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VoIP is often used abstractly to refer to the actual transmission of voice (rather than the protocol implementing it). This latter concept is also referred to as IP telephony, Internet telephony, voice over broadband, broadband telephony, and broadband phone. The last two are arguably incorrect because telephone-quality voice communications are, by definition, narrowband.

VoIP providers may be viewed as commercial realizations of the experimental Network Voice Protocol (1973) invented for the ARPANET providers. Some cost savings are due to utilizing a single network to carry voice and data, especially where users have underused network capacity that can carry VoIP at no additional cost. VoIP to VoIP phone calls are sometimes free, while VoIP calls connecting to public switched telephone networks (VoIP-to-PSTN), may have a cost that is borne by the VoIP user.

One advantage of these two types of services is the ability to make and receive calls as one would at home, anywhere in the world, at no extra cost. No additional charges are incurred, as call diversion via the PSTN would, and the called party does not have to pay for the call. For example, if a subscriber with a home phone number in the U.S. or Canada calls someone else within his local calling area, it will be treated as a local call regardless of where that person is in the world. Often the user may elect to use someone else's area code as his own to minimize phone costs to a frequently called long-distance number.

For some users, the broadband phone complements, rather than replaces, a PSTN line, due to a number of inconveniences compared to traditional services. VoIP requires a broadband Internet connection and, if a telephone adapter is used, a power adapter is usually needed. In the case of a power failure, VoIP services will generally not function. Additionally, a call to an emergency services number may not automatically be routed to the nearest local emergency dispatch center. Some VoIP providers only handle emergency call for one country. Some VoIP providers offer users the ability to register their address so that emergency services work as expected.

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