The Ultimate Guide to SIP Trunking

Increasingly, SIP trunking is the go-to for enterprise IT leaders upgrading from PRI connections. The Ultimate SIP trunking guide is here to explain why.


VoIP vs. SIP?

This is a misnomer

What is SIP Trunking?

SIP is an application layer protocol for VoIP

How is SIP Priced?

Per channel + set up + other 1x fees

Rob Rodier

Nov 23, 2021


It can be hard to inspire a move away from legacy infrastructure and systems at the enterprise level.

Forward-thinkers in IT departments know of these hardships all too well. Lots of businesses at the enterprise level continue to employ legacy-based systems such as the IP-PBX, which means you’re likely utilizing some sort of trunking as well.

Increasingly, SIP trunking is the go-to for enterprise IT leaders upgrading from PRI connections. The Ultimate SIP trunking guide is here to explain why.

The PBX Paradox

Legacy systems do scale, but they rarely do so efficiently.

For instance, take ISDN-PRI (Primary Rate Interface). For internal private branch exchange (PBX) systems, PRI is the telecommunications protocol that connects a business to the external PSTN aka the Public Switched Telephone Network. The intermediary connection PRI creates is essential for employees seeking to contact the outside world via phone calls by 10 digit dialing.

When a company needs more available lines, more circuits need to be purchased and added. And this is where scaling becomes inefficient: PRI’s provide exactly 23 additional trunks (bearer channels) per circuit. So, whether you need five new lines, or 50, you’re forced to scale in increments of 23, leading to unnecessary expenditure and sunk costs. Adding PRI channels not only requires additional subscriptions from the PRI provider, but also additional cards for your PBX, and sometimes additional cards require additional expansion chassis.

On the other hand, there are some exciting cloud-based business communication products available. These services offer many attractive features for IT leaders and business owners—easier scalability, greater resiliency and flexible pricing chief among them. But if these new communication services don’t integrate with your legacy telephony systems, you’re out of luck—unless you’re willing to rip and replace your current infrastructure, which is often cost-prohibitive.

That said (and borrowing the classic infomercial phrase), there has to be a better way!?!

Enter SIP Trunking: Proving to Be the Better Way

In 2019, the SIP trunking market was valued at $13.44 billion in the United States. And according to Research and Markets, this valuation will more than double to $30.22 billion by 2027. And communications vendors who sell PBXs and related services are fueling a substantial amount of this growth. But SIP trunking also is proving to just be a better way forward for those who’ve invested heavily in legacy PBX systems (aren’t interested in transitioning to a “virtual PBX”). And we think it’s worth taking the time to understand why.

Therefore, this guide is designed as a holistically comprehensive (i.e., ultimate) guide on the subject. In total, we’ll cover:

  • PBX and VoIP: Old-School Solutions, New-School Problems

  • SIP Trunking: The Basics

  • SIP Trunking Service: Pricing Factors

  • The Future of SIP Trunking and Business Phone Systems

Buckle up. It’s going to be a trunky ride…

PBX and VoIP: Old-School Solutions, New-School Problems

Before we dive in, we recommend you take a look at this guide on The History of VoIP: From IP-PBX to Hosted PBX to UCaaS first!

Business owners started bringing their phone systems in-house in the 1960s. Privately hosted, circuit-switched systems, complete with their own cadres of human operators, quickly became an internal analog to their external PSTN counterparts. And these systems were the forebears of modern private branch exchange (PBX) systems.

But it wasn’t until the advent of cheaper, widely-available semiconductors in the 1970s that internal business communications started to take off. These semiconductors made automated switching systems more affordable than manually switched systems. But the costs of installing and maintaining physical hardware remained a significant hindrance—that is, until the 1990s when the Internet flipped business telecommunications on its head. It was at this point developers made it possible to send calls through a company’s LAN and Voice over Internet Protocol (VoIP) was born.

