A
`
` Brief History of VoIP
`Document One – The Past
`
`
`
`
`Joe Hallock
`joe@sitedifference.com
`
`November 26, 2004
`
`Evolution and Trends in Digital Media Technologies – COM 538
`Masters of Communication in Digital Media
`University of Washington
`
`Page 1 of 17
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`Unified Patents Exhibit 1008
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`

`
`A Brief History of VoIP
`Document One – The Past
`
`Table of Contents
`
`Introduction ..................................................................................................................... 3
`Technology Overview ....................................................................................................... 4
`What is VoIP?............................................................................................................... 4
`How does VoIP work? .................................................................................................. 4
`Technological History........................................................................................................ 5
`Cultural History ................................................................................................................ 8
`Economic History.............................................................................................................. 9
`Conclusion ..................................................................................................................... 12
`Glossary ......................................................................................................................... 13
`Appendix – Abbreviations and Acronyms......................................................................... 15
`Bibliography ................................................................................................................... 16
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`A Brief History of VoIP
`Document One – The Past
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`Introduction
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`
`
`This paper is the first in a three part series that will ultimately detail the past,
`
`present and future of Voice over Internet Protocol (VoIP). The purpose of this paper is to
`
`detail the history of VoIP and explore this technology/industry by examining its technological
`
`history, cultural history and its economic history. For the sake of brevity, this paper (and the
`
`two that follow) will focus on this technology and its place in the business world.
`
`
`
`The goals for the second paper will be to focus on the present condition of VoIP in
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`the business world and to draw connections to historic events. In a similar structure, the
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`second paper will also focus on the technology, cultural and economic factors that define
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`VoIP in current terms. In addition, the second paper will detail particular legal or ethical
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`issues faced by the industry, the target audience for this industry, and will present the
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`factors leading to an explanation the digital divide.
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`
`
`The goals for the third paper will focus on the future possibilities of VoIP in the
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`business world and will draw connections from both the past and present states of the
`
`technology/industry. That document will draw together the hypotheses presented by
`
`leaders in the industry and will also include my own analysis of the future of the
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`technology. Furthermore, I will include hypothetical events that may affect the technology,
`
`our culture and the industry’s economics.
`
`
`
` The use of VoIP by individual consumers was the beginning of a massive move from
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`traditional telephone systems to a form of new media where voice and other forms of
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`digital media could converge with an already established data network. Major
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`advancements in the technology are the result of business development and adoption. This
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`paper focuses on the history of VoIP and how this technology fits into the business setting.
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`A Brief History of VoIP
`Document One – The Past
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`Technology Overview
`
`
`What is VoIP?
`
`VoIP, also known as IP Telephony, is the real-time transmission of voice signals using
`
`
`
`the Internet Protocol (IP) over the public Internet or a private data network.1 In simpler
`
`terms, VoIP converts the voice signal from your telephone into a digital signal that travels
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`over the Internet. One of the most significant advantages of VoIP (over a traditional public
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`switched telephone network (PSTN - also known as a legacy networks) is that one can
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`make a long distance phone call and bypass the toll charge. This integrated voice/data
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`solution allows large organizations (with the funding to make the transfer from a legacy
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`network to a VoIP network) to carry voice applications over their existing data networks.
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`Not only will this technological advancement have an impact on the large traditional
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`telecommunications industry, it will alter the pricing and cost structures of traditional
`
`telephony.2 Furthermore, when compared with circuit-switched services (yet another
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`name for legacy networks), IP networks can carry 5 to 10 times the number of voice calls
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`over the same bandwidth.3
`
`How does VoIP work?
`
`To transport voice over a data network, the human voice must be “packetized.”
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`
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`This process contrasts significantly with the circuit-switching mechanism used in traditional
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`networks. Voice packetization involves appending headers with routing information to the
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`voice data. Multiple voice samples are combined into a packet and the voice packet is
`
`
`1 Morris Edwards. "IP telephony ready to explode into corporate world. (Industry Trend or Event)."
`Communications News 38, no. 5 (2001): 96-97, Proquest.
`2 P.P. Francis-Cobley and A.A. Coward "Voice over IP versus voice of frame relay"
`International Journal of Network Management 14 (2004): 223-230, Proquest.
