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Here is Alexander Graham Bell in 1892, opening a long-distance line from New York to Chicago.

Source: Library of Congress

At iMedia's Brand Summit last month -- in 2005 -- when I called on the hotel telephone last night to my wife in Los Altos Hills, California, I used exactly that same technology. I had a dedicated circuit between Coronado Island in California and Los Altos Hills.

Every time I paused in that conversation, there was unused bandwidth. It was just an egregious waste of money and time. Instead, we can throw those voices into the internet cloud: it should be packets, and it should be reassembled on the other end. We don't need a dedicated line. VoIP -- voice over internet protocol -- is doing it.

Here is the transcript of a brief video from the Skype home page.

Hello, this short film is about how easy it is to use Skype. Skype is a little piece of software that allows you to call people through the Internet anywhere in the world for free. Yes, that is right. Calls between Skype users do not cost a thing. They are free. To use Skype, you don't need to be a super smart person, or be friends with an engineer or scientist. You just need a computer. It doesn't matter which one. Skype is friendly with Windows, Mac, Linux and Pocket PC. It is a good idea to use a headset to make the calls, though you can use normal headphones, if your computer has an in-built microphone. Skype takes just moments to download and install. When that's done, have your friends download Skype so they can talk for free as well. Making a call is as easy as selecting a friend from your contact list and pressing the big, green call button. Your friend answers, and then you say, "Hello. How are you? What is the weather like there?" Simple, eh? Thank you for watching. Good-bye. Next week, basket weaving with confidence.

I got into Skype because I'm giving a speech in Sao Paolo next month, and I always have a hassle with phones when I am traveling over seas. So, I gave Skype forty bucks so I can call back to the states from South Paolo next month.

eBay just acquired Skype. Meg Whitman is a very bright CEO, and she is spending 2.6 billion dollars on Skype. On my trip to Sao Paulo, it would cost something like eleven cents per minute for me to call home. Skype is free computer to computer, and the cost of calling computer to phone is less than half the cost of a traditional phone call.

The telcos are going crazy.

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