May 2014 US$7.00
E X P E R T S E R I E S
CLOUD & COMMUNICATIONS

By Joan Engebretson
SIP trunks are an important element of enterprise IP-based voice and video communications. Offered by numerous communications service providers, SIP trunks are communications links that support session initiation protocol (SIP), which provides an alternative to traditional telecom network signaling and call routing for IP networks, thereby supporting VoIP phone and unified communications systems and cloudbased alternatives.
As more and more enterprises adopt IP-based communications, SIP trunks are experiencing high adoption rates. An April 2013 report from research firm Infonetics noted that SIP trunk adoption jumped 83 percent globally between 2011 and 2012 – and the firm expects to see continued strong growth.
A February 2014 report from Frost & Sullivan calculated a 25.9 percent growth rate of SIP trunks in North America between 2011 and 2012 measured by installed users, and a 26.1 percent growth rate in terms of revenue. Those numbers suggest a slower growth rate than Infonetics found, perhaps because growth is greater outside North
America. Nevertheless, a 26 percent growth rate is a strong one, suggesting a substantial opportunity for channel partners.
Enterprises have several technology options for the communications service underlying
SIP trunks. MPLS connections, for example, offer several important advantages in carrying SIP traffic. This Expert Series Report reviews these advantages and how MPLS
VPNs compare with other communications service options. It also discusses when to recommend MPLS VPNs for SIP trunks and how to advise customers on the merits of using a centralized or distributed SIP architecture.
There are many reasons for enterprises to move to VoIP communications, including the ability to reduce voice communications costs and to gain new IP-based capabilities, such as unified communications, that can help enterprises operate more efficiently and increase productivity.
According to an October 2013 report from New York City-based research and consulting firm Eastern Management Group, the vast majority of recently acquired phone systems
(88 percent) now support SIP.
As an alternative to acquiring a VoIP phone system, some enterprises may want to use a cloud-based VoIP offering, also known as hosted VoIP or IP Centrex. With these offerings, VoIP phone system functionality is delivered from a data center operated by the cloud service provider, to which enterprises connect using wide area network (WAN)
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connections. Rather than purchasing their own VoIP phone systems, enterprises pay for
VoIP capability on a monthly basis. This approach does require the enterprise to invest in IP phones, however.
Whether an enterprise operates its own VoIP phone system or purchases a hosted
VoIP service, calls between individual locations on the enterprise network can be carried in IP format end-to-end. This bypasses the traditional telecom network and eliminating the costs associated with those calls, including per-minute access charges, typically measured in a few cents or fractions of a cent. But enterprises also need the ability to deliver calls to and receive calls from people outside the enterprise.
There are two ways to achieve this. One way is to hand calls to the traditional public switched telephone network (PSTN) at the customer premises. This requires the company to have traditional TDM voice trunks for calls destined for or received from people or businesses outside the company. The ability to hand calls to the PSTN at the customer premises is sometimes referred to as “gateway” functionality.
SIP trunks essentially provide an alternative to exchanging PSTN traffic at the customer premises. Instead, all calls are delivered to and received from the communications service provider in IP format, and the service provider takes responsibility for converting traffic to and from the PSTN.
Access charges are only incurred at the far end of the call rather than at both ends of the call. (In either case, and depending on the customer’s long-distance provider, these charges may not appear on the customer’s bill; instead the provider may build them into the cost of service.)
VoIP and SIP also save money because IP connections are less costly on a per-bit basis than traditional voice communications over the PSTN using time division multiplexing (TDM). Customers typically pay for SIP connections on a per-trunk basis, but depending on the service provider
Eastern Management
Group’s John Malone and how the network is configured, fewer trunks may be needed than when traditional TDM trunks are used. (How that occurs will be discussed later in the section on SIP architectures.)
SIP trunks also can save money because they give enterprises the option of running the VoIP traffic over the same physical connection used for the company’s data communications. John Malone, CEO of Eastern Management Group, estimated an enterprise can cut transport costs by 25-40 percent by using SIP trunks rather than by using traditional TDM voice connectivity.
Despite these savings, Eastern Management Group estimated just 13 percent of businesses use SIP for 100 percent of their toll traffic today. But that’s changing fast, the firm reported. By 2018, the firm predicted 42 percent of businesses will send all of their toll traffic over SIP trunks. Eastern Management Group’s findings were based on a survey of enterprises in seven world regions and 22 vertical industries.
