How did this trend get started? In 2003, Skype introduced a proprietary voice-over-Internet-Protocol (VoIP) service to allow subscribers using a computer and Internet connection to make phone calls with an online number. In January 2006, Skype added video conferencing for its nearly 100 million users and, in May 2010, Microsoft bought Skype (and access to its then 750 million users) for $8.5 billion. Those numbers show that VoIP had captured the popular imagination.

Meanwhile, mass-market VoIP services were being deployed by other vendors using existing broadband Internet access and allowing subscribers to place and receive telephone calls in the same manner as they do via the public switched telephone network (PSTN). Today, full-service VoIP phone companies provide inbound and outbound service with direct inbound dialing, call waiting, call forwarding, conference calling, and voicemail with optional email forwarding. Many offer unlimited domestic calling for a flat monthly subscription fee, and some include international calls to certain countries. Phone calls between subscribers of the same provider are usually free when flat-fee service is not available.

There are three options for connectivity to VoIP telephone service providers:

1. Dedicated VoIP phones designed in the style of traditional digital business telephones that connect directly to the Internet using ethernet or wi-fi
2. An analog telephone adapter converting a conventional analog telephone to allow it to connect to the Internet through a modular phone jack
3. Application software (i.e., a softphone) installed on a computer attached to the Internet, which is equipped with a microphone and speaker or a headset.

VoIP has many benefits, including advanced features that are not available from the PSTN, but its single biggest advantage is cost savings. Some of these benefits are:

• Phone numbers correlated to given locales no matter where you are located
• Plug-and-play connectivity: Your phone numbers move with your phones
• Phone calls routed over a single network, without the need for separate voice and data
• You can transmit more than one phone call over a single broadband connection
• Phone conversations can be secured using standard protocols (i.e. SRTP, or secure real-time transport protocol).

VoIP telephone services do have some challenges; notably, they must be properly configured to deal with quality-of-service issues and susceptibility to power failures. By contrast, these are not issues with which PSTN analog telephone services have a problem. Also, the nature of VoIP makes it difficult to locate callers geographically; so emergency calls cannot easily be routed to call centers and 911 support may not be available.

Even with the challenges, VoIP has undeniably become a mainstream solution. My firm, for instance, works with agents and insurers daily who mail their work-at-home employees an IP phone and begin transacting business with them immediately. Their service on the corporate phone system is indistinguishable from their in-office peers and the costs savings are compelling.