As with an IM client, you can change your online status, look at your contact list and decide who you want to talk to. The Skype application looks and works a lot like an instant messaging(IM) client.

But the two services have more differences than similarities, starting with the steps you need to take to open an account. Depending on how you use it, Skype can even be completely free. This is especially true if you make a lot of long-distance calls. Skype and Vonage are also similar in that they can be significantly less expensive than traditional phone service. Voice over IP uses a technique called packet switching to send a call over the Internet. Check out How Voice over IP Works to learn about this process and how it's different from plain old telephone service (POTS). Once it reaches its destination, the telephone or computer that answers the call translates it back into analog sound.

The digital signal travels over the Internet. This equipment and your computer translate the analog signal of your voice into a digital signal. When you make a VoIP call, you use your computer's built-in microphone and speakers, a headset, an IP phone or a phone plugged into an analog telephone adapter in place of an ordinary phone.

Skype and Vonage are similar in that they're both VoIP services.

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