Did you know that the first VoIP call was made in 1974? Most businesses consider VoIP (Voice over Internet Protocol) a relatively recent innovation and, while it’s true that VoIP has only become widely adopted since 2000, the technology has been available for around 50 years.
As we’re celebrating our 25th year in business, we thought we’d dive into VoIP’s history. It’s been around more than twice as long as ITS and has stood the test of time. VoIP’s history is entwined with the development of the internet itself and it has now become almost as ubiquitous as HTTP (hypertext transfer protocol) – the foundation of the internet.
What is VoIP
VoIP stands for Voice over Internet Protocol (sometimes called IP telephony) and is group of technologies for real-time voice communication over internet protocol networks such as the internet.
Traditional telephony uses a circuit-switched network and depends on a physical connection (usually a wire) between two points on the network to transmit analogue data (like voices) for a phone call. VoIP, on the other hand uses a packet-switched network that transmits our voices as digital information. One of the upsides of using a packet-switched network is that it significantly reduces costs. This is because you no longer need a dedicated circuit or connection available between two points at all times.
Beginnings: 1960s and ‘70s The story goes back at least as far as 1966, when Fumitada Itakura of Nagoya University and Shuzo Saito of the Nippon Telegraph and Telephone Corporation created a method to convert speech into digital signals called LPC (linear predictive coding). It’s a speech processing algorithm which became the basis for VoIP, however we were still some years away from functionality that allowed us to make phone calls via the internet.
Eight years later in 1974, the first VoIP call was made over ARPANET (Advanced Research Projects Agency Network), though the label ‘VoIP’ came later. ARPANET was a precursor of the internet we know and love today and the call was made between Culler-Harrison Incorporated in California and MIT’s Lincoln Laboratory in Lexington Massachusetts.
It worked, but the speech quality was poor.
Standardising the data transfer protocol: 1980s
VoIP may never have existed as we know it today if it weren’t for one engineer working at Bell Telephone Laboratories (the research division of American Telephone giant AT&T) called Marion Croake. Currently Vice President of Engineering at Google, Marion was also inducted into the Women in Technology International Hall of Fame in 2013 for her work on VoIP and was one of the first black women to be inducted in the US National Inventors Hall of Fame in 2022 for the same reason.
To be commercially viable, VoIP needed a standardised and more efficient system for sending data. In the 1980s there were two competing protocols for data transfer between computers: TCP (Transmission Control Protocol) and ATM (Asynchronous Transfer Mode).
Marion Croake convinced AT&T to adopt TCP instead of ATM. Marion’s reasoning was that TCP (later known as TCP/IP – Transmission Control Protocol / Internet Protocol) is a packet-switching protocol and doesn’t need a single unbroken wire connection to function. As you may have guessed from the name, VoIP relies on the IP (Internet Protocol) part of TCP/IP.
ATM on the other hand is a circuit switching protocol, like traditional telephony networks. Marion believed that TCP was more adaptable and less vulnerable to physical disruption than telephone wires. She persuaded the executives and led her team to develop the technology into something far more stable and reliable.
(For completeness, we should also say that modern VoIP is generally no longer used with TCP as later engineers have found an even better protocol, but without that first shift from circuit-switched to packet-switched networks, we wouldn’t have VoIP. However, we won’t go into more detail here as that’s a whole article in itself.)
First commercial applications: 1990s
In 1991, Speak Freely was released and was the first consumer VoIP application, written by John Walker and Brian Wiles.
Another VoIP application called Teleport (later renamed to Telesuite) was launched by owners of a luxury resort business. We might even be able to blame creators David Allen and Harold Williams for popularising the idea of checking-in at work while on holiday. They noticed that business people would cut short their stay at a luxury resort to attend a vital work meeting. In response, they created Teleport to allow guests to attend a meeting while staying at the resort, meaning they could stay longer (and spend more money there!) and Hilton Hotels became their first big client.
Though this sounds fairly impressive, the most influential VoIP release of the decade wasn’t until 1995 when VocalTec released the Internet Phone. It allowed two users, both running the software, to make a call using a speaker and microphone connection alongside their internet connection.
For a successful VoIP call back then you needed:
- a 486 computer processor
- 8MB of RAM
- a 16-bit soundcard
- a microphone
This is a far cry from today’s 13th Generation Intel Core processors and the standard 16 – 32GB of ram needed by most day to day laptops. Not to mention the fact that computers now simply aren’t sold without either a microphone or sound processing technology.
What were the pros and cons for business customers using VocalTec?
Although the new technology was still expensive, it created notable savings for customers compared to standard international and long-distance call charges. However, at this point in time VoIP calls accounted for only 1% of all phone calls made across the world.
The downside was that low bandwidth internet meant that audio quality was often poor and calls were frequently dropped. Think how frustrating we find a jittery zoom call today, especially when we’re busy, and you’ll empathise with 1990s executives using VoIP to make important international calls. Therefore, the technology still wasn’t ready to go mainstream.
The age of Skype: 2000s
During the 2000s, broadband internet became readily available in richer countries, which improved the general quality of VoIP calls allowing it to become a far more appealing alternative to a standard telephone call. By 2003, a quarter of all voice calls were VoIP calls.
Software developers were quick to spot the potential and in 2003, Skype (known back then as Sky Peer-to-Peer) was founded in Estonia by Niklas Zennstrom and Janus Friis. It allowed free internet-based voice calling between PCs and later expanded its functionality to include text chat and file sharing. Skype is also responsible for popularising the concept of video calling, by adding this feature in 2005.
Skype’s popularity grew quickly. In 2005 it had 2.9% of the international call market share and in 2014 that had risen to 40%. By the end of 2010 Skype had 660 million users worldwide and in 2011 Skype was acquired by Microsoft.
Also in this decade, telephone manufacturers began creating hardware that could do the “switching” needed for a packet-switching network. Until now, only a computer could perform the digital switching needed, hence why calls had to be made between computers. With telephones that could make VoIP calls, the foundations were now in place to develop unified communications systems.
PTSN switch-off and a global pandemic
By 2012, hosted VoIP telephone services were growing by nearly 20% per year and VoIP was fast becoming the standard for business telephony.
Since then, the number of providers and the telephony options for businesses have grown almost exponentially.
Just five years later, in 2017, the UK telecoms industry announced that the UK’s Public Switched Telephone Network (PTSN) was to be turned off by the end of 2025. This leaves VoIP as the technology of choice for making voice calls, for both personal and business customers.
Because VoIP has a history of at least 50 years, it’s now a very stable technology. It also has its roots in the very foundations of the internet, so it’s clear we can rely on VoIP to continue to enable the millions and millions of voice calls it makes possible.
While VoIP was already on a path to become the standard for telephony across the world, the COVID-19 pandemic forced millions of us into remote working and accelerated the need for hosted VoIP systems and unified communication systems. Overnight, businesses needed their employees to be able to work from home as efficiently as they could from the office.
To be as productive as possible at work, we need voice calling systems that integrated desktop phones, smart phones, tablets and laptops. So no matter where our workers are, they can make and receive business calls using their business telephone number.
Finding the best telephony system for your business
In 2023, none of us can imagine running a business without VoIP. Yet, that doesn’t mean you have to understand the technical detail to implement business telephony that reduces stress for your workers and optimises productivity.
At ITS, we stay up to date with the latest developments so we can provide a tailored solution for each customer, that takes into account your business needs.
Contact us if you’d like to find out how we can help you find an affordable VoIP solution that delivers what you need it to.