VoIP service, offered by small start-ups such as Vonage, Packet8, SunRocket and others, use a small device that attaches ordinary telephones to cable TV modems and other high-speed Internet connections. Phone conversations are translated into digital data and carried over the Internet, allowing VoIP users to save money by bypassing the heavily regulated and government taxed phone network.
On Thursday, Internet service provider America Online announced it will begin offering VoIP in 40 U.S. cities. AOL members who sign up for the phone service will pay from $14 per month for local calling or up to $30 per month for unlimited calling throughout North America.
James Tobin, vice president of voice strategy at America Online, said the AOL Internet Phone Service will be "pretty simple" to set up. "Making it simple is why AOL is doing it," he said. "Because we can bring that to the market."
Tobin said subscribers will get their own digital device to connect their phones to the Net and the entire setup process is even guaranteed to take less than 15 minutes.
"Otherwise it's just like your normal phone service. "You get dial tone, you pick up the phone and start dialing people," said Tobin. "It'll also save you about half your monthly phone bills."
Tobin said AOL will also differentiate its service from smaller, rival VoIP providers by offering 24-hour technical support. And unlike other VoIP setups, AOL's system comes with Enhanced 911 service that automatically provides a caller's address and location informatione.
So far many consumers have been reluctant to use the Internet for phone service. Industry analysts say the hesitancy has been over such issues as reliability and ease of use. However, as AOL and other companies -- including cable TV companies and traditional local telephone service providers -- enter the fray, the number of VoIP subscribers is expected to rise.
According to a recent market report by IDC, there will be about 3 million VoIP subscribers in the United States by the end of this year. By 2009, that figure will jump to nearly 27 million.
-- Richard Davies, ABC News
Cybershake is produced for ABC News Radio by Andrea J. Smith.