We have recently upgraded to Voice Over IP (VoIP). This technology allows you to route telephone calls over the Internet using TCP/IP, usually a Terminal Adapter (TA) is provided that can plug into a standard telephone. The TA simulates a traditional dialtone, and your voice calls will continue to work in much the same way as they always have. After installing the terminal adapter, simply plug your old phone into the adapter and you can start making phone calls.
Needless to say, like anything new there are moderate imperfections with this technology. At the top of the list is the inability for VoIP to carry modem data. While this might sound unnecessary, you should carefully review the devices in your home before deciding to try this. Some of the hardware to be wary of includes fax machines, TiVo, home alarm systems and any special purpose device that requires access to a phone to download data. For example, my wife is a real estate agent and her Supra device requires a nightly call to sync a special key.
If you have a device that requires a phone, you should first determine if there is a networked equivalent to that same technology. For receiving faxes, take a look at a free service like K7 that provides you a fax number and sends these faxes to your email address. For TiVo owners, the 9th Tee site provides an upgrade to connect your Series 1 TiVo to a LAN, which will obivate the need to make a nightly call.
In the few cases where there are no alternatives, you may be forced to delay adoption of this technology. Packet8 is promising improved support for modems in the near future, and while other VoIP providers have not mentioned this yet it seems likely they will all need to provide some dialup solution.