North American Enterprises Rarely Use SIP Trunking

It should be one of the easiest decisions that CIOs make, because it can dramatically cut costs and provide seamless interoperability with other network services, Kerravala says.

SIP trunking offers advantages over traditional primary rate interface trunking (channelized T1s) because SIP trunks run on broadband bandwidth a company in all likelihood already has purchased for other reasons.

And where PRIs are channelized, essentially requiring the purchase of a minimum of 24 voice trunks, whether they all are needed, or not, SIP trunks can be bought in more granular fashion, much as Ethernet bandwidth scales more gracefully between 1 Mpbs and 1,000 Mbps, where TDM bandwidth scales abruptly between 1.544 Mbps and 45 Mbps.

SIP trunking also means other IP-based services such as presence, text chat, conferencing, IP-based video and instant messaging can be integrated with voice streams. SIP trunks also eliminate the need for premises gateways.

Just about any firm, of any size can save money using SIP trunking, and enterprises, because of the larger number of voice trunks used, can save most.

An organization with 100 offices using IP telephony might buy two PRIs to support each office. SIP trunking would allow such an organization to centralize servers used to support unified communications features, offsetting those PRI connection costs. The degree of cost savings will depend on how the organization is able to provide or buy call origination and termination services.

SIP trunking also lays the foundation for hosted services of many types, including IP telephony, messaging, hosted software and applications.

Kerravala says awareness of SIP trunking is relatively low. Yankee Group interviewed 20 network managers on an individual basis during the past year and only three of them fully understood what SIP trunking is and how it works, he says.

In part, that is because incumbent providers of lucrative PRIs are not anxious to cannibalize a very-important revenue stream. As always, that leaves a market opportunity to be exploited, at least for a while.

Still, there are signs of change. Verizon Business, for example, sees SIP trunking as a necessary complement to Microsoft OCS R2 unified communications services.

Microsoft’s Office Communications Server was initially released last year, but has recently been upgraded to support SIP trunking as well.

The value proposition for enterprises wanting to make major use of instant messaging, presence, Web conferencing and VoIP software and applications drives their interest in SIP, so Verizon Business has decided now is the time to make its move.

Global Crossing and Sprint Nextel also are expected to support Microsoft OCS 2007 with their VoIP services, and likely will want to offer their SIP trunking services as well.

On the other hand, SIP trunking is not technically as simple for an end user organization to deploy as a PRI, which is highly standardized both on the network and customer premises equipment and software fronts.

SIP is a standard with lots of “extensions,” meaning not every service, device or application running the protocol automatically interoperates completely seamlessly with all other SIP-certified devices, networks and software.

Firewall issues can be an issue, typically overcome by use of a SIP-aware firewall or session border controller.

Also, many IP-based phone systems use a proprietary version of SIP or H.323, neither of which would be compatible with a fully standards compliant SIP available from an IP telephony service provider.

This problem can be solved by choosing a vendor that has built its products following standards-based SIP. Many equipment vendors tout SIP compliance, but users must be sure that the full SIP standard has been followed. Still, a session border controller can make the required translations between SIP flavors.

Also, call quality measures often are required to maintain end-to-end performance. Traffic-shaping devices or MPLS and other traffic-shaping features provided by a network can help, in that regard, says Kerravala.

Up to this point incumbent service providers have been reluctant to switch customers from high-margin T1 connections to SIP trunks. But with cable operators, among others, preparing to launch SIP trunking services, incumbent telcos ultimately will have to come around. Incumbents do face a harder business case as SIP trunking services will in many cases cannibalize an existing service.

In that regard, SIP trunking poses the same problems as VoIP does. If you want to know why incumbent telcos haven’t moved faster in North America to embrace VoIP, it is because doing so cannibalizes the existing voice revenue stream. But incumbents have faced this sort of problem often in the past. Digital subscriber line services posed the same danger: cannibalizing T1 demand to an extent. But aggressive cable operator market share gains finally convinced incumbents they had no choice but to charge in. The same thing ultimately will happen with SIP trunking and VoIP, but not for a while.

It’s a complicated business case, but a rational argument can be made for letting competitors take market share for quite some time, rather than meeting the challenge immediately and head on by aggressive adoption of either VoIP or SIP trunking. There is, in short, more to lose and less to gain from aggressive VoIP or SIP trunking marketing.

Competitive providers often have a different business case that makes SIP trunking an easier decision. Speakeasy, for example, has launched a nationwide SIP trunking service.

The company will ship preconfigured Ethernet-over-copper boxes in 10-Mbps and 3-Mbps versions.

Depending on the volume ordered, Speakeasy says it will sell the SIP trunking service under a three-year contract at prices between $15 and $25 per trunk.

Service providers can use media gateways to provide SIP trunking for organizations using legacy phone systems as well, but the business case is more complex, since the cost of the gateway has to be included in the total cost of ownership.

At least for the moment, there also seems to be something of a shift in thinking about where the value of broader unified communications features lies. Though traditionally the focus has been on unifying messaging, devices and mail boxes, recently the value has been seen disproportionately in the conferencing area.

We probably therefore will see something of a shift in language and lead product focus. Rather than focusing on soft savings derived from presence, integrated messaging and call control, we might see an emphasis on IP-based conferencing.

SIP trunking plays a part in enabling IP conferencing, and that might be a new focus for some customers and some service providers, though “saving money” on voice access remains key for many entities.

Given the current economic climate, conferencing as a lead offer would make sense, as it offers a fairly quantifiable hard dollar advantage in the form of reduced travel expense. To the extent that SIP trunking contributes to that value proposition, as well as cutting access costs for the growing number of organizations using IP telephony, SIP trunking seems bound to grow, despite its relatively slow adoption so far. IP