How does GV work?

Google will call your phone and connect you.

Number to call

Phone to call with

Remember my choice

 

Connect

The above is service provided by GV. If I enter a number in  'Number to call', GV will first call my phone (say I set it to my home land phone), then it will connect it to the 'Number to call'. Now I am curious who pays the long distance fee. Since GV calls me, so I am not. I assume GV calls 'Number to call' as well, then that number wont need to pay the long distance either (assume it is a home phone, not a cell). So GV pays for it, or the service is through internet, so it is very cheap?

So my two question is:

1. Who pays for the long distance call?

2. If the service through internet or regular phone line?

Thanks.