`3 See #1
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`A Brief History of VoIP
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`switched hop-by-hop through the network.1 To summarize, the voice signal is broken up
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`into small pieces (packets) and sent though the network one-by-one. The process of
`
`packetization compresses the callers voice signal, transfers it over the IP network, and it is
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`then decompressed at the other end. 2
`
`
`Technological History
`
`
`
`There are two fundamental technologies that are necessary for the existence of
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`VoIP. The first, and most widely used, is the telephone. The second technology is the
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`Internet. The telephone was as direct result of the (independent) work of Alexander Gram
`
`Bell and Elisha Gray in the 1870s3. The first regular telephone exchange was established in
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`New Haven in 1878. Early telephones were leased in pairs to subscribers. The subscriber
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`was required to put up their own line to connect with another. In 1889, Almon B.
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`Strowger, a Kansas City undertaker, invented a switch that could connect one line to any
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`of 100 lines by using relays and sliders. This switch became known as "The Strowger
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`Switch" and was still in use in some telephone offices well over 100 years later.4 To make
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`a call, the user needed to push a button on their phone the required number of times to
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`dial the receivers phone number. This button was replaced in 1896. Interestingly,
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`Philadelphia was the last city to give up the dual service (rotary and button) in 1943.5
`
`
`
`About the same time the transistor was invented, mathematician Dr. Claude
`
`Shannon published "A Mathematical Theory of Communication," which promoted the
`
`
`1 P.P. Francis-Cobley and A.A. Coward "Voice over IP versus voice of frame relay"
`International Journal of Network Management 14 (2004): 223-230, Proquest.
`2 Morris Edwards. "IP telephony ready to explode into corporate world. (Industry Trend or Event)."
`Communications News 38, no. 5 (2001): 96-97, Proquest.
`3 About.com. "The History of the Telephone"
`http://inventors.about.com/library/inventors/bltelephone.htm
`(accessed November 8, 2004).
`4 About.com. "Telephone History – Telephone Technology"
`http://inventors.about.com/library/inventors/bltelephone7.htm
`(accessed November 8, 2004).
`
`5 Ibid
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`concept of communicating in binary code. Dr. Shannon's paper formed the basis of the
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`entire digital communications revolution, from cell phones to the Internet.1 15 years later,
`
`in 1963, AT&T used Dr. Shannon’s ideas and created “TouchTone” dialing. This evolution
`
`of technology allowed calls to be switched digitally and, later, enabled all manner of
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`automated menus and functionality that eliminated the need for human operators.2 In
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`1984 the US government broke apart AT&T – allowing home users to stop leasing their
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`phones from AT&T and allowed them to purchase their own phones. These changes lead
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`to a wave of new designs and functions for the home phone.3
`
`
`
`In 1968 the Internet was first developed by ARPANET (Advanced Research Projects
`
`Agency Network), founded by the U.S. Department of Defense in 1957. ARPANET was
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`developed to provide a decentralized communications network that would not be
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`disrupted by a potential global war.4
`
`
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`Developed in the 1970s, and in parallel to the Internet, were time-share computer
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`networks owned by large companies who would rent out their large mainframe
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`computers during the evening and weekends when they lay virtually unused. In 1979
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`CompuServe started a time-share computer service to consumers during these evening
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`downtimes. As the PC became popular, online service companies (e.g. Prodigy and AOL)
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`formed to provide proprietary information and email services. Subscribers would dial into
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`the network with their telephone lines would pay an hourly fee to receive the services
`
`offered.5
`
`In 1989, Tim Berners-Lee and a group of researchers at CERN (an international
`
`
`1 Consumer Electronics Association - CEA. "Consumer Electronics Association: Digital America"
`http://www.ce.org/publications/books%5Freferences/digital%5Famerica/history/telecom.asp
`(accessed November 6, 2004).
`
`2 Ibid
`3 See #1
`4 Consumer Electronics Association - CEA. "Consumer Electronics Association: Digital America"
`http://www.ce.org/publications/books%5Freferences/digital%5Famerica/history/interconnectivity.asp
`(accessed November 6, 2004).