While its first three letters are self-explanatory, the “P” in VoIP bears defining. Protocols are sets of rules that govern how data travels over a network. In theory, protocols accomplish what cooperation between switching stations did for early PSTNs. Since protocols act as a shared language, computers in different locations within a business could work together to transmit data across an internal network, as opposed to electrical signals. And, thanks to VoIP, voice was now transmissible across the same channels as information, video, and other media.

how voip works

Due to this versatility, VoIP (along with IP-PBX) quickly evolved into the go-to for business communications systems, fueled by the substantial cost savings compared to the hardware-burdened legacy PBX systems. Giants like Dell computing saved $39.5 million by embracing VoIP (while drastically cutting their carbon emissions).

A 2011 case study in PC World found that businesses with more than 30 phone lines saved on average $1,200 a month by switching to VoIP. And around the same time, ComputerWorld reported that VoIP was saving small businesses up to 45% each month compared to traditional phone services. Due to the substantial ROI, VoIP quickly became the World Wide Web for voice.

In addition to being cheaper, VoIP provided (and still provides) additional advantages to business-to-business communications, as it:

  • In some cases it removes the distinction between long-distance and local calls

  • Connects multiple locations as needed (including flexible remote and hybrid working options)

  • Scales up and down based on the needs of the business

  • Supports FAX, texting, and basic audio & video conferencing

But while VoIP offered major advancements for internal communications, business owners still needed a way to connect to external, PSTN systems for inbound and outbound calls.

Traditionally, this required analog lines or a PRI, an investment involving physical lines that connected internal systems with the outside world. And with PRI came the same burdens of traditional telephony, additional costs to lease the lines, and complications in adding or removing lines as businesses needed to scale.In fact, the congruence of this growing variety of ways the digital workforce operates is now collectively referred to as unified communications (UC). And with the growing demands and complexity of managing UC over VoIP, some major limitations have grown increasingly apparent.

But herein lies the major problem, as most businesses have already made significant investments in their business communication technologies. As hinted at in our opening, SIP trunking isn’t the way of the future. Rather, it’s a cost-efficient, hyper-scalable way to bridge existing legacy systems with future-forward technology.

SIP Trunking: The Basics

What is it about SIP trunking that makes it such a viable bridge for legacy IP-PBX’s?Firstly, the idea of “SIP vs. VoIP” is a misnomer. As stated above, VoIP is a means by which voice packets are transferred from one point to another. SIP is an application layer protocol for VoIP, meaning it initiates, manages, and terminates the sessions during which these transfers take place. SIP = Session Initiation Protocol.

The term “trunking” is actually a carryover from physical landlines still utilized in PSTN systems. Technicians refer to the bundles of wires that split off from the main landline and connect switches as trunks (like those of a tree). While similar conceptually, SIP trunks are virtual. Trunks can support multiple phone numbers or “DIDs”, “lines” cannot.

And herein lies the not-so-secret secret of SIP trunks' value in business communications. Since these channels are virtual, there are no physical limitations to how many channels can be utilized or how the amount of channels increases or decreases over time. The only limitation for SIP trunking solutions involves the amount of bandwidth from your business Internet connection.

As a virtual proxy, these SIP trunks act as a flexible, scalable intermediary between legacy PBX systems’ internal IP traffic and external Internet Telephony Service Providers (ITSPs) and, by extension, PSTNs.

In addition, the benefits of SIP trunking include:

  • Significant cost savings on a predictable, recurring basis

  • Scaling without the need to purchase additional PSTN gateways or PRI cards to scale

  • More efficient, flexible utilization of bandwidth

  • Added layers of security

  • Multiple Codec support to enable higher quality, or lower bandwidth calling

  • More inexpensive and flexible PBX licensing

But, despite these advantages being more or less consistent between SIP trunking services, there are some essentials to be aware of when vetting providers.

