VOIP - Voice Over Internet Protocol - has been around for a number of years - PGPhone came out in the late 1990s, and wasn't even the first (though it's encryption was, and still is, impressive) - but has been heavily popularized by services like Skype and Vonage. After having finally gotten an internet connection of decent speed, I've been exploring the often-confusing world of VOIP and tackling it's steep learning curve. What I've discovered is presented below, for those interested in these things.
Before you start learning about terms like SIP, DID, PSTN, and ATA, there's a fundamental choice a prospective VOIP user has to make - to go with a proprietary system, or an open standards-based one. Skype is perhaps the most popular of the former, while providers like BroadVoice, Sipphone, Blueface, and FWD are of the latter, all based around the SIP (Session Initiation Protocol) standard.
There are two important differences between the two, both of which are somewhat technical and "behind the scenes". The first is interoperability - most of the closed, proprietary networks only support calls to other network members (and, in most but not all cases, "real" PSTN telephone numbers). If the people you want to talk to are all on one closed VOIP network, then that's fine, but if you're on a different network, well, as they say, "you can't get there from here". You can call a regular phone number, perhaps for cheaper rates than regular long-distance, but one of the big attractions to many of VOIP is the potential for free calls between VOIP users. This is where SIP-based providers excel; yes, intra-network members can call each other, but they can also generally dial members of as many as hundreds of other networks, for free, either thru direct peering or via the services of intermediaries like "SIPBroker". It may require a handful (or two!) of extra digits to be dialed... but, hey, that's what address books are for.
The second major difference between the types of network lies in hardware support. A lot of the closed systems are either softphone-only (where you have to use a microphone and speakers on your computer, about which more shortly, with their software) or support a very, very limited amount of hardware phones and adapters. SIP-based providers generally have (at least unofficial) support for any of the dozens of VOIP handsets (Grandstream Budgetone, et cetera), ATA (Analog Telephone Adapter) devices (which allow you to use a regular corded or wireless home phone with a VOIP service) from companies such as Sipura and Cisco, a variety of third-party softphones, and even wi-fi VOIP handsets (like the excellent little UTStarcom F1000). Because the hardware isn't proprietary or service-specific, there's a competetive market in SIP-compatible VOIP hardware, which is of course a good thing for the consumer. Most can even be interfaced (with a couple dollars' worth of hardware) with a computer and used with a voice mail system or PBX (like Asterisk and Asterisk-at-home).
The choice really isn't even a contest; skip Skype and the other proprietary networks, and go standards-based.
I'm not going to recommend a provider; most provide a more-than-adequate service. Choose based on price, the country you live in, area-code availability (if you want a "real" phone number for incoming calls), and support response, depending on what's important to you. As long as they've peered with Sipbroker - and preferably directly with several large VOIP providers - you shouldn't have a problem calling - and being called from - pretty much anywhere.
Softphones are inarguably popular - free downloads, idiot-proof configuration, and most PCs these days come with the requisite soundcard, microphone and speakers. If you plan to do anything more than play around with VOIP, and insist upon using a softphone, ditch the microphone and speakers for a decent headset with microphone. There are all sorts of USB phones on the market, with all sorts of high-tech styling; they're universally junk, a step up from a cheap microphone and a pair of speakers (which is a recipe for horrible audio and echoes galore). Get a decent headset - it'll probably set you back $30 to $50, but it's very much worth it if you want to sound good. My first VOIP call was made with a high-quality Koss headset, the R/50B; the person on the other end was blown away by the sound quality, saying it sounded like I was a few feet from them, not calling on the phone (and certainly not calling on a computer). If crystal-clear, absolutely awesome sound quality is your overriding concern, a good headset and a good soundcard are hard to beat.
For about the same price as a decent headset, though, you can get a hardware ATA that connects a regular old phone to the internet. A perfectly servicable no-name "ATA-1000" unit can be had for about $40 online, and basic Sipura adapters go for only slightly more. This is the way to do VOIP, plain and simple. Your computer doesn't need to be on, you don't have to wear a headset; you use a regular telephone handset, just like you would one connected to a regular phone line. Ethernet cable goes in one side of the ATA, telephone cord goes in the other, a power plug goes in the wall outlet, and (once you've set it up, if it didn't come pre-configured), it's good to go. Sound quality is every bit as good as, or better than, a regular phone call, and you can gain the extraordinarily useful ability to program custom "dial plans" to add extra functionality to your phone. I can't emphasize this enough - if you plan to use VOIP service for more than occasional, casual use, get a hardware ATA or Grandstream-type VOIP handset, as they're - overall - easier to use, more convenient, more reliable, and simply better than even the best softphone out there. You won't have to fight with (multiple) sound cards and software mixers, or be constantly tweaking volume levels; you can just pick up the phone and use it like a phone, like telephony was meant to be, regardless of who's carrying the signal.
VOIP is a field that poses a special danger to the obsessive-compulsive; people can (and do!) waste hours debating the relative merits of one codec versus another, scheming how to maximize network throughput by tweaking frame lengths, and dozens of other arcane technical minutae. Don't worry about any of this; it's really not important. Unless you're trying to do more advanced things than just simply making and receiving calls over the 'net, don't worry about it. Relax, kick back, and enjoy the low cost and excellent quality that makes VOIP so popular.