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SUMMARY
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Skype calls use the internet and calls to other skype users is always FREE. However, they also have monthly plans to call anyone in the US & Canada for $2.95/month.

Unlimited calls to any phones in the US & Canada. No long-term contract. No connection fees. $2.95/month.

    http://www.skype.com/allfeatures/subscriptions/uscanada/

Just need to buy a skype phone.

    http://shop.skype.com/phones/philips-usb-corded-phone.html
    http://www.ecost.com/detail.aspx?edp=40935839&source=ecostdeal&cm_mmc=CSE-_-Shopping.com-_-ecostdeal-_-Electronics

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LIMITATIONS
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There are some limitations.

1) Fair Usage Policy: Calls to phones and mobiles and Skype To Go calls are included in your subscription subject to a fair usage limit of 10,000 minutes (166 hours) per user per month, with a maximum of 6 hours per day. Also, no more than 50 different numbers in total can be called per day. Once these limits are exceeded Skype will charge normal rates and a connection fee for any additional minutes used.

    http://www.skype.com/legal/terms/fair_usage/

2) No emergency calls with Skype.

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HOW IT WORKS
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It turns your computer (or mobile device) into a phone via your speakers and microphone.

    http://www.skype.com/help/guides/howskypeworks/

Simply put Skype is an online phone but with many more benefits. As well as making calls you can:

    * Make free video calls.
    * Connect with instant messages (IM).
    * Send text messages.
    * Set up voicemail.
    * Allow friends to call you on Skype from their phones.
    * Send and receive files, photos and video clips.
    * Easily control your online presence.

    http://www.skype.com/allfeatures/
   
Your first call is free. Your first call is free - up to 10 minutes to any phone, anywhere. Make more calls with Skype Credit. Skype-to-Skype calls are always free.

    http://www.skype.com/allfeatures/tryforfree/