I recently ran across a VOIP(?) service called "Chatterbug" (at the obvious URL).
I don't have any intention to subscribe, but I was just curious if anybody here has used the service and/or know how it works...
The website is a bit thin on technical details, but apparently there's a box you connect between a regular phone and a POTS line. "No computer or internet access required... draws power solely from the phone line."
My best guess is that the box captures the number you dial, then makes a modem connection to a tollfree number and places a low bitrate VOIP call over the modem connection. I'm thinking that would sound pretty crappy compared to analog POTS, but I can't see another scenario (other than "scam" :-) for this service.