David S. Bennahum has an article in Slate about how the Internet might drive phone companies out of business:

For those of you who haven't heard of Skype, the latest white-hot Internet technology and new social phenomenon, here's what you need to know: It's a free piece of software (of course!) that you can download to your PC; suitably armed with speakers and a microphone, you'll then be able to "call" and talk to anyone else in the world who's on Skype. In the less than two months it's been available, 1.6 million people have downloaded the software, setting a world record for this kind of thing. As a crude measure of buzz, after six weeks of life the word "Skype" generates more than 2.8 million pages on Google. As a point of comparison "KaZaA," which is Skype's progenitor (the two Swedes who invented KaZaA invented Skype), appears nearly 4.4 million times.

The most amazing thing to me is not that phone companies are in trouble, it's that they're actually still around (in their traditional capacity, anyway). There were programs and applications to do this sort of thing years ago.