Infonetics Research also sees a big shift toward SIP trunks. More than a third (38 percent) of North American companies in a March 2013 Infonetics survey said they use SIP trunking for at least some of their PBX traffic, and Infonetics expects that number to
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increase to 55 percent in 2015. Between now and 2015, the research firm forecasts T1 connectivity for PBX traffic declining from 71 percent to 55 percent.
SIP trunking
T1 lines
Standard analog/ digitial phone lines
ISDN BRI
ISDN PRI
0% 20% 40% 60%
Source: Infonetics Research, March 2013
A SIP trunk can be implemented over several different connection options as follows:
Dedicated Lines.
Dedicated lines provide a dedicated path across the WAN for the customer’s exclusive use, thereby isolating the customer’s traffic from other network users and supporting predictable real-time delivery with low latency. But dedicated lines are also the most costly option. Channel partners likely will want to recommend this option only for customers who indicate a strong preference for this type of connection.
Internet VPN.
The least costly connectivity option is to use the Internet and to use
VPNs based on IPSec, SSLs or a similar technology to encrypt traffic, thereby securing it from other Internet users. The downside of using Internet VPNs is that there is no way to prioritize voice or video traffic end to end, which means performance can suffer when data traffic levels are high, explained Ron Dunworth, CEO of channel partner Advoda.
For this reason, channel partners should strongly consider not using this approach, particularly if voice communications are mission-critical for the customer.
Despite their limitations, however, Internet VPNs may be appropriate to support a company’s mobile workers or telecommuters, as enterprises likely will not to incur the expense of a dedicated line or MPLS connection for these workers. Another consideration is that such employees typically have the option of falling back on alternative communication methods if voice service should fail.
IP MPLS VPNs.
Layer 3 IP MPLS VPNs (typically referred to simply as “MPLS”) fall between the dedicated line and Internet options in terms of cost – and several service providers and channel partners interviewed for this article see MPLS as offering the optimal balance of cost and performance.
MPLS saves costs by eliminating the need to create a dedicated path for the exclusive use of the customer. Instead, communications are broken into packets containing
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addressing and other information such as the priority of specific packets. Within the service provider network, customer’s traffic is isolated from that of other customers by establishing VPNs, which direct the customer’s traffic across pre-established paths, essentially preventing individual network users from “seeing” another user’s VPN traffic.
Another way MPLS can save costs is when customer buys SIP trunks from the same service provider that provides the company’s data connectivity, and can combine both types of traffic on the same connection. (If this option is chosen, it will be important to set up the equipment to give priority to the voice and/or video traffic.)
Jeff Betteker, chief strategy officer for service provider One Source Networks, advised channel partners to steer enterprise customers toward MPLS for their SIP needs in most situations. MPLS, he said, “provides a level of deterministic performance across the network.” In comparison with an Internet-based solution, he said,“when you look at a location you don’t have to worry about the time of day or peering point.”
Jim LaBrec, vice president of channel partner Converging Technologies, offered a similar take. “MPLS is more cost-effective than a dedicated line and more reliable and secure than the public Internet,” he said.
Ethernet.
Another approach for SIP trunk communications is to use a
Layer 2 multipoint network based on the E-LAN standard created by the
Metro Ethernet Forum. This also encompasses VPLS connectivity – Layer 2 multipoint Ethernet connectivity delivered over an MPLS network. E-LAN services operate like an extension of a customer’s premises-based LAN and are popular with enterprises that like to have a high level of control over
their network, including managing their own routing tables.
In contrast, Layer 3 MPLS services hand off routing table management ito the communications service provider – a feature that appeals to customers that do not have extensive IT resources or who simply want to use those
Converging Technologies’
Jim LaBrec resources for other purposes.
Andrea LaPointe, account manager for channel partner NetSource Group, noted that metro Ethernet services often are available only at relatively high data rates that may provide more capacity than customers need simply for SIP trunking. Metro Ethernet services are seeing strong growth rates, however, and as more enterprises move data traffic to these networks, they also may want to move SIP traffic to Ethernet as well.
The recommended connection option also will have a lot to do with the SIP trunking deployment architecture selected — distributed, centralized or hybrid.
