(FORTUNE Magazine) – Three years ago we predicted the day was near when teens could enter a chat room and be able to verbally ask 'NSync questions. Like you, we're now wondering, 'NWho? And where in the heck are all these gee-whiz functions we were promised?

The fact is, the number of phone calls moving over Voice Over Internet Protocol (VOIP) technology, which would enable chat rooms with voice, remains a fraction of a fraction of the total number of calls routed using good old-fashioned circuit-switched phone lines. (Fewer than 150,000 people use VOIP as their main method of communication.) With that in mind, here's our latest prediction for VOIP: It's going to make your phone calls cheaper. Beyond that, you probably won't even know you're using it.

Cable companies around the country and upstarts like Vonage are racing to offer VOIP services to consumers. The upshot? A price war, as the regional Baby Bells fight back against the all-you-can-yack local, long distance, and even international calls that are $10 to $15 a month below their rates. By 2009, as much as 40% of the nation's voice traffic could be zooming over the Internet. "For the consumer, this is all good," says Kate Griffin, a senior analyst at research firm Yankee Group.

Besides just using VOIP to retain customers, the Bells also hope to achieve some cost savings. They'd better be right. The technology's biggest threat isn't from lowered bills but from its ability to dramatically reduce the fees AT&T and others pay to move calls over the Bells' networks--fees that make up about 30% of the Bells' revenues.

Telecom execs plan to fight back by offering lots of gee-whiz voice products. "In about 18 months, John Smith will be using 'find me, follow me' on a regular basis," predicts Griffin. "That's an interactive call-routing system that lets him send all of his phone numbers--home, work, cell--to anywhere, anytime." Don't hold your breath. There's no stopping VOIP, but whether the Bells can profit from it? That's another matter. --Julie Creswell