Skype is changing its service model to allow for annual subscribers to have unlimited long distance calling from PC to POTS telephones in the United States and Canada. The company hopes to lure broadband users away from their existing long distance carriers with a single $14.95 annual fee. Skype’s scheme is a direct challenge to Vonage, which charges a higher monthly fee for unlimited calling. The pricing challenge adds to the already muddy waters of selecting a VoIP provider. For instance, while Vonage allows inbound calls from standard telephones, Skype offers encrypted conversations.

Skype first hit the scene in August of 2003, offering free PC to PC "phone" calls across the Internet. Since then, the service’s customer base exploded, leading to an enormous $2.6 billion purchase by eBay in 2005. Part of the VoIP boom is attributable to new technologies making the service friendlier. Products like telephone adaptors (that let you use your existing phone as a VoIP device) and 2 in 1 handsets (that connect to both Skype VoIP and your existing carrier simultaneously) give non-tech savvy users the feel of a regular phone, even though they are talking through the Skype network.