A protocol is a set of guidelines or rules for use in various circumstances. The term is used in etiquette, international relations, technology, and other fields. In computing, a protocol is a standard that controls or enables connection, communication, and data transfer between two devices. Protocols may be implemented by hardware, software, or both.
Voice over Internet Protocol, also called VoIP, IP Telephony, Internet Telephony, Broadband Telephony, Broadband Phone, and Voice over Broadband is the routing of voice conversations over the Internet or through any other IP-based network.
VoIP phone service works by taking a voice and converting it into data packets that are then routed over a network, just like e-mail or data files.
Originally VoIP calls were made just between computers, but now they can be made between a computer and an ordinary phone, or even between two ordinary phones. VoIP can be used as a substitute for the traditional Public Switched Telephone Network ("PSTN"), and it can also be used to connect various branches of a company, as a substitute for expensive leased telephone lines.
When VoIP is used instead of a traditional phone company, most providers offer unlimited calling plans where you can call anywhere in the United States and Canada, and talk as long as you like for one low monthly charge. VoIP service providers often give away features such as voicemail and Caller ID that traditional phone companies charge extra for. International calls made with VoIP are very low when compared to traditional phone companies, and may even be free.
Functionality
VoIP can facilitate tasks that may be more difficult to achieve with traditional networks:
Incoming phone calls can be automatically routed to your VoIP phone, regardless of where you are connected to the network. Take your VoIP phone with you on a trip, and wherever you connect to the Internet, you can receive incoming calls.
Free phone numbers for use with VoIP are available in the USA, UK and other countries.
Call center agents using VoIP phones can work from anywhere a good Internet connection is available.
Mobility
VoIP allows users to travel anywhere in the world and still make and receive phone calls:
Subscribers of phone-line replacement services can make and receive local phone calls regardless of their location. For example, if a user has a New York City phone number and is traveling in Europe and someone calls the phone number, it will ring in Europe. Conversely, if a call is made from Europe to New York City, it will be treated as a local call. Of course, there must be a connection to the Internet to make all of this possible.
Specialized mobile VoIP services enable people to use VoIP based Instant Message services like Skype, MSN and GoogleTalk from cellphones.
VoIP phones can integrate with other services available over the Internet, including video conversation, message or data file exchange in parallel with the conversation, audio conferencing, managing address books, etc.
(some of above from Wikipedia)
Service Providers
Don't confuse VoIP phone systems with VoIP phone service, from companies such as Vonage or Skype. Those companies become your your connection to the outside world, but don't affect the phone system you use. Other kinds of service providers, such as Bandwidth.com, specialize in VoIP networks to unite branches of a business, or the main office and remote workers, who use VoIP phones and systems.