ISP / Telco Inquiry

Question 1.

I have not built the server yet but after the build and configuration, do I need to find a Telco service at which to route traffic? Does there need to be a carrier in-between my Asterisk server and someone else’s phone system. I am missing a key concept here and I’ve not been able to find an explanation. Do I need to pay a Telco service to route our VOIP traffic to systems (phone numbers) we dial? If so, would you recommend a vendor based on coverage and price.

Question 2.

We are in a good position because we don’t have a phone system right now so we are planning to install the Asterisk server, however, with all the ISP/Telco Line choices (DSL, T1, Dynamic T1 and many more), what is truly best yet cost effective. Our office will have 5 to 10 phones with a 35% daily usage. The prices for ISP/Telco lines are rather expensive but do I really need a QOS T1 @ 500.00 dollars per month? What about business cable modem @ 7MB down / 3 MB up with firewall port prioritization. What about… You can see my dilemma. Being inexperienced, I want to make the right decision before signing a ISP/Telco 1,2 or 3 year contract. Any help would be appreciated and/or point me to web published studies done on this sort of topic.

Thanks in advance.