Voice over Internet Protocol, or VoIP, is the technology that allows voice communications over the Internet. The quality of voice over IP now is crystal clear and rivals the one of traditional telephone. The VoIP services from leading provider Vonage are subscribed by over one million users by 2006. It all started back in 1995 when a few hobbyists developed software for sending voice data packets over the Internet rather than communicating through standard telephone service, so they could make long distance calls free of charges. Early VoIP were marked by poor sound quality and connectivity. Besdies, it required both callers to have a computer equipped with the same software, the same sound card and the same microphone. In 1996, Vocaltec was the first company that released a commercial VoIP product found on the shelves of Compusa and other retail outlets.

By 1998, a caller could make calls to any standard phones from a PC with right hardware and software. Phone to phone service soon followed, but the phones were required to connect to PCs to establish the Internet connection. The same year, the VoIP landscape changed drastically when both the Internet hardware giant Cisco and major communication hardware manufacturer Nortel entered the VoIP market with hardware equipment that allowed easy switch between standard phones and the voice data packets on the Internet. The new hardware made the VoIP hardware less computer dependent. Eventually, the connection to VoIP with a router is just as easy as to connect to a standard phone outlet.

VoIP finally took off in 2000. It has become a mainstream alternative to standard telephone service since then. The growing acceptance of VoIP in both business and residential phone use is evidential in the phenomenal success of Vonage, a major player in VoIP market today. Vonage offered VoIP service to business communities in 2001 and signed its first residential customer in 2002. Year 2003 was marked by the first platform for 911 calls on VoIP software. Between 2004 to 2005, Vonage VoIP was launched in Canada, Puerto Rico, United Kingdom and other European countries. Vonage phone service charges a monthly service fee, and calls (local, long distance or international) are technical free or unlimited. With more than one million subscribers this year, Vonage continues to offer new services and plans to meet the needs of both business and residential markets. Some small businesses have started to take the advantage of the flat fee of VoIP plans. They now have an alternative to 1-800 numbers to interact with their customers.