Has the Internet killed the phone business?

I am very excited by the VOIP technology. I have used it on and off in the past and saved money on international calls to my family in India. However, I noticed one drawback. You need cable/DSL high speed internet connection for the data packets to be transferred smoothly: on both ends if you are going to use the internet to make free calls or at least on one end if you call a traditional phone line.
This is probably not an issue in the Western world with the easy accessibility of high-speed connection (though, I still think paying $37 per month is expensive, especially for students/low-income households). As far as India is concerned, I know only 2% of the population has access to high speed internet connection. On the other hand, at least 80% of the urban population has access to a phone. So I think telephony is not in any kind of immediate jeopardy in India. Also the cell phone boom is at its peak, as is the case in China and Japan.
But what I found helpful about the article is how the writer has used Skype as a case in point to illustrate the changes within the telecom industry. It is interesting to note how VOIP is riding the already existing Internet infrastructure wave to challenge traditional telephony, but at the same time allowing the flexibility to use telephone connections when required. Therefore, the AT&T/MCI hegemony may be in trouble but not the telephone as a communication device. Infact, the ease of using a handset is unquestionable, especially since it provides flexibility of movement. You can talk from the privacy of your bedroom or the sunny porch. This can only be possible if you have a wireless headset/laptop when using an Internet connection.