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Why is it so cheap?

Voice conversion into data packets by using Internet Protocol permits its transmission through the same data network (Internet connection, for example), without having to pay for a specific telephone network. The convertion between voice and data (two different networks integrated into one) account for the first big saving in user costs and phone management.

Originally, quality was a problem for VolP, but it has been greatly improved in recent years, to the point that VolP quality is now similar to that of conventional telephony.