SIP Trunking: Come for the Cost Savings, Stay for More Cost Savings
If you still think SIP trunking is primarily about cost savings -- guess what? You’re still right.
The conventional wisdom on SIP trunking was expected to shift over time, in a classic new-technology pattern: Come for the cost savings, stay for the features/functionality/new applications. And SIP trunks do still promise benefits around making unified communications apps more easily and widely available across your enterprise network. But according to Gartner research director Sorell Slaymaker, the big reason to move as soon as you can to SIP trunks is simple: You can (still) save up to 50% over your PRI bill.
I'm delighted to say that Sorell will be presenting a session on SIP trunking cost savings at Enterprise Connect Orlando next month, where he'll offer an in-depth look at how to Maximize Your SIP Trunk Cost Savings. Sorell was our original Enterprise Connect SIP trunking guru, going back five years to his time working on the enterprise IT side of the house. He started our SIP trunking tutorial and has written and spoken about the topic extensively in the time since.
I caught up with Sorell on the phone recently and he gave me a quick preview of some of the insights he'll share in Orlando. He started by recalling that when he did that first tutorial five years ago, he advised attendees that they could save up to 50% with SIP trunks.
"Five years later, that theme is still true," Sorell told me.
What has changed is how you capture that savings, Sorell explained. Carriers are moving toward a single rate for all long-distance traffic carried over SIP trunks; in the past, they had separate rates for intrastate and interstate long distance.
Going to the single rate provides savings for a few reasons, Sorell said. For one thing, PRIs are regulated under the rules for legacy PSTN technology, which means they can't be similarly combined into a single category even if a carrier wanted to do so. Furthermore, as Sorell has pointed out in his tutorials and as he reminded me again, there's the old adage: "Forty percent of the phone bill is the phone bill." Simplifying the charges helps the carriers reduce costs even further.
These refinements to the price structures reflect the continuing maturity of SIP trunking services, Sorell said, and he noted that both the incumbents (AT&T and Verizon) and the competitive SIP trunking carriers (Level 3, XO, et al) are moving to this new approach for price structures.
The newest round of savings helps keep SIP trunking at the 50% level relative to PRIs, even though PRI prices have been falling as incumbent carriers seek to slow the SIP trunking migration and squeeze the last few years out of their PRI infrastructure, Sorell said.
Pricing is just one aspect of the formula for controlling SIP trunking costs. Sorell also noted that as Ethernet access services continue to decline in price, the underlying access costs on the SIP trunks also are cheaper. Maybe surprisingly, this is prompting some enterprises to separate rather than converge their access; according to Slaymaker, some enterprises find procuring Layer 2 Ethernet access for SIP trunking more economical than combining voice traffic with data on a single MPLS circuit and having to use prioritization. Not only can this cost less in carrier charges, it simplifies operations, which saves money.
Other cost savers in the SIP trunking world include the concept of "pooling," which emerged a couple of years ago, and which Sorell said is growing in utility. Pooling allows an enterprise to pay for total concurrent usage across all sites, which means you don't have to overspend by buying enough capacity at every individual site for that site's peak usage. In addition, enterprises have been able to configure, say, twice as many SIP trunks into their environment than they have active, but are able to keep the rest of the trunks on standby for disaster recovery.
One fallacy is that an enterprise must first move to VoIP before it can get SIP trunking. This is not true, Sorell pointed out. Session border controllers (SBC) from some vendors (Cisco, AudioCodes, Sonus Networks) have TDM interfaces enabling an enterprise to utilize SIP trunks from the carriers and still connect via T1/PRI into a legacy PBX. Some carriers offer a managed SBC service to further simplify the migration to SIP trunking for those enterprises that do not have the time and/or expertise to implement SIP trunking.
Finally, the other major trend Sorell is seeing in SIP trunks is the emergence, at last, of significant SIP trunking markets outside of North America. Customers in Western Europe are seeing 15% to 25% cost savings with SIP trunking, and AsiaPac enterprises are just beginning to find availability of SIP trunks. The cost savings remain lower in Western Europe than in North America because of two factors:
- The U.S. regulatory regime is more bifurcated between IP and PRIs than its counterpart in Europe, making the aforementioned long-distance pricing evolution more of a pronounced change in North America.
- North America features stiffer carrier competition. Though a Tier 2/3 market is emerging in Europe, competition isn't as robust as it has become domestically.
So the bottom line is... the bottom line. SIP trunking can save your enterprise money. Possibly lots of money. Still.
Sorell also will be presenting the session "Strategies for Reducing the Telecom Budget" at Enterprise Connect Orlando, taking place March 16-19. Register with code NJSPEAKER to save $300 on conference passes.
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