This is simply my own two-bits on what I know about Internet Phone, though it also contains several links to other internet phone resources so that you don't have to feel limited to my personal decisions of what I feel is worthy to include. Thanks to them, my wife and I have been able to talk everyday, during the unfortunate separation of 2,600 miles created by my new job. You may feel free to make links to this document, or distribute it as you feel useful, but I'd appreciate knowing about it.
Internet phone uses two computers and an internet connection.
Using your computer's microphone as input, your voice is converted into a digital signal, which the computer sends out over the internet as data. The receiving computer recognizes the data and converts it into an analog signal which is then played through your computer's speaker. Once you've already established your internet connection, there's no additional cost to using internet phone, since on the most basic level you are just sending data back and forth across the internet. There is one caveat, however. Transmitting speech data is very bandwidth intensive.