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The Best VoIP Internet Phone Service Providers for the Money

Definition of VoIP

What is VoIP Internet Phone Service?

VoIP is an acronym for "Voice Over Internet Protocol".  It describes a complex process that makes it possible for analog (voice) signals to be converted into digital (computer language) data and transmitted over an internet connection to a PSTN (public switched telephone network).  On the receiving end, the digital data is converted back to analog again and can be heard by the other party. 

With hardware-based VoIP services, a VoIP adapter is used to convert the analog (voice) data into digital (computer) data.  With software-based VoIP service (like skype, net2phone, and webphone), computer software serves the purpose of converting analog (voice) signals into digital (computer-based) data. 

The biggest advantage of VoIP is that voice data is sent over the "freely available" internet rather than the fixed circuitry of  public telephone networks, thus avoiding the high fees and taxes associated with using an expensive "private" route owned by the phone companies.  This is what makes internet phone service so cheap - it does not rely on expensive telephone company connections for the transmittal of data. 

Why is VoIP so Cheap?

Initially, VoIP was so cheap within the United States because there were essentially no government taxes on this service.  Since internet phone service utilizes the free  "internet highways" to transmit data, calls can be made as cheaply as sending an email.  All good things must come to an end, however, once the government realizes it can make some more money.... 

Will VoIP stay cheap?

We doubt it.  At least not in the United States.  Always looking for another way to get more money out of us hard working citizens, the U.S. government has done it again....

As of June 22, 2006 the FCC passed USF (Universal Service Charges) taxes onto VoIP service providers.  This means that internet phone service providers will inevitably have to raise their rates or pass some extra fees onto us VoIP subscribers.  An interesting fact relating to this (according to eWeek) is that "the USF will lose as much as $350 million starting in August when DSL and other broadband Internet access services become exempt from having to contribute to the fund." 

Evidently, high-powered broadband service providers have convinced the FCC that they should not have to pay into this USF fund any more.  This will create a $350 million shortfall.  The FCC has to make up the difference somewhere, so they are passing the USF fee on to internet phone service providers, who will inevitably pass it on to us consumers in the form of higher VoIP service fees. 

The Universal Service Charge Fund is used to offset the cost of providing phone service to rural areas that do not have the population or monetary resources to foot the bill themselves.  Telecommunications companies must contribute to this fund for the "greater good", and most simply pass the cost on to the consumer. With VoIP service today, we see no extra charges for USF, but most of us can find them on our cell phone and PSTN (land line) phone bills.  Very few VoIP companies will be willing to simply "absorb" this charge, as it will inevitably affect their bottom line.  All good things must come to an end, and really cheap internet phone service will soon become a thing of the past once we start getting hit with all the new government charges.  VoIP should still be cheaper than having a traditional POTS (plain old telephone service) line, though.

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