Voice-over-Internet Protocol has been a subject of interest almost since the first computer network. By 1973, voice was being transmitted over the early Internet.[1] The technology for transmitting voice conversations over the Internet has been available to end-users since at least the early 1980s. In 1996, a shrink-wrapped software product called VocalTec Internet Phone (release 4) provided VoIP along with extra features such as voice mail and caller ID. However, it did not offer a gateway to the PSTN, so it was only possible to speak to other Vocaltec Internet Phone users.[2] In 1997, Level 3 began development of its first softswitch (a term they invented in 1998); softswitches were designed to replace traditional hardware telephone switches by serving as gateways between telephone networks.[3]

Revenue in the total VoIP industry in the US is set to grow by 24.3% in 2008 to $3.19 billion. Subscriber growth will drive revenue in the VoIP sector, with numbers expected to rise by 21.2% in 2008 to 16.6 million. The US's largest VoIP provider is Vonage

Functionality

VoIP can facilitate tasks and provide services that may be more difficult to implement or more expensive using the PSTN. Examples include:

The ability to transmit more than one telephone call over the same broadband connection. This can make VoIP a simple way to add an extra telephone line to a home or office. 
Conference calling, call forwarding, automatic redial, and caller ID; zero- or near-zero-cost features that traditional telecommunication companies (telcos) normally charge extra for. 
Secure calls using standardized protocols (such as Secure Real-time Transport Protocol.) Most of the difficulties of creating a secure phone connection over traditional phone lines, like digitizing and digital transmission, are already in place with VoIP. It is only necessary to encrypt and authenticate the existing data stream. 
Location independence. Only an Internet connection is needed to get a connection to a VoIP provider. For instance, call center agents using VoIP phones can work from anywhere with a sufficiently fast and stable Internet connection. 
Integration with other services available over the Internet, including video conversation, message or data file exchange in parallel with the conversation, audio conferencing, managing address books, and passing information about whether others (e.g., friends or colleagues) are available to interested parties. 
Advanced Telephony features such as call routing, screen pops, and IVR implementations are easier and cheaper to implement and integrate. The fact that the phone call is on the same data network as a user's PC opens a new door to possibilities. 
Also now the only major issue with VoIP's acceptance by more users "Mobility" is also being addressed with new cordless phones (Wi-Fi) enabled available in the market. With new technologies such as (WiMax) evolving it is believed that the Mobility issue with VoIP shall vanish.