Internet Calling Pressures Bells to Lower Rates – New York Times
During the first quarter of this year, the number of traditional telephone lines dropped by 150,000 a week, according to TeleGeography. At the same time, the number of subscribers to Internet telephone services has increased by 100,000 a week.
The main reason for falling prices for phone service is that it costs less to deliver voice communications over the Internet than over the traditional phone network.
With the old technology, phone companies use costly equipment that directs a call through complex switches to its destination. On the Internet, phone calls are broken up into small packets of data, just like an e-mail message or a Web page, and then delivered to their destination.