I guess it depends on the context in which you heard it. True Voice-over-IP is referred to as Toll-Bypass. This involves Company X that has two (or more) locations. Between those locations they have a Leased Line...usually a T-1 (1.5Mbps). Fiber is also being used more everyday as its availability increases.
On either side of the T-1 is a router which converts Analog signals into IP packets, compresses them, and then sends them over the link to the other side, which decompresses them and then converts them back into analog signals. This allows the company to avoid using the PSTN (public switched telephone network). Instead, they are using their network that already existed for data...for voice as well. IP Telephony takes this one step further by keeping the voice as packets and removing analog signaling altogether.
Many cable providers are now offering broadband phone services which are similar, but not free by any means. I think you might have the two confused?