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SIP trunking: The savings are there but the transition is complex

Tim Greene | April 5, 2013
One user recommends spending up to a year researching, designing and negotiating before trying making move to SIP trunking

The merits of SIP trunking have been talked about for years and now it looks like businesses are aggressively adopting the technology, lured by striking cost savings and the promise of new functionality that their old phone networks just couldn't support.

A recent report by Infonetics Research found that of the respondents to a survey of North American businesses, 58% say they will use at least some SIP trunks in 2015 while 55% say they will use will use at least some T-1s. That's a dramatic shift from today, when the balance is 38% using some SIP trunking and 71% using some T-1s.

The best reason for adopting the technology: savings. Expert say telecommunications savings of up to 50% can be had depending on the individual network. Other benefits include better visibility into call patterns, centralized management, dealing with less hardware and engaging fewer service providers, particularly for branch offices.

SIP trunking involves connecting all corporate voice traffic to service providers' networks over a single IP connection rather than over multiple TDM lines. Those traditional T-1s and PRIs provide voice circuits in bundles of 23, which almost invariably means businesses wind up paying for more lines than they actually need most of the time.

SIP enables buying only as many call instances that are needed, with the flexibility to add more on the fly over the same SIP trunk during heavy call periods. SIP trunking can also reduce intracompany long-distance fees by riding voice calls over the corporate data network, resulting in savings that are very real.

Finish Line, a national sports shoe and apparel retailer with about 700 stores, racked up $2 million in savings over three years, says Derrick Mitchell, enterprise voice supervisor for the chain. The cost of long-distance calls between stores dropped to zero by running them over the data network. The company negotiated down the cost of inbound 800-number calls to the Finish Line contact center to half what it was before, he says. More savings came from pulling expensive POTS lines and Centrex service from each store.

In a business with larger branch offices the savings could be even more, says Barb Grothe, CEO of Telecom Resources consultancy. If every branch had its own PBX, centralizing call routing would eliminate all the branch PBXs and their associated costs, she says.

Customers can expect other cost savings to come from reducing hardware needed to terminate copper circuits at corporate sites, therefore reducing maintenance, says Grothe. Instead, call paths -- the SIP equivalent of phone circuits -- run over a single connection that lands on a single port.

SIP trunking can also reduce the headaches of dealing with many individual local carriers to set up phone service in businesses that have far-flung branch offices, she says. Calls can be routed centrally out a single trunk at headquarters, so just the SIP-trunk service provider is involved.


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