How is it possible?

do you need special phones, software etc?

Take a look at Skype for starters.

It's called VoIP (Voice over Internet Protocol) and can be done with software (skype indeed being a prime example) provided you have headphones and a mic. The easiest way I've found however is just to use MSN's built in voice/video chat - make sure your mic and speakers are selected in MSN's tools -> Audio and Video setup option box, start a chat with someone and click on the call or video call buttons at the top. Though I suppose this isn't strictly speaking a phone call.

Hope that helps,

can you use skype to call mobile, landlines etc?

Yes, but its not free.

http://www.skype.com/intl/en-gb/products/skypeout/rates/

I have a bt home hub, you get a seperate cordless phone which is a VOIP phone, its very good, and cheap.

It doesnt need to be used through a pc either, there are other companies that do stand alone ones too, I think belkin do one.

As well as VoIP phones you can also get adapters that allow you to use your existing phone.

thanks guys, so can i get software that allows me to click a button and ring someone in my outlook contacts list?

thanks guys, so can i get software that allows me to click a button and ring someone in my outlook contacts list?

Again .... Skype will do this;

http://www.skype.com/help/guides/outlook_contacts.html

www.freecall.com -- cheaper than skype imho - its what I use