Skype is a software application that can be used to make phone calls over the internet. In addition you can make video phone calls, send instant messages and interchange files. Infact the software was created by the same people as Kazaa the peer to peer files sharing program. The company was bought by ebay in 2005. The technology used is called VoIP or voice over internet protocol. There are several other providers. 

Skype does not replace a traditional telephone since it does not allow emergency numbers to be called and some freephone numbers are also restricted. However as a money saving tools for overseas calls it is fantastic. It uses a secure technology, invisibly encrypting calls over a closed-source private coding. We make calls regularly to the UK and in Spain and find the quality excellent. Calls are free if you call someone else with skype but you can also call all European countries for less than 2 cents / 2 pence per minute. If you take out a monthly plan it is even cheaper and there are no long term contracts. How about unlimited calls to anywhere in Europe?

With SkypeOut you can buy credit and call phones which are not connected to the internet. This is great for calling people who aren't into the internet or use its services.