Why is VoIP phone service so much cheaper than traditional service?

There is no doubt that the LECs (Local Exchange Carriers) are getting a bit nervous about the savings that VoIP offers to consumers. In fact, some have launched advertising campaigns designed to portray Voice Over Internet as a risky, unreliable service that should be avoided at all costs. But just why is VoIP so much cheaper than traditional service?

The answer lies in the technology used to send VoIP phone calls. Since VoIP works by converting analog sound signals into digital data packets (voice packets) and then routing them over the internet, long distance charges are entirely avoided. In fact, the LEC (Local Exchange Carrier) only sees a local call when a VoIP call is connected, regardless of its origination point. That's because the digital voice packets that are sent over the internet are dumped off to the PSTN (Public Telephone Network) at a switch that is within the local calling area of the receiving customer. Consequently, the PSTN is only used for a very short distance even for traditionally expensive international calls. Many VoIP providers are now offering calling plans that include unlimited calls anywhere in the world for prices that the phone company simply can not compete with.