If you're like me, you've seen lots of ads for Internet phone services but met very few people who actually use one.

Dan Cistone, an Army staff sergeant based in Killeen, Texas, is living proof that those ads aren't purely hype. Cistone switched from a traditional Sprint landline to Vonage's broadband phone service several months ago, and he has never looked back. "I decided to give it a try when I realized that over half of my monthly phone bill was taxes and fees," he says. Cistone, who now pays about $17 a month for 500 minutes of unlimited use, cites the extra features he gets as a major plus of Voice over Internet Protocol (VoIP) service. "For that one fee, I get all the services I used to pay for, like voice mail, call waiting and forwarding, and caller ID, plus I got to choose my own area code," he says.

Cistone likes being able to use his Net phone wherever he has a broadband link. "It's great if you're in the military, because you can take the box with you."

Of course, VoIP service isn't exactly new; it's just gotten a lot better. Until recently, the technology was plagued with glitches and inconsistencies, and using it might entail firing up a PC and putting on a special headset just to call Aunt Marge. Worse, phone calls--when they went through at all--often sounded as though they were being routed through a Cub Scout's walkie-talkie.

Bug-free Calling

But internet phoning seems finally to be coming of age. Providers of the service--which include most major phone carriers and broadband services, along with a collection of specialized independent companies such as Vonage and Net2Phone--say that the bugs have been all but exterminated and that the service is ready for prime time. AT&T, literally the mother of all phone companies, recently stopped selling traditional phone service to regular consumers; but it got into VoIP service in a big way.

Communications research firm The Yankee Group expects there will be 1 million VoIP subscribers by the end of 2004, up from just 131,000 last year.

With most VoIP systems, you attach an adapter (many providers offer them for free) to your broadband connection, and then plug your telephone into the adapter. The adapter converts the phone's analog signal into a digital one that can travel over the Internet. You might need to make a few additional adjustments if you're running a Wi-Fi network; but you should be able to go online and talk on the phone at the same time, and your computer need not be turned on for you to make a phone call.

The most compelling reason to consider a Net phone is cost. In almost all cases, VoIP is cheaper--and sometimes a lot cheaper--than traditional landline telephone service. If you have a cable modem, the savings are even greater than with DSL because you can eliminate the cost of maintaining a dedicated voice line.

Instead of charging you à la carte for options such as voice mail, caller ID, call blocking, call forwarding, and conference calling, most Internet telephone services include all those features (and often more, such as voice-to-e-mail messaging and do-not-disturb protection) in one monthly rate. Rates and specific calling plans vary, but charges typically run between $10 and $40 a month.

Another plus, at least for now: National regulatory legislation for VoIP service hasn't been established yet, so you're less likely to be nickel-and-dimed with the surcharges, taxes, and service fees that bloat your regular phone bill. (However, some rules are already being established for VoIP, including wiretap regulations that could limit the privacy of calls. Click here for details.)

Speaking of bills, wouldn't it be nice to get fewer of them every month? In addition to costing less for calls, VoIP service could help reduce or streamline your paper trail of telecommunications bills, consolidating some combination of your telephone, Internet, cable, and wireless charges into one statement.

The Downside

Inevitably, VoIP does have drawbacks. Probably the most troubling is that your telephone connection is only as good as your power and your broadband service, so if either one goes south, you're cut off until the juice starts flowing again. Many services, including Verizon's VoiceWing, offer a call-forwarding feature that sends calls to a backup number during outages; just make sure that your backup is a cell phone or other system that does not require electricity to operate.

Still, it's disconcerting to think that unless you have a backup phone (or a power generator), your connection with the outside world depends on the efficiency of your service's repair crew.

If you ever find yourself in an emergency situation, you probably won't want to have to count on VoIP as your lifeline. As a rule, the services don't support traditional 911 emergency systems, though many offer a feature that connects you to local emergency services via a third party.

This workaround may be fine in some situations. But there's one important caveat: If you aren't at the address registered with your VoIP account when you call and you can't provide your location to the dispatcher, emergency responders won't know where you are.

Play it safe, and make sure you fully understand how your VoIP provider handles emergency service calls before you sign on. And make sure you have an emergency backup system. Many new cell phones include GPS technology that can locate you when you call 911.

Other services that most VoIP companies don't support include 411 directory assistance and text-telephone relay (TTY) service for the hearing-impaired. Many of the services don't offer published phone directories. And don't count on being able to send or receive faxes on a VoIP connection (though a few services are starting to offer fax capability). Another consideration: Many Net phones don't work with home security services or satellite TV systems that connect to a telephone line.

While most VoIP services proudly tout the ability to transfer your current phone number to your new service, some readers have complained to us that this process can take weeks or months to complete (click here for details). Not all VoIP companies offer the service in every area yet, and wireless numbers and the number on the telephone line that you use for a DSL connection usually can't be transferred to VoIP.

Finally, if you plan to transfer your current number to a VoIP account, don't cancel with your previous phone service provider yourself. Premature cancellation could cause you to lose the number.

Not sure whether you're ready to commit to a VoIP plan? Many companies, like Verizon, make you agree to an annual contract; and many will hit you with a hefty fee if you bail out early. But some, such as Net2Phone, let you purchase a prepaid plan that doesn't establish a long-term contract. Others, like Vonage, let you try the service for a limited time with a money-back guarantee.

A final word about sound quality: VoIP has come a long way since the days of walkie-talkie quality, but it still isn't perfect. Network congestion and other factors can affect sound clarity and service speed, so if crystal-clear sound and rock-solid service are important to you, VoIP might not be the way to go--yet.

On the other hand, if you travel extensively, need sophisticated features, or simply want to save a few bucks each month, VoIP may be the answer.

Anne Kandra is a contributing editor for PC World. You can send her e-mail at consumerwatch@pcworld.com.