VOIP - Voice Over Internet Protocol

I was trying to help out someone on Twitter tonight with what VOIP is and it is to big of a topic for Twitter.  So focus111, this is for you.  

VOIP, or Voice Over Internet Protocol is a process where voice can be turned into a tcp/ip packet and sent over a data network to what is known as a "soft" switch.  The "soft" switch will then convert the packet into a standard telephony packet and send it to the local telephone carrier of the destination.  At that point depending on who the other persons carrier is will depend on what happens with it.  With a Bell company (Verizon, AT&T, ect.) the data is run through a standard telephony switch and sent down twisted pair lines to a home.  If the back end of the call is a cable company(not all do it this way) the packet is sent to a private data network and sent to the persons home as a VOIP packet. If the back end of the call is a company like Vonage and Skype the packet is sent through a soft switch and sent over the internet to the customer via their ISP.

VOIP has a significant cost advantage over standard (circuit switched) telephone.  A soft switch is nothing more than a computer with VOIP software on it.  

What will be interesting this year is when Google relaunches Gizmo5.  Gizmo5 will give Google a way of providing dialtone over VOIP.  This could mean that all you will need is a Google Voice account and a cell phone with an unlimited data plan and you will no longer have to worry about minutes.  There has been rumors about how Google was going to launch the Nexus One with only data capabilities.  This would be pointless unless you had a way of getting dialtone (Vonage, Skype, Gizmo5).  So until Google relaunches Gizmo5 I don't see a data only phone hitting the market.  One thing is trying to get this past the cell carriers.  They are making a killing on what they are charging for minutes.