. Cochlear implants and voice-over-internet protocol (IP) telephones use the same underlying technology today. The Vocoder has been used in music by various artists, including the German electronic group Kraftwerk.


1969: The Arpanet

It is impossible to have internet calling without an internet connection.

You probably won’t believe this, but the Internet started as a research project at a university in 1969.

Formerly known as the Defense Advanced Research Projects Agency (DARPA), ARPA specializes in developing cutting-edge military technology. The goal was to facilitate better computer-to-computer communication and remote access to computers.

The outcome was the Advanced Research Projects Agency Network (ARPANET), an early user of the Transmission Control Protocol/Internet Protocol (TCP/IP) suite of network protocols.

Packet-switching groups of data can be sent through telephone networks independently of one another, eliminating the requirement for a dedicated circuit that requires a constant end-to-end connection. The ARPANET used modems to link personal computers in a wide variety of sites around the United States, including academic institutions like Harvard, UCLA, and MIT.

This system was officially shut down in 1990.

1973: First Voice Data Pack

A group of researchers at MIT’s Lincoln Lab led by Bob McAuley, including Ed Hofstetter and Charlie Radar, created the first voice packet transmitted across ARPANET in 1973.

Linear Predictive Coding (LPC) is the backbone of Speech over Internet Protocol (VoIP) technology, allowing this voice transmission to take place. LPC is a method for analyzing speech that re-synthesizes voice signals and speech from their compressed digital representations using the linear predictive model.

Lincoln Lab and Culler Harrison, Inc. successfully exchanged test speech data packets in 1974. It wasn’t until 1976 that Culler Harrison and Lincoln Labs held an LPC conference call. An important step forward was taken in 1982 when they used LPC to link a local cable network, a mobile packet radio net, and an interface with the PSTN (Public Switched Telephone Network.)

Accessing the Internet for non-business purposes was unlawful at the time. Therefore, in 1973, when user Lenoard Kleinrock wrote a message about his missing electric razor, the first “cybercrime” occurred.


1975: CompuServe

Access to even the most rudimentary version of the Internet was notoriously difficult to come by for most businesses and the general public prior to this moment.

When CompuServe, the first major commercial ISP, arrived in the market in 1975, things began to change. CompuServe was originally founded as a branch of Golden United Life Insurance.

Golden United intended to treat the Internet like a beachfront timeshare. During regular business hours, Golden United made its computer system available for other companies to rent.

CompuServe spun off as a separate entity in 1975 and was listed on the NASDAQ. Like AT&T with the telephone, it became immediately identifiable with the term “Internet.” Electronic bulletin boards and email enabled users to communicate on CompuServe. When CompuServe debuted its chat service in 1980, it was the first of its kind to cater to regular people. The real competition for CompuServe didn’t emerge until the 1990s; by then, it was too late. This competitor was acquired by a major competitor in 1997.


1988: First Wideband Audio

ITU-T accepted the G.722 wideband audio codec in November 1988, greatly improving spoken communication quality over its predecessors.

G.722 could sample audio data twice as rapidly as before and had a significantly larger speech bandwidth. G.722’s support for data speeds of up to 64 kbit/s makes it well-suited for Voice over Internet Protocol (VoIP) communication, especially across local area networks (LANs.)

Toll quality means the call’s audio is on par with what you’d get on a regular public switched telephone network call.


1989-91: First VOIP App Domain

In 1989, programmer Brian C. Wiles set out to create a program that would enable gamers to talk to each other in-game via dial-up modems. Technically speaking, RASCAL was their first VoIP program, which he developed.

John Walker, the founder of Autodesk, which makes software for architects, engineers, and other professionals, relocated to the European Union in 1991.

There was a period when 64 Kb/s was the minimum speed for voice applications. Wiles designed a decimation/expansion strategy to lower the required bandwidth to 32 Kb/s.

He then makes NetFone available to the whole population.

Speak Freely, which was formerly known as NetFone, was the first software-based VoIP phone. Walker mostly used it to eavesdrop on meetings and have internal conversations with other programmers at his company.


1993: Video Telepresence System

Teleport was the earliest telepresence system, preceding even Skype and Zoom (later renamed TeleSuite.)

Creators This simple video conferencing system was developed by David Allen and Herold Williams to safeguard their high-end resort business. Clients were shortening their stays or not booking as many nights because they had to return to work. As a result of the effectiveness of the video conferences, Hilton Hotels quickly became a major client.

Allen purchased TeleSuite’s assets and sold them to Polycom in 2007, but the deal ultimately fell through.


1994: Free World Dialup

Free World Dialup (FWD) was the pioneering VoIP service provider.

In 1994, FWD was founded by Jeff Pulver, Brandon Lucas, and Izak Jennie to provide a platform for its users to communicate with one another. Unfortunately, outbound PSTN calls could not be made at the time; therefore, FWD was the only option for connecting.

