Phone sex can be defined as any sort of explicit conversation between two or more adults. In most cases, one person is describing a sexual fantasy, while the other person fantasies and masturbates while listening to the other person's voice. This is probably the first kind of virtual sex the world has known.
In the 80's through the 90's, phone sex was very popular, particularly in the US and UK. It is around this time that these services took off. With the invent of the Internet, phone sex has lost it's popularity, as there were more interactive ways to enjoy virtual sex. Web cams have proved very popular, and cheaper than phone sex.
There are many websites promoting various phone sex services and catering to all fantasies, and many webmasters may operate these sites in a larger network. The adult industry often uses these services as an additional income to their other adult businesses.
Phone sex services still operate around the world, although the decline in popularity compared to the Internet has created a business that is not as profitable as it once was in it's heyday.
The obvious purpose of providing a phone sex service is to make money by offering a client a live masturbation aid. For these clients, the big advantage of phone sex is that they are able to indulge in a sexual fantasy that they are perhaps too embarrassed to discuss with own partner. They may want to experiment with something considered too inappropriate, so they prefer to talk about it anonymously to a live chat girl.
In many countries, it is common to find these girls working as phone sex callers based from their own private homes, usually using toll free services. Those girls use phone sex as a way of making some quick money, or possibly as a second job.
As well as it happens with cyber sex and other forms of virtual sex, it's a matter of constant discussion whether phone sex may be considered a real form of infidelity. Sometimes the level of intimacy between people participating of phone sex is enough to be considered cheating, while in other cases, the reason of fantasizing about sex with the help of the other person can be considered cheating.
It's also important to say that being a phone sex worker can't be characterized as prostitution at any level, and there's no legislation that prohibits a person of working in such activity, since there is no physical contact between phone sex participants.