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The traditional phone company "cloud" is called the Public Switched
Telephone Network (PSTN). It uses old connection-oriented technology to
dynamically provide 64kbps connections between voice switches. Local phone
service is normally provided by the Regional Bell Operating Company (RBOC)
like Verizon, Bell South, SBC and Qwest. They complete the call to the
destination if it is local or they hand it off to the long distance provider
(AT&T, Sprint, etc) for calls that are not local.
You can find more general information at:
http://www.howstuffworks.com/telephone2.htm This was first published in September 2002