From the SIP Trunking Experts

April 03, 2012

Do SIP Trunks Save Money?

By Gary Kim Contributing Editor

It is a good bit of conventional wisdom that SIP trunks save businesses money when used to support IP telephony traffic. But there now are arguments that this might not be true. That might be troubling news for suppliers selling SIP trunks.

Depending on whose research you look at, the penetration rate of SIP trunking in the US is somewhere between five percent and 30 percent of all trunk lines. Zeus Kerravala estimates penetration is  right around five percent in the United States, with Europe being about half of that and adoption being almost nonexistent in Asia at the moment.

Of course, much depends on the architecture an organization used to support its IP telephony operations. The argument essentially is that that moving voice to a distributed model allows use of wide area network transport that is less costly than SIP trunks.

A savvy mid-sized enterprise can source North American WAN services for less than $10 per megabit per month (the equivalent of about 8 VoIP sessions using G.711 or about 16 VoIP sessions using G.729 with max bandwidth usage at 60 percent of capacity).

Cisco now argues that the architectural model that most people use when designing their SIP Trunking network is not necessarily right for every enterprise.

Much of the savings ascribed to SIP Trunking is tied to an assumption about the enterprise WAN architecture, namely that it will move toward a more centralized model: communications functions will be consolidated in the datacenter, and voice traffic will be backhauled on the company WAN from remote offices to the datacenter, where a single SIP Trunk will carry all of the enterprise's external traffic to the PSTN. In practice, this is generally a mirrored data center, so you end up buying two SIP trunks.

The classic business case for SIP Trunks has been inseparable from the assumption that enterprises will move from a model where PBXs are distributed around the network, each serving a single site or a relatively small cluster of sites, to one where voice is a data center application.

If an enterprise has many “not yet depreciated” phone systems,  then building a centralized “PBX” in the data center is expensive.

The argument that centralization may never be the right architecture of course suits Cisco, which believes video is the new voice, and wants to avoid “hairpinning” all calls to the data center, some would say

The significance of the new arguments is the questioning of whether SIP trunks “always and necessarily” save businesses money. In some cases, it is argued, SIP trunks do not save money. The savings might be most clear for small businesses that do not have multi-site operations, though. 

Edited by Jennifer Russell
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