Take it or leave it, IP telephony’s days in the closet are over. Exceptions notwithstanding, largely on account of state mollycoddling of incumbent service providers, IP telephony is happening almost everywhere and growing quickly. While many of the traditional circuit switched telephone networks realized this only when their revenues went into a tailspin or they felt threatened, many embraced it, passing on tremendous cost benefits to users of voice services, in terms of substantially reduced long distance call rates. Of course, reduced call rate is just one of the many benefits that the deployment of IP-based telephony services entail. And there are still quality of service and reliability issues, among other things, that need to be looked into before we bid adieu to point to point dedicated telephony, in favor of packet-based ones.

Historically, IP telephony has evolved (though many regard it as a disruption and hence a revolution) and grown in countries with high PC and Internet penetration as a substitute for high cost PSTN telephony, allowing users to avoid high long distance and international call prices. Beginning sometime in 1994 with PC to PC voice chats, the system evolved into PC to Phone calls in 1996, and Phone to Phone in 1997. It is largely believed that PC to PC and PC to Phone calls over the public Internet created a new set of users for whom cheap call rates were the biggest incentive for avoiding PSTN networks.

Currently, there are hundreds of players, mostly based in the US, who claim to offer "free" PC to PC or PC to phone domestic and international long distance service. These include names like Net2Phone.com, Phonefree.com, Dialpad.com, iConnectHere.com (formerly Deltathree.com), etc. Much of the traffic carried over PC to PC is regarded as new traffic that would not otherwise have existed.

 The same is true of much of the PC to phone traffic – especially the free ones. However, existing carriers are losing market share because of some of these and a great majority of calls carried over Phone to Phone services would have been otherwise made over PSTN.