`
`5 Ibid
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`scientific organization based in Geneva, Switzerland) created hypertext transfer protocol
`
`(HTTP) and a text format code called hypertext markup language1. They also invented a
`
`universal resource identifier (later universal resource locator, or URL) to identify document
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`locations. These inventions formed the foundation of the World Wide Web.2
`
`
`
`Although the telephone and Internet were vital to the existence of VoIP, there is
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`another technology that is closely related, and just as important. In 1972 Dr. Vint Cerf was
`
`the man who invented Transmission Control Protocol / Internet Protocol (TCP/IP) - the
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`technical protocol that defines the form of net data packets and how they travel to their
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`destinations.3
`
`
`
`Now that the groundwork has been documented, we can examine the short brief
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`of VoIP. From most accounts, VoIP started in February of 1995 by a small company in Israel
`
`called Vocaltec, Inc. Their product, InternetPhone, allowed one user to call another user via
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`their computers, a microphone and a set of speakers. Additionally, this application/product
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`only worked if both the caller and the receiver had the same software setup. By 1998
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`some entrepreneurs started to market PC-to-phone and phone-to-phone VoIP solutions.
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`The phone calls were marketed as “Free” nation-wide long distance calls. When the caller
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`would start the call he/she had to listen to advertisements before the call was connected.
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`Another development in 1998 was the hardware’s foray into the market. There were
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`three IP Switch manufactures that introduced VoIP switching software as a standard in
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`their routing equipment. By the end of 1998 VoIP calls had yet to total 1% of all voice calls.
`
`
`1 Consumer Electronics Association - CEA. "Consumer Electronics Association: Digital America"
`
`http://www.ce.org/publications/books%5Freferences/digital%5Famerica/
`history/interconnectivity.asp
`(accessed November 6, 2004).
`
`2 Ibid
`3 BBC NEWS. “What the net did next"
`http://www.bbs.co.uk/go/pr/fr/-/2/hi/technoogy/3292043.stm
`(accessed November 5, 2004).
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`By 2000, VoIP calls accounted for 3% and by 2003 that number had jumped up to 25%.1
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`A Brief History of VoIP
`Document One – The Past
`
`
`
`
`
`Cultural History
`
`Depending on one’s perspective, there are several supervening necessities that
`
`spurred the development of VoIP. The AfriISPA website (The Association of African Internet
`
`Service Providers) states that the development of VoIP was, in part, due to the
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`unavailability of regular telephone service.2 Daniel Berninger, a self-proclaimed “expert in
`
`the technical and regulatory aspects of the hostile takeover of telecommunications by
`
`communication applications of the Internet” believes that VoIP was developed to
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`circumvent the traditional telephone systems’ monopoly on communications.3 And others
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`say that they just want to avoid the per-minute tolls associated with the legacy networks.
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`
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`Along with the avoiding toll charges, there were other cultural reasons for using
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`VoIP. The most basic is that the right (and ability) to communicate should be available to
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`everyone.
`
`
`
`On the business side of the topic, most multinational companies have adopted VoIP
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`in an attempt to bring down the costs communications as well as simplify their information
`
`infrastructure. On a related note, some large organizations have used the power of VoIP
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`to shift American call-center jobs to India (e.g. Bank of America). The implications of these
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`decisions have a significant cultural impact on both the American’s who’ve lost their jobs
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`and the Indians who have gained jobs. Amitabh Pal, a reporter for The Progressive wrote a
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`piece on Indian call-centers that train their employees to be more “American.” She states,
`
`
`1 See #1
`2 AfriSPA. "Voice of IP"
`http://www.afrispa.org/voiceip.htm
`(accessed November 7, 2004).
`3 Daniel Berninger. “Untitled Home Page”
`
`http://www.danielberninger.com/
`
`(accessed November 2, 2004)
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`“Welcome to the Anglo-American-ization of India, or at least of urban English-speaking
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`youth. The call center industry is extracting a sliver of Indians who are actively de-
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`Indianizing themselves and adopting Western names and identities, accents and culture.”1
`
`The technology of VoIP, on its own, won’t change human culture. I don’t pretend to be a
`
`technological determinist in that fashion. That is, it’s not the gun that kills – it’s the person
`
`shooting the gun. It’s how the technology is used that will have an impact on the culture.
`
`
`
`Economic History
`
`
`“The $3 billion dollar budget at Bell Laboratories did not include a single project
`addressing the use of data networks to transport voice when VocalTec
`Communications released InternetPhone in February 1995. As of 2004, every project
`at the post-divestiture AT&T Labs and Lucent Technologies Bell Labs reflects the
`reality of voice over Internet Protocol. Every major incumbent carrier, and the
`largest cable television providers, in the United States have announced a VoIP
`program. And even as some upstart carriers have used VoIP to lower telephony
`prices dramatically, even more radical innovators threaten to lower the cost of a
`phone call to zero-to make it free.”2
`
`
`
`
`
`
`
`
`
`
`-Daniel Berniger
`
`
`
`
`
`The constant hype associated with VoIP is almost always directly related to the
`
`
`
`economics surrounding the technology, the future of the technology, and the investment
`
`opportunities in the companies developing the technology. Almost every article that
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`references VoIP and some form of economics states that VoIP will have “some” kind of
`
`1 Amitabh Pal. "Indian by Day, American by Night."
