You may have heard about “SIP trunking” or using SIP to reduce your telecommunications costs, but you may not be exactly sure what it is or if it’s a strategy your company should consider. Here I offer a basic explanation of what SIP is and how it may help your company save money and gain greater telecom flexibility.
Telecom costs are continuing to decrease. Costs for IP (Internet Protocol) phones systems, local and long distance rates and data circuits have gradually reduced over time. I am reminded of the story of the farmer who drove to the local co-op to buy bales of hay. He asked how much a bale costs and the store owner said, “well, the more you buy the cheaper it gets.” At that the farmer replied, “great, keep loading ‘em up on my truck until it’s free!” So goes the telephony market except for the fact that it actually never really gets to “free.”
SIP, or Session Initiation Protocol, is simply another way to deliver connectivity to your phone system for local and long-distance calling. Rather than using traditional PSTN (Public Switched Telephone Network) circuits such as T-1s, PRIs or analog lines, many service providers offer SIP. SIP trunks are delivered through your data (Internet) connection rather than via traditional PSTN trunks.
The cost for SIP trunks is much less than traditional circuits, and the measured per minute rates (local/long distance) are equally cost-effective. Companies can save quite a bit by using SIP trunks, but you will need to have the proper equipment to take advantage of SIP. There are four components needed to use SIP:
- An IP-based phone system capable of accepting SIP trunks
- An Internet connection robust enough to handle the SIP traffic
- A gateway device to allow the SIP trunks access to your network
- A service provider to deliver the SIP Trunks
How to Set up Your Environment for SIP
Virtually every phone system manufacturer today offers IP-based phone systems or hybrid systems that use digital and IP handsets. You need to ensure that your phone system will accept SIP trucks as the connection to the outside world. Today, SIP compatibility can be done inherently with most systems, or via an appliance that will translate the SIP trunks to your phone system.
If you do not have an IP-based phone system, you may still be able to take advantage of SIP. Some providers will offer SIP service through an IAD (Integrated Access Device), which splits your connection between voice and data. The IAD will “hand off” the trunks to your phone system as analog, PRI or T-1 trunks, whichever your system is set to handle. From your phone system the lines appear to be normal PSTN trunks, however at the carrier side, the traffic is handled as SIP.
Make sure that your Internet connection is stable and large enough to allow IP voice (SIP) traffic. Some SIP providers require you have their circuits as your data connection, while others simply use your existing circuit.
Either way, if you have a small DSL connection and want to run 50 voice calls over it, you may find that your connection does not have enough bandwidth to support your needs. In that case, consider upgrading your data connection or use a combination of SIP and traditional PSTN circuits to balance your connections between the two.
The SIP provider should be able to give you some guidelines that specify how much bandwidth you need for the call volume you anticipate.
Lastly, since SIP trunks come over your Internet connection, you need to be sure your network will allow the traffic to pass to and from the SIP provider. This typically means that your firewall needs to be set to allow the traffic, while maintaining the appropriate security. You may also be able to prioritize the voice traffic on your network to help QOS (Quality of Service) for your calls.
Remember, simply using SIP will not make all your telecom expenses go away, but you can expect a significant reduction in monthly or annual costs. SIP-to-SIP calls are by far the least expensive calls to terminate, however many companies you call may still have traditional circuits, which means the SIP provider must translate the call at some point onto a PSTN circuit and thereby incur some measured costs (cost per minute).
Other advantages of SIP include the ability to have local phone numbers in different cities which terminate to one location via a data circuit. This can be advantageous for companies wishing to have a local presence phone number without a physical site.
Getting Started With SIP
We are seeing more companies adopt SIP strategies within their overall portfolio of telecom solutions although few have converted completely to SIP. Most have used SIP as an additional resource and balance their connections between traditional PSTN and SIP. Adopting this strategy will provide the best of both worlds and give you some redundancy in the event of issues or problems with one specific route.
Has your organization made the switch to SIP? What benefits are you seeing? Or, if you’re considering SIP, what questions do you have about it? Please share your experiences or concerns in the comments below.
Frank Marro served as Regional Vice President responsible for sales management in Cincinnati, Dayton and Columbus, Ohio. He also directed MCPc’s national carrier service program, which provides solutions for clients looking for voice, video and data circuits for WAN connectivity.