What SIP Means to a Business

If you’re a business owner and you look up SIP trunks (Session Initiation Protocol) on the internet you will find complicated definitions of the technology that will probably leave you scratching your head and still not knowing what effect the service could have on your business.

SIP trunks are call paths over the internet, but unlike analog phone lines, the ratio between phone numbers and phone lines doesn’t have to be one to one and unlike PRI, they don’t have to be ordered in groups of 23.

Simply put, SIP trunks are just a better utilization of the data infrastructure that was created and built up in the 1990’s.  In the 90’s, due to the internet and tech stock boom, hundreds of miles of fiber was buried in the ground.  Hundreds of phone and internet service providers, like Qwest, Level 3, XO and Cogent, established their own networks to vie for the demand for bandwidth.  After the collapse, fiber and network was sold for pennies on the dollar.  In the 90’s businesses were willing to pay over a thousand dollars a month for a T1.  Now it’s possible to buy a 10 Mbps fiber circuit for less money.

The cost of bandwidth is going down while the Public Switched Telephone Network (PSTN) is being taxed more, growing older and becoming more outdated.

SIP is Voice over IP.  Some carriers, like Integra, don’t want their reps disclosing that, because of all the past voice quality issues related to VoIP, but that’s what it is.  If you’re a business owner and you’ve been burned by VoIP, get over it because it’s here to stay and even your business phone lines are connected at some point to some version of VoIP.  That’s because the carriers understand that sending voice communication over a data network makes economic sense.  That’s the reason why you’re paying 3 cents instead of 30 cents per minute for long distance phone calls.

SIP trunks are scalable, faster to deploy and can be deployed on your company’s existing IP network.  SIP service offers the use of remote DID telephone numbers, so a company could have phone numbers, from area codes across the United States, ring anywhere.

You don’t have to order SIP trunks in groups of 23, like PRI’s.  So if you need 30 call paths, with SIP, you order 30.  With PRI’s you would need two PRI’s, providing you with forty six call paths, which might be over kill.  Two PRI’s cost approximately $1000 a month.  Not too long ago, the typical SIP trunk went for $30 per month.  In this example, 30 would cost a company $900 a month.  Then there is the cost of bandwidth.  Let’s say a company is going to order a separate internet circuit to support the SIP trunks.  In this example, we’ll say that the carrier is using G.729 (a method used to limit the bandwidth necessary to make a phone call) so a single T1 could support the 30 SIP trunks.  If we use $400 for price of the T1, the total with SIP is $1,300 a month.  So in this example, the SIP solution is more expensive.

That’s how SIP was sold.  Now providers are bundling SIP with their internet offerings and the pricing is much more economical.  You can purchase SIP trunks for as little as $10 per call path, per month.  In the same example, 30 SIP trunks would cost $300.  Add that to the cost of a T1 and your total is $700, and because the voice is delivered over the internet, the taxes and surcharges are minimized.

You used to have to go to third tiered carriers for $10 per SIP trunk pricing and many times they wanted you to supply your own internet connection.  They couldn’t offer Class or Quality of Service (methods to assure voice quality) and the call quality could be horrendous.  Now the carriers are providing end to end SIP solutions so they are managing the traffic and prioritizing voice over data traffic.  The result is call quality that rivals the call quality that is transmitted over copper phone lines.

SIP will thrive is at the Enterprise level.  Enterprise sized companies are able to utilize economies of scale and buy in bulk.  They possess huge fiber pipes, from providers like AT&T, Verizon and Qwest, that can be scaled up as prices continue to drop.  They’ll have one network to manage instead of multiple networks.  Security and privacy will be easier to maintain because they’ll be able to limit the number of entry points to their networks.  Less equipment and cabling will be required so they will experience savings there as well.