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Voice over Internet Protocol, VoIP or Broadband phone service as it is often referred to, is changing the telephony world. Traditional phone lines are slowly being phased out as businesses and households around the world embrace the benefits and features that VoIP technology has to offer. As this evolution accelerates, it is worthwhile to stop and take a look at the history of VoIP. You will find that as interesting as the history of VoIP may be, the future of VoIP is even more intriguing and exciting.

The history of VoIP shows that this technology started as far back as 1995, when a small company called Vocaltec released the first internet phone software. This software was designed to run on a home PC and much like the PC phones used today, it utilized sound cards, microphones and speakers. The software was called "Internet Phone" and used the H.323 protocol instead of the SIP protocol that is more prevalent today. Vocaltec had initial success with Internet Phone, and had a successful IPO in 1996. It was the Skype of the mid 90s. A major drawback in 1995 was the lack of broadband availability, and as such, this software used modems which resulted in poor voice quality when compared to a normal telephone call. However, this was still a major milestone as it represented the first ever IP Phone. It is also worthwhile to mention that one of Vocaltec’s key employees is also a founder of Whichvoip.com.

By 1998, VoIP traffic had grown to represent approximately 1% of all voice traffic in the United States. Entrepreneurs were jumping on the bandwagon and were creating devices which enabled PC-to-phone and phone-to-phone communication. Networking manufacturers such as Cisco and Lucent introduced equipment that could route and switch the VoIP traffic and as a result by the year 2000, VoIP traffic accounted for more than 3% of all voice traffic.

Now, in 2005, major voice quality issues have long since been addressed and VoIP traffic can be prioritized over data traffic to ensure reliable, clear sounding, unbroken telephone calls. Revenue from VoIP equipment sales alone are projected to reach around $3 billion this year and are being forecast to be over $8.5 billion by the end of 2008. This is primarily being driven by low cost unlimited calling plans and the abundance of enhanced and useful telephony features associated with VoIP technology.

This is a phenomenal growth rate and with the rapid introduction of Video over IP fueling demand, the future of this technology is truly exciting and will enable us to enjoy products that our grandparents and even parents never thought were possible. Video over IP follows the same concept as VoIP but in this case enables the transmission of video signals. As such, video phones are becoming more common than you would think, and many companies are already offering attractive packages. One of our featured partners, Packet8 already has a video phone offering.