VoIP is much cheaper than traditional phone service. But if VoIP calls are packets moving through the Internet, shouldn’t it be free? After all, if browsing is free, why can’t phone service be free?
The phone network, or PSTN (publicly switched telephone network) as it is called in the telecom industry, is what the carriers use to connect calls between parties. It is what handles phone traffic. The PSTN is not a part of the Internet. It was designed for analog phone service connecting calls using phone numbers. As it travels from one end to another it goes through various carriers’ networks and terminates at its destination. It was a rather sophisticated technology for its time, but a little outdated now.
VoIP calls travel through the Internet. For calls never needing to traverse into the PSTN, calls are typically free. That is why Skype-to-Skype calls, Facetime calls, and many other apps offer free calling. However, because the PSTN handles phone numbers for routing, most calls destined for a number still need to traverse into the PSTN. The hop from the Internet to PSTN and vice versa is where the cost lies. Carriers that control the PSTN still need to cover their costs and when a provider creates the link between the two mediums, there is a cost associated with it.
So how come VoIP is so much cheaper? Well, when you move through the Internet it’s free, the crossover to the PSTN happens much closer to the destination. In the old days, carriers charged for calls based on distance (remember LATA 1, LATA2, Long Distance, etc.?). With VoIP, all calls would travel via internet then cross over at the nearest point of destination thus making all calls a local call. Thus, a call to your next door neighbor will cost the same as a call across the country.
So why can’t international calls cost the same as a local call? Well, each country has their own network of carriers. Thus, they have their own rates to cross over into their PSTN. In order to get to the desired phone number, the carriers will charge a fee, which is then passed on to the caller.