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SIP Trunking, Media Gateway and VoIP Access Services: Market Numbers

There's been plenty of talk about SIP trunking in the market and on NoJitter (see Gary's latest, a summary of the VoiceCon session on the issue), so why shouldn't I weigh in? This week, I'll be participating in a webinar on the topic, along with AT&T and Network Equipment Technologies (NET); we'll discuss SIP trunking as a cost-effective alternative to traditional PSTN connections; the challenges of integration and interoperability; and lessons learned from SIP-PSTN integration into environments such as Microsoft Office Communications Server 2007 R2.I hope you'll join me for the webinar on Thursday 11/19 at 1pm ET; just register here. In the meantime, here are some data points from Frost & Sullivan's latest research on media gateways, a market that is expected to be impacted by the growth in SIP trunking over the next several years. The report was written by my colleague Elka Popova, and clients can download it here.

The enterprise media gateway market experienced decelerating growth in both ports shipped and revenues in 2008; port shipment growth rates declined from about 30 percent in 2007 to about 10 percent in 2008, and revenue growth rates declined from about 27 percent in 2007 to 5 percent in 2008. Contributing factors for the deceleration include increasing market saturation and maturity, as well as the economic downturn. As IP telephony shipments slowed, vendors saw limited demand for their gateway products. We anticipate the gateway market to end the year with a negative growth rate of about -15 percent in terms of ports shipped and -19 percent in terms of revenues.

By 2010 the market is likely to grow, driven by mass adoption of IP telephony, branch office integration, and solid growth rates in the SIP trunking and UC markets. Due to market maturity and rapidly improving SIP interoperability among vendors and service providers, annual growth rates are likely to peak in 2011 and 2012.

In 2008, toll bypass and IP telephony still accounted for more than 80 percent of the total ports shipped, but their share is likely to decline going forward as SIP trunking and application integration drive new demand for gateway functionality. IP-based applications such as contact center, conferencing and unified messaging have created new opportunities for gateway vendors, as these applications must be integrated with premise-based telephony infrastructure and with carrier TDM networks.

VoIP and SIP trunking services are gaining traction as they deliver cost savings to companies with both TDM and IP telephony infrastructure. At the same time, service providers are using VoIP access services to deliver advanced capabilities such as network-based FMC, voicemail and auto attendant, and voice VPNs with abbreviated dialing across multiple sites. Since the majority of the installed telephony infrastructure is still TDM, and interoperability with IP telephony platforms is limited, the growing penetration of VoIP trunking services will be highly correlated with demand for gateway functionality.

Indeed, application integration is likely to account for a growing percentage-anywhere from 10 percent to 15 percent-of total ports shipped over the next five to six years. The increasing availability of VoIP access and SIP trunking services will drive demand for the gateways required to connect to both TDM and IP telephony CPE.