Voice over IP Internet Telephone Service
The ability to make telephone calls over the Internet is enabled by a technology called VoIP (Voice over IP). The ability to make computer to computer calls over the Internet is one option. The other very popular option is to make calls between a computer and the PSTN (Public Switched Telephone Network) which is the telephone network traditionally established using a technology called circuit-switched voice. This is the telephone network where the 10-digit telephone number is used in North America. Internet Telephony and Broadband Telephony are common terms used to refer to the VoIP capability.
To make computer to computer VoIP calls, two computers each with the appropriate software and hardware are needed. There is a plethora of software on the computer for such a purpose. The MSN or Windows Live Messenger software from Microsoft will enable this. Skype is another provider of software to enable computer to computer calling in addition to computer to PSTN calling. Minimal hardware is a headset with microphone. A more elaborate hardware setup involves an IP Phone which is shaped like the traditional telephone handset but internally constructed to handle the VoIP protocol.
The telephone service companies (traditionally referred to as "telcos" or LEC - local exchange carrier, your local telephone company) offer VoIP telephone services in addition to traditional PSTN circuit-switched voice. In some cases, the technology distinction is not even made. Internet Telephony providers (CLEC - competitive LEC) offer a competing alternative to the traditional Telcos. An example of such a company is Vonage.
There are VoIP providers that offer exceptionally low calling rates in addition to offering a DID (direct inward dialing) telephone number which can be used to terminate (receive incoming) calls or from which to originate (make outgoing) calls. Examples are Voice Network Inc and and LES.net.
Voice Network Inc offers a DID 10-digit number that can be used to originate and terminate calls for $3.50/month with $0.01 per minute calling within North America; voice messaging service is included. A softphone such as X-Lite from CounterPath Corporation is free; a headset and microphone is needed. An alternative to the softphone + headset is an IP phone. A broadband Internet connection is needed. Voice quality for the most part is very good with the occasional transmission lag which causes a delay between the time a word is spoken and when the other end has heard it.See Internet Telephony Setup Guide.