VoIP (Voice over Internet Protocol)
Put simply, this technology uses the Internet for phone calls.
Often new technologies are difficult and take some time to be easy and useful.
VoIP is both useful and very easy to implement.
You need a microphone - ideally a headset which combines headphones with a microphone. Lash out and buy an expensive one for $30 max. Cheapies are $10.
You can also buy more sophisticated hardware at various levels but you can try VOIP at the cheapest level and work up to the super stuff later.
Of course, you need a computer with an internet connection. It works best with a broadband connection, either cable or ADSL, or ISDN. It works with dialup providing your connect speed is above 33kbps - ie a reasonably up to date system usually attains greater than 40kbps
There is no cost calling from PC to PC if you are online, which you are with ADSL or when you are browsing on dialup. There is of course a drain on your download quota. This is around 1Mb for 5 minutes (200kb per minute)
There is a Melbourne company at http://www.freshtel.net/
Follow the prompts to get Firefly. Firefly will allocate you a number or you may choose you own but it must start with an 8.
Hint: A useful option is to choose 8 plus the last seven digits of your home phone number, which is easy to remember.
Then you may download the software, configure it and away you go. (We use Firefly)
You can also call from PC to just about any phone, either in Australia or internationally for ~7cents per minute. Some countries are more expensive but UK and USA for example are ~7cents. The details are on the site. Choose the PC to phone option if you wish, but remember it costs!
There is a second option at http://www.skype.com/
If you decide it's for you, follow the prompts to get Skype. Download and install it, then register. This gives you a Skype name. Any charges are in Euros but the charges are about half those for similar PC to phone calls. As with Firefly, Skype calls from PC to PC are free.
If calling a phone is your choice, Skype is about half the price of Firefly. I have chosen Firefly because I like the Firefly number, the interface is simple and good, and it's a local company. For some, the more apparently global nature of Skype may be the go.
Encourage your friends with computers to use the same service as you choose for interconnectivity.