Analysts predict that 2005 will be the year of Voice over IP (VoIP). This year more businesses are expected to buy VoIP telephone systems than conventional telephone systems. Paradoxically, consumers unhappy with the Plain Old Telephone System (POTS) think of VoIP as some sort of an urban legend used to scare unruly children.
The basic difference between the POTS and VoIP is that the former operates on circuit-switched voice transmission lines (phone lines) while the latter run on a packet-switched data network (the internet.) Basically, circuit-switching involves sending data along a dedicated connection between two phones, packet-switching sends data across a network with thousands upon thousands of paths to choose from.
Packet-switching is inherently more robust then circuit-switching and uses less telco resources. Two days after hurricane Katrina struck, with phone lines down, the mayor of New Orleans was able receive a call from President Bush because an employee set up a Vonage account on his laptop. This illustrates the reason the military was so interested in the internet: In case of nuclear war, the internet would operate long after conventional telephone systems had failed.
As an article on howstuffworks.com pointed out, in as late as the 60s, if you made a long distance call from Montr