VoIP Basics - What You Need to Know

VoIP is the newest Internet phone technology. If you haven't heard of it, let's take a look at what it is.

Alexander Graham Bell probably didn't realize the far-reaching effects his invention of the telephone in 1865 would have. Through the culmination of refinements and technological advances, more than one hundred years later VoIP was released. VoIP is an acronym for Voice Over Internet Protocol. This is the ability to transmit voice over an IP-based network. The ever-growing popular broadband phone service began in 1995 in Israel by some men doing PC-to-PC communications. This was in its basic form from what VoIP is today. The phone system created by Bell, initially seen as a fad for entertainment purposes only, has developed into an enterprising business.

In 1995 Vocaltec released the first Internet phone software. This challenged the traditional Public Switched Telephone Network (PSTN) system. Data packets sent over the Internet was a system that could avoid long distance costs. The process broke data into small packets and transmitted them to a receiver through routers, with no circuit closings as with traditional PSTN. The receiver's software would reorder the data packets back in order. In its earliest form, this innovative service allowed free calls to be made between PC's. The requirement was that both the sender and receiver needed to have the same equipment. The software ran on a home PC, utilized sound cards, speakers, microphone and a modem and used H.323 protocol. Voice quality was poor compared to that on the traditional telephone but that would soon improve.

By 1998, VoIP had garnered less than 1% of the voice traffic. This initial application had many problems. PC to phone followed by phone-to-phone communications was soon established through the use of gateways. The phone transmission would include advertisements at both the beginning and the end of the call to subsidize the costs and allowed companies to offer free calling to their customers. When Ethernet services were introduced, the voice quality issue was greatly enhanced, although static and connection problems between the Internet and PSTN were still prevalent.

Up to this point a computer was needed to establish communications. By 1998, three IP manufacturers, including CISCO, Nortel and Lucent, developed equipment to route and switch IP traffic. Switching capabilities developed, allowed data packet switching into something, which could be read by PSTN. This allowed VoIP to be less dependent on computers. With hardware more reasonably priced, companies began implementing VoIP on their internal IP systems. It also started to be used by long distance carriers. By the year 2000, IP traffic had increased to 3%.
This new technology is continuing its steady growth with 2005 revenues meeting 3 million dollars. Voice quality issues have been addressed and VoIP is able to offer low cost, unlimited calling plans and other services. It is offered to business and residential users. It is an exciting area where changes and developments are abundant. The competitiveness in this area results in better services and cheaper costs. It is a win-win situation for the user. It is the culmination of the explosive new technology introduced in its most primitive stage, by Mr. Bell himself.