Short for Voice over Internet Protocol, a category of hardware and software that enables people to use the Internet as the transmission medium for telephone calls by sending voice data in packets using IP rather than by traditional circuit transmissions of the PSTN. One advantage of VoIP is that the telephone calls over the Internet do not incur a surcharge beyond what the user is paying for Internet access, much in the same way that the user doesn’t pay for sending individual e-mails over the Internet.
There are many Internet telephony applications available. Some, like CoolTalk and NetMeeting, come bundled with popular Web browsers. Others are stand-alone products.
See the posting on Skype below for more VoIP info.