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• Distributed — uses SIP trunks at all locations, giving enterprises the ability to hand off PSTN traffic at the closest service provider point of presence.
IP PSTN
Enterprise
IP WAN
SESSION BORDER CONTROLLERS
DOWNLOAD
THIS INFOGRAPHIC toolbox.channelpartnersonline.com
P PBX/UC SYSTEMS UC SERVER CLUSTER
Source: Cisco Systems Inc.
• Centralized — uses a SIP trunk only at a central location, typically the headquarters location or, in the case of a hosted service, the cloud provider.
Intra-company traffic is carried among corporate sites over the private WAN, and all connections to the PSTN are made through the central location.
IP PSTN
Enterprise
IP WAN
SESSION BORDER CONTROLLERS
DOWNLOAD
THIS INFOGRAPHIC toolbox.channelpartnersonline.com
P PBX/UC SYSTEMS UC SERVER CLUSTER
Source: Cisco Systems Inc.
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• Hybrid — uses SIP trunks at some enterprise locations but not others.
IP PSTN
Enterprise
IP WAN
SESSION BORDER CONTROLLERS
DOWNLOAD
THIS INFOGRAPHIC toolbox.channelpartnersonline.com
P PBX/UC SYSTEMS UC SERVER CLUSTER
Source: Cisco Systems Inc.
A centralized architecture requires WAN connections, such as IP MPLS VPNs, as noted in the previous section.
Steve LaClair, director of portfolio management for service provider tw telecom, argued a centralized architecture is one of the biggest drivers of SIP trunks. “It can’t be done with traditional voice without overbuilding and paying for services you’re not going to use,” he said. He cited the example of a company headquartered in Seattle with offices in other parts of the country. “If I’m sitting in Denver, my SIP trunk to the
PSTN is in Seattle,” he said. “If I want local calling, the call would connect through local trunking in Denver.”
A key advantage of centralization is that companies can share call paths into and out of the central site across all of their locations, minimizing the total number of trunks needed, LaClair explained. It’s important to note, though, that some service providers give customers the ability to pool SIP trunks across all of the customer’s locations even if customers use a distributed architecture.
With this approach, “if one network was at capacity, the sessions could be used from a different pool if the sessions were not being used at the second location,” said
NetSource Group’s LaPointe.
For companies that manage their own equipment, an IP communications system based on a centralized architecture also should be easier for IT to oversee.
The downside to a centralized approach is that it adds to overall bandwidth requirements because some calls from branch locations must go into and come back out of the headquarters location. If SIP is used only for voice, and remote locations have relatively low call volumes, this may not be a concern – and even with relatively high voice call
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volumes, this approach may not add substantially to communications costs. But if an enterprise uses or plans to use SIP to support video communications, the impact could be substantially greater as video consumes about 10 times the bandwidth of voice communications, according to a Cisco estimate.
Another drawback to the centralized approach is that latency is increased when voice or video calls go into and back out of the headquarters location, Cisco said.
A hybrid model shares the advantages and disadvantages of both the centralized and distributed approach but may be the preferred strategy if an enterprise has several key locations with high call volumes.
Decisions about SIP trunks typically are made at the time a customer makes the move to an IP phone system, hosted VoIP service, or IP videoconferencing system.
Converging Technologies’ LaBrec said most channel partners specialize in
either hardware or connectivity but not both. By establishing relationships with companies that sell IP phone and video systems, channel partners who sell connectivity can gain a valuable source for pre-qualified leads, he said.
When meeting with a sales prospect to discuss SIP trunking, One Source
Networks’ Betteker advised channel partners to look at the customer’s phone bill. “You need to understand their local and long-distance usage,” he said.
Specific items to look at include whether customers have toll-free numbers; whether they have rerouting capability; and whether they have
call forwarding turned on, use advanced call routing or are buying service as part of a bundle. “Then you can have the same dialog on the data side,” said Betteker.
When the channel partner tallies up the customer’s current communications requirements and compares them to what the costs are in a SIP environment “customers get excited when they realize the savings they can get from this kind of architecture,” Betteker said.
Using MPLS to provide WAN connections can help customers maximize SIP trunk savings, while also maintaining the call quality customers require.
Joan Engebretson is a freelance writer who has been covering the telecommunications industry since 1992. She is a former editor for America’s Network and Telephony magazines.
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