`http://gateway.proquest.com.offcampus.lib.washington.edu/openurl?url_ver=Z39.88-
`2004&res_dat=xri:pqd&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=article&rft_dat
`=xri:pqd:did=000000704672581&svc_dat=xri:pqil:fmt=html&req_dat=xri:pqil:pq_clntid
`=8991 68, no. 8 (2004): 29, Proquest.
`2 Daniel Berninger. “Untitled Home Page”
`
`http://www.danielberninger.com/
`
`(accessed November 2, 2004)
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`impact on traditional legacy networks. The history of VoIP is directly tied to economics.
`
`VocalTec, Inc. created a business in 1993 (and launched the first VoIP product in 1995) on
`
`the premise that voice telecommunications could travel over a data network1. And if we
`
`take a step back in history, we can clearly see that the monopolistic behavior of AT&T had
`
`a lot to do with people’s perception of the telecommunications industry. For the first two
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`thirds of the 20th century, AT&T had manned the “Berlin Wall” separating
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`telecommunications and computing2. Daniel Berniger (who I reference frequently in this
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`section) states in his essay on voipdaily.com:
`
`
`
`
`
`It was these events that brought us to our current communications environment.
`
`The economic climate over the last 5-6 years has lead companies to cut costs in their
`
`
`1 Daniel Berninger. “Untitled Home Page”
`
`http://www.danielberninger.com/
`
`(accessed November 2, 2004)
`2 Ibid
`3 OM Malik. "VoIP Daily: VoIP News Served Fresh Daily"
`http://www.voipdaily.com/
`(accessed October 29, 2004).
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`“The roots of the VoIP insurrection trace back to four synchronistic events in 1968.
`The Federal Communications Commission (FCC) ruled MCI could compete with AT&T
`using microwave transport on the Chicago to St. Louis route. The same year, the
`FCC’s Carterfone decision forced AT&T to allow customers to attach non-Western
`Electric equipment, such as new telephones, and modems, to the telephone
`network. The Department of Defense’s Advanced Research Project Agency issued a
`contract to Bolt Beranek and Newman for a precursor to the Internet. And in July
`1968, Andrew Grove and Gordon Moore founded Intel. Innovation in the
`communication sector remained the proprietary right of AT&T for most the 20th
`century, but events in 1968 breached the barriers that kept the telecom and
`information technology industries apart.”3
`
`
`
`
`
`
`
`
`
`
`
`-Daniel Berniger
`
`
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`A Brief History of VoIP
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`infrastructure spending. A supervening necessity of the VoIP was the need to cut
`
`telecommunication costs and converge their voice and data networks. However, many
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`companies soon learned that the less-expensive VoIP calls were of a far less quality. This
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`quality of service (QoS) presented a business opportunity to Internet Telephone Service
`
`Providers (ITSP). If they could guarantee quality (by upgrading the existing network), then
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`they could charge a nominal fee. This is the primary business plan for most ITSPs.
`
`
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`With the hype of VoIP (and a few companies starting to make real money in the
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`business), a form of marketplace congestion developed. With a lack of government
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`regulation and the ability to transfer voice over a data network; several small
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`“communications companies” sprung into existence. Most offered calling cards that would
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`allow one to make international phone calls for 1 or 2 cents a minute. Worldwide Telco
`
`started a service whereby small telecommunications companies can resell VoIP minutes and
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`make a 20% commission.1 It appears that long-distance minutes are becoming a
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`commodity item.
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`1 Frank Ohlhorst. "More Channel Profits from Telco's Wipphone."
`CRN, no. 1104 (2004): 25, ABI/INFORM.
`
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`A Brief History of VoIP
`Document One – The Past
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`Conclusion
`
`
`
`This paper is the first in a three part series that will ultimately detail the past,
`
`present and future of (VoIP). The purpose of this paper is to detail the history of VoIP and
`
`explore this technology/industry by examining its technological history, cultural history and
`
`its economic history. The telephone and the Internet were the foundation blocks that VoIP
`
`was built upon. It was the accumulation of 40+ years of work in both the
`
`telecommunications industry and the computing industry that allowed the existence of
`
`VoIP. It was also the behavior of the telecommunications industry and the openness and
`
`freedom of the Internet that brought this technology to the forefront of communications.
