The first public demonstration of a one-way videophone occurred on April 7, 1927, between Herbert Hoover (Hoover, Herbert) (then U.S. secretary of commerce) in Washington, D.C., and officials of the American Telephone & Telegraph Company (AT&T (AT&T Corporation)) in New York City. This was followed by the first public demonstration of a two-way videophone, on April 9, 1930, between AT&T's Bell Laboratories and its corporate headquarters, both in New York City. This two-way system employed early television equipment and a closed circuit; by 1956 Bell Labs had developed a videophone that could be employed over existing telephone circuits. Further studies led to the development of the first complete experimental videophone system, known as Picturephone, in 1963. By 1968 Bell engineers had developed a second-generation Picturephone, which was put into public service in 1971.

The second-generation Picturephone was designed as a complete system. All aspects of the system—such as terminal equipment, local loop transmission, switching, long-distance transmission, and private branch exchange—were designed and developed to support two-way video communication over telephone circuits. Picturephone employed analog black-and-white video transmission similar to that used in television broadcasting. The crucial difference lay in the bandwidth of the video signals. Conventional television employed a 4.5-megahertz signal, which could transmit the information required to trace the standard American analog television picture of 525 lines per frame at a rate of 60 frames per second. In order to reduce the video signal to 1 megahertz—a bandwidth that could be supported by telephone lines—Picturephone employed a picture frame of approximately 250 lines. The screen was 14 by 12.5 cm (5.5 by 5 inches)—a screen size that was deemed to be appropriate for video monitors and was compatible with the resolution of the transmitted signal. The Picturephone terminal consisted of a free-standing microphone and a video display unit containing a speaker, an electron-tube camera, and a cathode-ray (cathode ray) picture tube.

In 1992 AT&T introduced the VideoPhone 2500, the world's first colour videophone that could transmit over analog telephone lines. Unlike the earlier Picturephones, the VideoPhone 2500 employed digital compression methods to enable a significant reduction of the bandwidth required for full-motion video transmission. A V.34 modem was employed to transmit the compressed video signal over an analog telephone line for access to the PSTN, where the signal could be readily circuited through central-office switches. Depending on the quality of the telephone line, the VideoPhone 2500 transmitted at either 19.2 or 16.8 kilobits per second. The video compression algorithm employed in the VideoPhone 2500 was licensed to a number of Japanese manufacturers for employment in similar videophones. Nevertheless, lack of sales led AT&T to discontinue the VideoPhone 2500 in 1995. Other manufacturers in both the United States and Europe, including British Telecommunications and the Marconi Company, developed similar videophone terminals for operation over the PSTN.