(10/2/04: An updated review was posted. Vonage has made tons of progress in the last 12 months and some of the below descriptions are no longer valid.)
Multiple sources are reporting that starting Next Monday there will be a debate regarding whether phone services over Internet should be subject to existing regulations on normal voicec phone service (WSJ article, USAToday article).
Here is my personal experience: I had been an AT&T Broadband Phone customer for 12 months and since this last August I have been a customer of Vonage -- the leading broadband phone company mentioned in both reports.
AT&T Broadband Phone is totally transparent to the customer. AT&T technician installed everything for me by wiring from a cable box to my apartment's phone jack. After that, the service is just as a normal phone. This may because your voice actually goes on the AT&T internal network (though also in digital format as other broadband phone services). On the other hand, you pay as much as normal phone services, including all the subcharges you can think of. For value-added features like voice message and Caller ID you pay a few dollars more every month. AT&T by default signed you up for their most xpensive IDD plan, and once I spend $40 for a 10 minute call to Asia.
Vonage is another story. It's $24.99 unlimited plan offers mostly every feature you need: call waiting, voice mail, call forwarding, Caller ID, Caller ID block, call transfer, to name just a few. 500 nation-wide minutes are also included in the $24.99 price tage. Vonage also allows you to change phone number immediately (should you need to), to have phone number anywhere in the States no matter where you live, and to check your complete phone record online (with a few hours lag). It also offers very competitive internation dialing rates.
Before you try that, let me explain few drawbacks of the Vonage service:
1) You always need to dial 1 + area code + phone number even if you ring your neighbor.
2) You get incomplete Caller ID information for incoming calls; Vonage shows phone number for you only. Your outgoing calls will not bear your name in the Caller ID information as well.
3) Setting up 911 is a pain. Vonage failed to set up mine after almost three weeks. (I'll need to find time to try working with them.)
4) Wiring is another concern: Unless you set up a link between Vonage ATA box to your house's main phone jack you can only rely on wireless phonesets for house-wise availability.
Overall, I am still quite satisfied with the service. At the very least, it offers great value with so many features and flexibility. The bill only includes an FET tax of $0.76 and regulatory recovery fee of $1.50 -- still bearable to me.
You might also consider another supplier Packet8.net, which offers unlimited nation-wide calling plan for $19.95/month but does not include phone number transfer and 911 connection. Most Vonage features are also included in the plan.
Both Vonage and Packet8 offers 30-day trial so you may try it worry-free.
(BTW, if you want to try out Vonage, give me an email and I can sign you up thru the Vonage referral program: both you and I will get one month's of free service. I promise to respond within 1 business day.)