`
`And, it will be the economic forces that provide the motivation for companies to develop
`
`and use VoIP technology.
`
`
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`Glossary
`
`A Brief History of VoIP
`Document One – The Past
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`
`
` B
`
`
`Broadband
`High-speed voice, data, and video networked services that are digital, interactive, and
`packet based. The bandwidth is 384 Kbps or higher, and 384 Kbps is widely accepted, as
`the minimum bandwidth required enabling full-frame-rate digital video.1
`
`
`
` C
`
`
`Computer Telephony (CT)
`The addition of computer intelligence to the making, receiving, and managing of
`telephone calls.2
`
` D
`
`
`
`
`Digital Subscriber Line (DSL)
`A technology that allows a provider to use the excess bandwidth found in a copper line for
`the provision of data services. xDSL is used to describe all of the “flavors” of DSL in
`general.3
`
`
`
` F
`
`
`Federal Communications Commission (FCC)
`The United States federal agency responsible for regulating interstate and international
`communications by radio, television, wire, satellite, and cable.4
`
` I
`
`
`
`
`Internet Protocol (IP)
`A unique, 32-bit number for a specific TCP/IP host on the Internet normally printed in
`decimal form (for example, 192.168.1.1). Part of the TCP/IP family of protocols, it describes
`software that tracks the Internet address of notes, routes outgoing messages, and
`recognizes incoming messages.5
`
`
`
`
`1 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 154.
`2 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 155.
`3 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 156.
`4 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 158.
`5 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 161.
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`Internet Protocol Private Branch Exchange (IP PBX)
`An enterprise-based IP data network device that switches VoIP telephone traffic.1
`
`
`
`Internet Protocol Telephony
`Technology that allows voice phone calls to be made over the Internet or other packet
`networks using a PC via gateways and standard telephones.2
`
` P
`
`
`
`Private Branch Exchange (PBX)
`A telephone switch owned privately, usually by a large company. If it owns a PBX, a
`company does not need to lease a telephone line for each telephone set at a site.3
`
` T
`
`
`
`
`T-1
`Trunk Level 1. A high-speed (1.544 megabits per second) digital telephone line with the
`equivalent of 24 individual 64 Kbps channels, which are joined via time division multiplexing.
`A T-1 can be used to transmit voice or data, and many are used to provide connections to
`the Internet. Also known as a DS1 or Digital Signal 1.4
`
` V
`
`
`
`
`Voice Over Internet Protocol (VoIP)
`Technology used to transmit voice conversations over a data network using the Internet
`Protocol.5
`
` W
`
`
`
`
`Wide Area Network (WAN)
`A communications network used to connect computers and other devices across a large
`area. The connection can be private or public.6
`
`
`
`
`1 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 162.
`2 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 162.
`3 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 164.
`4 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 166.
`5 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 168.
`6 David Greenblatt, The Call Heard 'Round the World (New York: AMACOM, 2003), 169.
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`Appendix – Abbreviations and Acronyms
`
`
`
`Internet Protocol
`Internet Service Provider
`Internet Telephony Service Provider
`
`ARPANET Advanced Research Projects Agency Network
`
`CT
`
`DSL
`
`FCC
`
`
`IP
`ISP
`ITSP
`
`HTTP
`
`PBX
`PSTN
`
`QoS
`
`SMBs
`
`
`T-1
`TCP/IP
`
`URL
`
`VAR
`VoIP
`
`WAN Wide Area Network
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Computer Telephony
`
`Digital Subscriber Line
`
`Federal Communications Commission
`
`Hypertext Transfer Protocol
`
`Private Branch Exchange
`Public Switched Telephone Network
`
`Quality of Service
`
`Small and Medium Sized Businesses
`
`Trunk Level 1
`Transmission Control Protocol / Internet Protocol
`
`Universal Resource Locator
`
`Value Added Reseller
`Voice of Internet Protocol
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`A Brief History of VoIP
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`Bibliography
`
`1.
`
` About.com. "The History of the Telephone"
`http://inventors.about.com/library/inventors/bltelephone.htm
`(accessed November 8, 2004).
`
`
`
` About.com. "Telephone History – Telephone Technology"
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