There's just one catch: The story isn't true. Therein lies a tale of the disconnect that sometimes exists between the Internet's gilded promises and the messy realities of the world.

For more than a century, telephone companies have used circuit switches to route telephone calls. In the old days, they were building-size electromechanical machines. The modern versions are closet-size computers. But the principle has remained the same: Switches establish a dedicated communications circuit for each call.

The Internet uses an entirely different design known as packet-switching, in which a stream of information is broken into discreet, individually addressed chunks that are sent across a network and reassembled at the other end. This is an extremely efficient way to move data, but has only recently become practical for voice communications.

Net traffic is growing so quickly that everyone agrees it will ultimately make economic sense to have voice traffic carried across the same network. But the transition is not likely to happen as fast as the data-networking enthusiasts would like. What AT&T; really meant with its announcement earlier this year is that it won't buy "pure" circuit switches. Instead, it's buying hybrid gear that can do both circuit-switching and packet-switching. In fact, the Internet is a long way from taking over any significant percentage of voice traffic.

So far, voice-over-IP has had success mainly with small startups and international carriers. This year an estimated 813 million minutes will be logged on voice-over-IP calls, according to Probe Research, an industry analyst firm. That sounds like a significant number, until you consider that traditional networks will carry 5.4 trillion minutes.

In a speech earlier this year, Frank Ianna, president of network services for AT&T;, pointed out that voice still accounts for 51 percent of the traffic on AT&T; networks. Private lines, such as T1 and T3 cables, carry 45.3 percent, of which roughly half is also voice traffic. Internet traffic accounts for a mere 1.5 percent of activity on AT&T; networks. The rest goes to frame-relay and high-speed data services.

"There's been a lot of aggressive talk, but just about everyone has had to back off their initial projections," says Scott Marcus, CTO of GTE Internetworking. "What's really happened is a much more incremental, more graceful approach to migrating to voice-over-IP."

Data-networking vendors, led by Cisco Systems , have promoted the idea that phone companies are about to dump their decades-old infrastructure in favor of IP networking. "I say you should use something until it breaks, then, as quickly as you can, offload to next-generation platforms," says Cisco executive VP Don Listwin. "We're right on the cusp of that revolution. Can you get consumer voice-over-IP today? No. But is it months away? Yes."

Listwin has gone so far as to predict that IP voice traffic will be so economical that it ought to be free. That's not a popular idea among telcos, who generate as much as 70 percent of their revenue from voice calls.

Yet for all of Cisco's success, the migration from circuit-switching has been slow enough that the old-line telco-equipment suppliers – namely Lucent and Nortel – continue to do great business. The makers of circuit switches have decades of experience in writing voice applications, something the Ciscos of the world lack.

The switch vendors have bought the IP expertise they didn't have, to help them bridge the gap to IP. Cisco, meanwhile, has acquired technology that will tie its IP products into old-world networks, as evidenced by its recent $400 million TransMedia acquisition.

According to J.P. Morgan, telephone companies are set to spend $48 billion on circuit switches next year – seven times what they will spend on IP gear.

In the long term, it makes sense to bet on the Net. But to see the challenge, go to Cisco's new headquarters in San Jose, Calif. Behind the glass walls of an impressive showcase of Cisco hardware, the company has a phone-switching center for Internet voice traffic. While it looks impressive, most calls that go outside the building will still end up on a circuit-switched network.

It's All Relative While the traffic carried by IP-based networks continues to grow rapidly, total traffic still lags far behind that of circuit-switched networks.

Year Millions of Minutes Logged on IP Networks Millions of Minutes Logged on Circuit Networks

1998 200 5,100,000

1999 813 5,400,000

2000 3,100 5,700,000

2001 6,200 6,000,000

2002 11,200 6,300,000

2003 23,800 6,700,000

2004 48,500 7,000,000

2005 90,400 7,500,000