July 29, 2010

Is SIP Trunking Mostly About Cost Savings?

By Gary Kim
Contributing Editor

“There is a perception in the market place that SIP trunking is all about cost savings, and to a certain degree that’s true: SIP trunking allows organizations to build a more efficient trunking infrastructure, thus lowering their monthly telecom expenditures," said Matthias Machowinski, Infonetics Research (News - Alert) directing analyst.  

That should not be too surprising. Access is a tactical infrastructure item for information technology managers, not typically a "strategic" or "architectural" concern. Tactical action items tend to be those where a simple focus on lower cost (so long as functionality is retained) is a bigger concern than might be the case for more-strategic investments. 

Beyond that, many managers also will be looking for ways to take advantage of native IP applications and transport. But SIP trunking remains primarily a matter of cost savings, as did IP telephony and consumer VoIP before it. 

Cost savings continues to lead as the reason for transitioning from TDM to SIP based facilities, Machowinski said. The decision may be driven by the lower cost per voice path or the fact that SIP Trunks can be provisioned in units of one up to the capacity of the available broadband. 

Still, there are other considerations, he said. TDM circuits are essentially physical facilities tied to physical locations, he noted. IP communications consist of virtual circuits supported by physical elements, which means managers can centralize management chores.

New applications, though, also are important, once the simplification and cost reduction objectives are met, he said. Unified Communications (News - Alert), high-definition voice and advanced video applications frequently require an IP-based infrastructure. HD voice works only as an IP call end-to-end, at least for the moment. 

Call bursting, for example, allows a business to have a variable number of voice paths or concurrent call sessions based upon current traffic. This is especially useful to companies that have traffic flow that vary greatly based upon time of day, seasonal or even marketing activity such as “call now” offerings.

Still, no one should be terribly surprised that any access service mostly is purchased on the basis of price, assuming acceptable quality metrics are satisfied. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Stefania Viscusi