The History Of VoIP And Business Phone Systems

VoIP (Voice over Internet Protocol) technology has exploded during the past years, becoming commonplace in business and consumer communications. And it’s not surprising: this technology is affordable, quick, feature-rich, multi-channel, and supports integrations.


However, although VoIP has seen its breakthrough only one-two decades ago, its history goes as far as almost 100 years back! Originating at the Bell Laboratory, this technology since then had a very fascinating history, which has led to what it is today. 


To help you understand VoIP technology better, this article walks you through how it went from being a voice synthesizer to a mainstream communications solution with over 1 billion users


VoIP Technology Development: A Timeline


Let’s take a walk down memory lane, and visit some of the dates signifying a significant development or a breakthrough in VoIP technology.

1925 - 1938: Forming the Roots of VoIP technology


In 1925, the Bell Labs came into existence as a result of joined forces of the engineering departments of AT&T and Western Electric company. More than a decade later, in 1938, one of the engineers of the company, Homer Dudley created the first electronic voice synthesizer in the world. Named Vocoder, it could analyze and recreate the sounds of human speech. It was later used in the SIGSALY System during World War 2 to send secret messages. Fast forward to today, the same technology is used in VoIP telephony, as part of cochlear implants, and in technologies.

1969 - 1988: ARPANET and The First Voice Data Packet Transmission


Then there was the Internet. Starting as an academic research project by ARPA (Advanced Research Project Agency) in 1969. ARPA was an agency of the US Department of Defense, and it was aiming to improve communication by accessing computers remotely.


The result of the research was the first packet-switching network, ARPANET. It was sending data over telephone networks independently and connected several computers around the USA, including MIT, Harvard, and UCLA.


Four years later, in 1973, at MIT’s Lincoln Lab, the first voice packet was developed. This was possible through LPC (Linear Predictive Coding,) which is the foundation of modern VoIP technology. A year later, the first voice data transmission between two labs happened. 


Although the VoIP technology was developing, at this point, it was close to impossible for the public to get access to it. In 1975, it all changed when CompuServe came into existence. CompuServe was the first commercial Internet provider and allowed users to send each other messages over email and electronic boards. It became a synonym for the Internet and was the first technology that allowed people to communicate with each other through computers.


A further leap in the development of VoIP technology was in 1988 when the G.722 wideband audio codec came forward offering a significantly improved speech quality.

1989 - 1993: First VoIP Application as Public Domain and the First Video Telepresence System


In 1989, developer Brian C. Wiles wanted to create a tool that would allow gamers to communicate with each other on their computers, via a phone network, when they were playing. This is how RASCAL came to be. He also wrote a decimation/expansion scheme that allowed to reduce the necessary bandwidth of voice applications to 32 kb/s from 64 kb/s, calling the program NetForce. Laker known as Speak Freely, NetForce can be considered the first software-based VoIP phone. 


Around the same time, in 1993, David Allen and Herold Williams created a video conferencing system and coined it “Teleport” (later Telesuite,) which would become the predecessor of Skype, Zoom, and other similar products. Interestingly, the product was developed as Allen and Williams wanted to protect their luxury resort business: many of the visitors would cut their holidays short to get back to their conferences, and the business would lose revenue. The video conferencing technology seemed to be the perfect solution.

1994 - 1995: Free World Dialup and First For-Profit VoIP Application


The first true VoIP business venture, the Free World Dialup (FWD,) has created a network where all the company’s subscribers could talk to each other. They, however, could connect with each other and make calls only inside FWD, as outbound calls were not yet accessible. 


Then, the first for-profit VoIP technology emerged the VocalTech internet phone. Very high-tech for its time, it charged a subscription fee, as well as a per-minute fee. However, it was still more accessible than international calls and helped users to save costs. 

2003-2004: Skype And The Alternatives


In 2003, the now legendary product, Skype, was created in Estonia. Beginning as audio-only, the company later introduced video calls and file sharing. This was made possible by the company’s hybrid P2P and a client-server system. The company was acquired by eBay the same year it was created, then became part of the Microsoft family in 2011.


After Skype was created and came into popularity, many alternatives emerged, offering similar or improved video conferencing services.

2005 - Today: VoIP goes Mainstream As A Business Communications Solution


From there, the growth of VoIP technology accelerated unprecedentedly. In 2005, the first mobile phone with wifi was introduced, and a year later TruePhone, the first mobile VoIP app launched for a series of phones including Nokia, Blackberry, and iPhone. It allowed users to send free in-network texts, and make free in-network calls.  


By 2012, the annual growth rate of VoIP solutions was standing at 17%. By 2015, many businesses had either switched to VoIP technology or were considering it. The boom of VoIP brought with it competitive pricing, making it affordable to many, as well as constantly improving products.


Then the Coronavirus pandemic happened. By that time, although VoIP was growing by 28% a year, that growth skyrocketed. As businesses were forced to switch to remote work almost instantly, the need for fast, reliable, and effective communication channels saw an unprecedented increase: Currently, VoIP is expected to become a $55 billion industry by 2025. The solutions provided by VoIP technologies allowed businesses to cater to those needs, offering them tools to connect with one another across time zones through video chats, conference phone calls, group chat messaging, SMS solutions, website chat, virtual voicemail, and many more. 

Wrapping up


With the scale and speed of development of VoIP, it becomes clear that this technology will soon entirely replace the traditional landline solutions. As these developments happen, the history of VoIP continues to evolve. As it’s already making its way into IoT, who knows, maybe in the near future VoIP won’t be confined only to smartphones and smart speakers but will be integrated into TV, e-Scooters, and other technology. Whatever is in store for VoIP, it’s fascinating to witness these developments, and we can’t wait to see what comes next.