The phone, the great-grandfather of VoIP, has come a long way since the days of Alexander Graham Bell. The electric device designed to transmit speech — that is, the telephone — came about from Bell's desire to improve the telegraph. In the mid-1870's, the first phone was born when Bell proved that different tones could vary the strength of a current in a phone wire. To create the telephone, Bell invented a working transmitter with a casing capable of receiving various electronic currents and a receiver which reproduced the variations in frequency. That telephone is VoIP's direct predecessor.
In the late 1870's, Bell patented the electromagnetic phone, which used magnets and a call bell. Ensuing developments included the end of the bell box and "battery" use in the 1930's. Each subscribing party (think phone customer) was assigned a line which was controlled in a central location instead of by local batteries. In the 1960’s, phones were further modernized by the touch-tone phone.
The next major modernization is digital telephony, also known as VoIP. VoIP has greatly increased the scope and quality of phone service, especially with providers such as ITP and Nextiva. Analog phone networks were modernized over time, first in the early 60’s by improving networks with lower-tech T1 systems. As digitizing technology improved, T1 systems were replaced with synchronous optical networking and fiber optic networks. Because of these improvements, data could be transmitted more quickly and much cheaper. In fact, many "analog" carriers use digital signals. They just don't tell you.
VoIP or IP telephony calls use a broadband connection to transmit signals as data packets. IP telephony offer low cost connections, even for mobile phones, via WiFi hotspots. VoIP can also be used within a private network to make calls within a business