SIP Trunking Service: Pricing Factors

Recurring Pricing Factors

In general, four main factors largely determine the pricing for recurring SIP trunking solutions:

  • SIP services are typically charged monthly, and the basics of the subscription itself are determined by how many voice service channels are needed (with typical fees running from $15–$25 per channel)

  • Most providers will charge a one-time setup fee for the service, but others may waive this fee and recoup it as part of the monthly service fee

  • The overall price will vary depending on whether the service is metered (monthly fee + per minute charges for calls) or unmetered (monthly fee + fixed price for unlimited calls)

It’s worth noting that surcharges, taxes, and fees for SIP solutions are based on the total monthly costs of service. That said, while these costs may vary little between SIP trunking providers, they can be substantially lower when compared to costlier, traditional services.

One-time Pricing Factors

SIP Trunking Implementation

Organizations with legacy PBX systems outfitted with analog or PRI card interfaces (systems not already configured to work with IP systems) will require the installation of a VoIP gateway to connect with the SIP vendor should their systems not be capable of terminating SIP trunks directly. And depending on the amount and type of equipment used, the cost would typically range between $500 and $2,000.

Native vs. Non-Native SIP Networking

You should also know if a given SIP provider is offering a native vs. a non-native SIP solution. To do so, ask if the vendor offers an end-to-end SIP solution. To ensure you get the features and level of service you’re looking for, you want a system designed from the ground up to handle IP traffic (i.e., native). Non-native systems that purport to offer SIP solutions are often a patchwork of various systems, some of which will include their own legacy hardware. As a result, these systems often struggle to prevent degradations in functionality and service quality and can actually be costlier to implement than native SIP solutions. Many SIP trunking providers will guarantee interoperability with major IP-PBX brands, shopping for trunks that have been proven to interop with your system is a good practice.

Direct Inward Dialing (DID)

All SIP trunking solutions require DIDs in order to facilitate inbound calling. Most often DIDs are sold in blocks of 20 numbers at an average cost of ~$5 each. If you want to enable each of your employees to take inbound calls from outside users/customers they all need their own DID. If not, all of your inbound calls can route to a receptionist or attendant which can then route calls to a specific extension on the phone system.

Local Number Portability

As opposed to providing each employee with a new number, some businesses opt to port along current numbers for use through their new SIP trunking service. In fact, thanks to the Federal Communication Commission, your org has the right to retain contact information when changing service.

411 Directory Listing

By law, businesses are required to notify directories of services (i.e., white and yellow pages) of any changes in contact information. Most SIP trunking providers will complete this process as part of the setup services they provide. However, some may charge a fee for doing so.

Call Types

There are cost factors beyond the control of SIP trunking providers that influence the price of different types of calls. But calls made through SIP often come at significantly reduced rates. For instance, through most providers, international calls can be 10–30% cheaper than with traditional carriers. Depending on the needs of the business, potential savings for different call types warrant a side-by-side comparison between different SIP providers.

Service Redundancy

Finally, it’s best if you also understand what redundancy and/or failover solutions will be part of your SIP trunking solution, as this is becoming a key design feature in quality SIP solutions. Depending on your business, it can be advantageous for your primary SIP trunk to have a backup. In these cases, any loss of connectivity to the primary trunk automatically triggers a failover process to a secondary SIP trunk, helping to ensure business continuity.

The Future of SIP Trunking and Business Phone Systems

While SIP trunking itself isn’t complicated, sometimes the most straightforward tech is the hardest to wrap your head around, let alone implement. We also believe decision makers in IT should have access to the most comprehensive information possible.

For those who do feel like SIP trunking is the best way forward for their business, there are some basics that come next. These include ensuring your business phone system and Internet service will be robust enough to support SIP trunking. And it also is important to vet ITSP and SIP providers to ensure both will provide you with exceptional service. That last part can be a time-consuming headache. Which, frankly, is why Lightyear’s in business. We can search and vet vendors and even negotiate the needed contracts at no charge to you. Sounds too amazing to be true? Well, as we’ve seen here, the idea of telephoning your assistant one room over used to seem pretty amazing too.

Seriously, if you’re ready to talk telephony and find the right SIP trunking service for your company, fill out our quick questionnaire here to get started!

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