Consumer VoIP - Types of Service
So you've decided to forge ahead and try VoIP. What you do next depends on how comfortable you are with futzing with networking product selection and setup and how many lines you are looking to get. To start out simply, I'll concentrate on VoIP products aimed at average not-especially-technical consumers. I'll call this Consumer VoIP for lack of a better term.
The early days of Internet telephony were pretty much limited to tinkerers, teens and 'tweens. These folks got a thrill using their computers equipped with a headset (or just microphone and speakers) suitable sound board and VoIP or "soft phone" software to directly communicate with callers with similar setups via the Internet (Figure 1). Call quality wasn't great, but since the phone company meter wasn't running, callers could talk as long as they wanted (or could stand the lousy quality).
Figure 1: Computer-to-Computer VoIP
This Free VoIP (also referred to as Computer-to-Computer) is still alive and well, but is now thought of more as enhanced instant messaging instead of telephone replacement. This method has also found a place in computer gaming, allowing players to verbally abuse each other while doing battle. The highest-profile exceptions to these uses are currently Skype (from the creators of KaZaA) and Earthlink, who are trying to revive the "free phone" angle. But even Skype is now pitching its pay-for SkypeOut service that connects to the good ol' PSTN world. Earthlink isn't offering VoIP / PSTN service yet, but says you can connect to anyone else using SIP-based services.
For now, most of the world still uses PSTN-based telephones, and people with VoIP service want to be able to call regular phone users and vice-versa. So all of the Consumer VoIP companies (Vonage, VoicePulse, Packet8) and telco consumer VoIP products (AT&T's CallVantage, Verizon's VoiceWing) support to / from PSTN calling (VoIP / PSTN service).
Tip: Terminology isn't always consistent, but companies selling VoIP service are frequently referred to as Internet Telephony Service Providers (ITSP).
Most ITSP's will require you to have a broadband connection to sign up. This isn't because a VoIP connection takes up a lot of bandwidth, but more due to other things you may be doing on your broadband connection. Streaming video, long downloads and peer-to-peer file sharing, for example, can eat up enough bandwidth to adversely affect VoIP voice quality. Some suppliers such as Voiceglo (which uses H.323) and Packet8 (which uses SIP) let you use a dial-up connection, but recommend using broadband for "best performance".