In spite of its “free” moniker, this service was instrumental in developing Pulver’s commercial VoIP offering from 2008.


1995: First for Profit VOIP App

VoIP calls have a time limit before they become unaffordable.

VocalTec Internet Phone, the first commercial VoIP application, was developed by the founders of VocalTec Communications in 1995. The H.323 protocol necessitated a 486 CPU, 8MB of RAM, a 16-bit sound card, and an SLLP or PPP connection in order to function.

Even though it doesn’t seem like much now, that was cutting-edge technology when it was first developed.

Customers were able to save money on long-distance and international calls despite VocalTec’s registration and per-minute expenses.


1996: Hosted PBX Solution and SIP Development

Key features such as web portal access and find me/follow me were included in the first hosted PBX solution by California Virtual PBX in 1996. It’s important to remember that before VoIP was widely adopted, hosted PBX systems still used the PSTN’s copper wiring for communication.

Both hosted PBX and SIP had their beginnings in 1996; however, neither was powered by VoIP at the time. Although this initial release of SIP only provided one command — to initiate a call — by 1999, it included six.

Cell phone companies switched to SIP as the standard for mobile VoIP due to its superior scalability compared to H.323.

2003-2004: Skype and Vonage

Skype, the most well-known name in video chatting at the time, was established in 2003 and is headquartered in Estonia.

In-network communications were free, but customers were charged for using the public switched telephone network (PSTN). Presently, it is only available in audio form.

However, because it is a client-server and P2P hybrid, it will soon be able to provide video calling, file sharing, Skypecasting, and other services. Both eBay (2003) and Microsoft (2011) bought it.

There were quickly dozens of Skype-like services available.

Approximately 2 million businesses have signed up for Vonage for Business since its launch in 2004.


2004: The FCC Weighs in

Until now, restrictions for using VoIP for phone calls had been vague.

In 2004, then-Chairman of the Federal Communications Commission Michael Powel decided that VoIP was not a telephone service but rather an information service. This not only resulted in lower taxes for VoIP users but also prevented individual governments from imposing additional regulations on the industry.

In 2005, the government mandated that VoIP services that used the PSTN also support e911 calling. Laws mandating the recording of phone calls were also enacted.


2005-2006: The Rise of Mobile VOIP

Calypso Wireless introduced the world to the first mobile phone with Wi-Fi in 2005, launching the C1250i.

The C1250i enabled users to make and receive IP phone calls and real-time, two-way video conferences regardless of whether they were connected to a wired or wireless network.

The first mobile VoIP app, Truphone, was released in 2006 for Nokia, iPhone, Android, and Blackberry devices.

The app’s users could make free in-network phone calls, send free in-network texts, and make free VoIP calls over the public switched telephone network (PSTN). Rather than using cellular networks, the app relied on Session Initiation Protocol (SIP) to place calls over an Internet connection.



Hosted VoIP telephone services grew by about 17 percent annually by 2012, while SIP trunking expanded by about 83 percent between 2011 and 2012.

By 2015, IP telephony was commonplace in many firms, and many more were making the switch. Market demand prompted AT&T to request that the FCC approve the use of fiber optic cables and IP switches by VoIP providers rather than copper wire.

Increased competition in the form of varying pricing and feature bundles, as well as a sharper focus on mobile VoIP, resulted from the proliferation of VoIP service providers at this time.


2016-2020: Remote Work & VOIP:

In 2018, VoIP technology in the United States was a $20 billion market, with forecasted growth of more than 28% between 2016 and the beginning of 2020.

In light of this, the early 2020 Coronavirus pandemic sped up the VoIP industry’s trajectory toward becoming the norm. Companies have been rushing to meet the demands of remote workers as the number of people working remotely has increased seemingly overnight.

Using VoIP technology, omnichannel routing, and unified communications-enabled distant teams to connect with one another and with clients over a wide variety of channels accessible from any device, including but not limited to:

  • Video chatting
  • Applications for soft phones
  • Communication in groups via telephone
  • There are several lines for making phone calls.
  • Group instant messaging (chat) for teams
  • Communication via a website’s chat function
  • Online voicemail system

Integration with customer relationship management (CRM) software, which gave vital customer history on incoming callers, also emerged as a crucial element of VoIP phone systems.


The Future VOIP:

According to Gartner’s research, nearly all IT executives will abandon purchasing on-premises communications entirely by 2021.

What this means is that it may not be too long until landline desk phones become an artifact of the past and are only seen in museums.

Intent on migrating to VoIP technology? Are you already utilizing a virtual telephone system but searching for superior service with more available options?

Check out our nifty comparison chart for a quick overview of the finest business VoIP services today.