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February 17, 2009

SIP Trunking - What's in it for Service Providers?


By Jon Arnold Principal, J Arnold & Associates



One of the best-attended features during recent ITEXPOs has been the SIP Trunking seminars sponsored by Ingate. There is clearly a growing appetite to learn more about SIP Trunking from both service providers and enterprises. I presented to both audiences at the ITEXPO in Miami a couple of weeks back, and experienced this level of interest first hand. While most of the messaging around SIP Trunking is focused on the end user and IT decision-makers, I think that much of this is relevant for service providers, and that’s what this column will focus on.

 
I will start by saying that a number of favorable conditions have lined up to make SIP Trunking good business for service providers in 2009. Demand for IP-based applications and services is growing with business users and with that come new revenue opportunities for service providers. SIP Trunking makes it much easier for businesses to take advantage of these new services, and enables the operator to play a more active role in providing them. Of course, we are also in a difficult economy, and in many cases, the ROI story makes SIP Trunking an easy decision for businesses. My ITEXPO presentations explored these themes in more detail, and I will now review the highlights below.
 
First and foremost, SIP Trunking allows for end-to-end IP connectivity between the enterprise network and the carrier network. This is the foundation upon which all the new services can be delivered and provided to their full potential. There are three important elements to this. First, end-to-end IP enables your enterprise customers to access more calling features than they get with TDM. Second, service providers can ensure QoS, making it easier to market IP-based services as being on par or better than TDM. This is an important consideration given historical concerns about the quality and reliability of IP telephony. Third, end-to-end IP makes interoperability easier between the service provider’s network and all the various IP telephony vendors. This is largely due to the work of the SIP Forum and their SIPconnect initiative, which continues to expand interoperability specifications across the IP communications ecosystem.
 
Taken together, these three elements make SIP Trunking an attractive value-add for enterprises. However, service providers can make it even stronger by positioning SIP Trunking in terms of the associated benefits that flow to the enterprise and end users. I see two distinct benefits to build this positioning around, with one being direct and another being indirect. The direct benefits speak to the bottom line, and relate to the tangible cost savings that come with SIP Trunking. The indirect benefits are less tangible, but every bit as important, and basically fall into the realm of improved productivity. Each will be further outlined below.
 
The direct benefit of reduced costs will resonate with all enterprise customers, but perhaps even more so if the full extent of savings is clarified. I see three distinct types of cost savings that come with SIP Trunking:
 
  1. Network operations – SIP Trunking facilitates the migration from TDM to IP, and with that, a converged network environment. This translates into lower network Opex, which can be especially beneficial for contact centers.
  2. IT/technology usage – end-to-end IP eliminates the need for media gateways. Not only does this generate cost savings for one of the most expensive network elements, but it can also simplify the network by having fewer pieces to integrate and manage.
  3. Carrier services – most notably, enterprises can do with fewer PRIs, which reduce trunking costs. Overall telecom expenses will fall as well in terms of reduced long distance charges, and less need for toll-free numbers. With SIP Trunking, enterprises will use more cost-effective modes such as IM and chat, which can serve as substitutes for toll-based calling. Furthermore, many calling features that cost extra with TDM are included with IP telephony plans.
Some of these savings will be a step backwards for service providers in terms of lost revenue, but SIP Trunking will help retain business customers and allow operators to participate in the emerging services that should lead to new revenues, many of which will have higher margins than TDM services. Retaining customers should be the number one priority, and beyond the cost savings, service providers can tout the productivity gains that follow with SIP Trunking.
 
To make this resonate fully, the benefits need to be articulated on three levels. At the base would be how new IP-based services improve personal productivity, for each and every employee. Second is how employees will be able to work more effectively in teams and collaborating on projects. Finally, SIP Trunking can be shown to help the overall organization be more productive. This is a loftier goal, but with the right vision and technology solutions in place, service providers can be a more strategic partner to help make this a reality.
 
Reviewing the full range of productivity benefits warrants an article of its own, and I’ll just touch on a few ideas here. Presence is one of the most important capabilities that comes with IP, and is a key driver for enabling productivity. By providing real-time status on your availability to communicate with others, there is less wasted time with phone tag, and it becomes much easier to initiate ad hoc conference calls to solve problems on the spot.
 
SIP Trunking also facilitates a richer communications experience that not only helps internal productivity, but outward-facing communication with customers and suppliers. With better service reliability and more stable QoS, service providers can readily support wideband and HD codecs. For businesses, this means HD audio and video conferencing, which can be particularly beneficial for sales calls, product launches and customer service. For service providers, this opens up new hosted offerings that could either be white labelled or offered on a partnership basis with well-known conferencing solutions.
 
Another important productivity benefit that comes with SIP Trunking is business continuity. With end-to-end IP, service providers have a stronger story to tell in assuring business customers that operations will not be disrupted when unforeseen problems arise. End users only need a broadband connection, and can keep the business running under adverse or unusual conditions. Disaster recovery is part of this equation, and service providers can offer valuable assurances that customers will always have a backup of their mission critical data.
 
Looking further ahead, SIP Trunking makes it easier for businesses to adopt Web 2.0-style applications and tools, as well as the broader spectrum of cloud-based services. These are important trends driving the communications world, and service providers need to incorporate them into their offerings. If they don’t bring these new services and capabilities to market, their competitors will, and in most cases these competitors will be better versed in how to create value with them. The important thing is that service providers need to protect their customer base, and demonstrate how SIP Trunking will help them benefit from 2.0-style communications without having to switch to another operator.
 
There is much more to explore with how SIP Trunking can help service providers create value for businesses, and if you’d like to see a follow-on piece to this, please let me know.

Jon Arnold, Principal at J Arnold & Associates, writes the Service Provider Views column for TMCnet. To read more of Jon’s articles, please visit his columnist page.

Edited by Greg Galitzine
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