We provide evidence on the determinants of diffusion of Voice over IP (VoIP) applications in a sample of public and private organizations in Italy. We first review the recent developments in the technology in order to identify the current trends and the costs and benefits of VoIP adoption. Second, we discuss the recent policy efforts at the European level toward the implementation of the technology. Third, we present an empirical investigation. Our results suggest that organizations become more likely to adopt as time goes by, and that the decision to adopt is mostly affected by size and availability of financial resources. Organizations can benefit from IP communications systems, because they offer cost savings and enhanced applications facilitating network management and on-line transactions. However, technical shortcomings, established habits and practices, and legacy network investments can inhibit adoption. This explains why firms are more likely to adopt as time passes and why small organizations are more inclined to adopt than larger ones.