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What is it about VoIP that leads to such cheap VoIP offerings?

Inexpensive VoIP works because of the underlying technology involved, says telephony expert Jon Arnold.

VoIP tends to be relatively inexpensive. What is it about this technology that allows for such cheap VoIP offerings?

I can think of many reasons for this, but the simple explanation is that the underlying technology is more efficient at carrying traffic over a network. With legacy telephony, calls are "circuit-switched," which means each one runs over a dedicated connection. While this provides a high quality and secure experience, it is an inefficient use of network resources compared to IP technology. With Voice over IP (VoIP), calls are transmitted in the form of data packets, which essentially traverse the network at no cost. In that regard, VoIP is a lot like email, but since it has more features and capabilities, email isn't usually offered for free.

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