February 22, 2012

SIP Trunking: Making it Pay

If there is any theme in IT today, it is a flat or reduced IT budget. One candidate for helping you stick to a tight budget is using Session Initiation Protocol (SIP) trunking and retiring your old T1 and ISDN Primary Rate Interface (PRI) carrier connections. In most cases, SIP trunking can produce enough savings to warrant the change.

Since most enterprises have some form of IP network, the concept of using IP to connect to the public switched telephone network (PSTN) is attractive. That's what you get with SIP services.

Flexible Provisioning

One reason to swap out legacy T1 and PRI trunking is their lack of flexibility, which has a cost associated with it. The T1 comes with 24 64Kbps channels, and the PRI supports 23 64Kbps channels. So if an enterprise needs 32 channels, then two T1 or PRI connections are required, considerably more than the number of channels actually needed to accommodate traffic loads. The SIP flexibility allows the enterprise to implement just what is required, exactly 32 channels, without overprovisioning.

You can expand or reduce the number of channels rapidly, which is helpful for the many enterprises that have seasonal or other variations in their communications requirements. Those that have major Christmas sales, for example, have about a three-month period during which channel requirements can easily be 300% higher than average. SIP trunking allows the enterprise to increase and decrease capacity without having to add and delete trunks every year - and avoid paying the associated costs to the carriers.

Provider Competition and Enterprise Leverage


Most enterprises have had long relationships with their carriers, because competition has traditionally been fairly limited. Now with SIP trunking, there are a number of other provider choices. This creates significant competition, which the enterprise can use to obtain more favorable agreements at lower prices. The situation gives enterprises far more leverage with their incumbent carriers, forcing the incumbent to price its services lower to retain the customer.

For example, an enterprise might wish to provide for a failure situation. It is relatively easy to contract with two providers for backup or, better yet, a shared-load connection. This puts the two providers in competition for price, reliability and service, all to the benefit of the enterprise.

Other Sources of Savings

Generally, as the number of sites increases, so does the cost advantage of SIP trunking. This is due to economies of scale; the more bandwidth you buy, the lower the cost per unit of bandwidth. SIP also allows the aggregation of multiple connections into one or two connections. There are a number of other areas where SIP trunking services can provide savings, described below.

• VoIP Gateways. When an enterprise moves to an IP PBX, VoIP gateways are required for connecting to the PSTN. With SIP trunking, the PSTN gateway is unnecessary. Besides avoiding the purchase cost of the gateway, the enterprise eliminates another device that has to be maintained and its software managed.

• Reduced Conferencing Costs. Audio conferencing can be costly when using carrier legacy trunks. SIP trunk providers also support conferencing bridges and can eliminate the trunking charge.

• International Calling.  More enterprises are developing international locations and international customers. The long-distance charges for some enterprises have exceeded their domestic call charges. SIP trunks can be used with voice-over-IP (VoIP) services such as Skype. SIP trunk providers can do a better job of least-cost routing of international calls than the incumbent legacy carrier. This can be very attractive for international mobile travelers and can reduce the call charges by as much as 90%.

• On-Net Free Calling. Most SIP trunk providers offer free calls among the enterprise's sites. Calls between enterprises can also be made without extra charges, though this capability might not be available in all countries. India, for example, does not allow toll bypass at this time.

While SIP trunking won't be a cost-reduction solution for every organization, it will be for most. The enterprise should investigate SIP trunking - if only to eliminate it as a solution.


1 Comment

Thank you for the article. This was really concise and provides several compelling reasons to go with SIP trunking.


Sincerely,

Ricardo Trinidad
President
Telcom & Data Inc.

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