What Is SIP Trunking? Do You Need It for Your Business?

• SIP trunking is a telephony protocol that makes calls over the internet by establishing and controlling data transfer.
• SIP trunking can significantly cut costs and increase reliability for your business phone system.
• SIP trunking pricing is based on several factors, including your vendor and add-on features.
• This article is for business owners who are considering SIP trunking as their business phone system type.

SIP trunking is an increasingly popular way for businesses to minimize their phone costs and improve their telecommunication bandwidth, but it can be a difficult service to understand. We broke down what SIP trunking is and how to know if it's right for your business.

What is SIP trunking?

SIP trunks are virtual phone lines that allow you to make and receive calls over the internet to anyone who has a phone number.

SIP – or Session Initiation Protocol – is a popular telephony protocol that initiates calls over the internet. It's used primarily to manage multimedia communications, such as voice and video calls. SIP establishes and terminates a phone call's connection, controls data transfer, and enables services like Skype and Facebook Messenger to provide free calling worldwide.

A "trunk" is a line – or link – that carries signals and connects nodes in a communications system. To explain SIP trunk channels, think of it as a pipe that carries the data channels inside it to connect two locations.

Key takeaway: You use SIP trunks to make and receive calls over the internet. Specifically, this technology relies on virtual phone numbers to facilitate the calls.

How does SIP trunking work?

SIP trunking is a method of sending voice and other communications over the internet through an IP-enabled private branch exchange (PBX), a telephone system within an enterprise that switches calls between users on local lines while allowing them to share the use of external phone lines. A PBX reduces costs by avoiding the need for each user to have a line to a telephone company's central office. SIP can be used to send and receive local and long-distance calls, text messages, and emails; browse the internet; and conduct video chats.

SIP trunking replaces the traditional method of the public switched telephone network (PSTN), a copper-wire, circuit-switched network that requires a physical connection between two points to make a call. Instead, SIP trunks use a packet-switched network, which breaks down voice calls into digital packets and sends them over a network to their destination.

How many concurrent calls can SIP trunking support?

Concurrent call limitations are based on available internet bandwidth on the upload side, typically slower than your download speed. Each noncompressed call uses approximately 85-100 kilobytes per second (Kbps) of bandwidth, meaning you can determine your limitations if you know your upload speed. If your upload speed is 5 megabits per second (Mbps), you can expect your system to handle 50 (5,000,000 divided by 100,000) concurrent calls. Alternatively, if you know the number of concurrent calls during your busiest hours, you can multiply that by 100 Kbps to determine your required bandwidth using this formula:

Number of Simultaneous Calls During Peak Hours x 100 Kbps = Required Bandwidth

If you opt for an on-premises PBX, the number of concurrent calls you can make is unlimited.

Editor's note: Looking for the right business phone system for your company? Fill out the below questionnaire to have our vendor partners contact you about your needs.

SIP channels

Each SIP trunk can hold an unlimited number of channels. A channel – or line – is equivalent to one incoming or outgoing call. Because each trunk can hold as many channels as necessary, a business would need only one SIP trunk no matter how many calls you have coming in and going out at one time. The more phone calls you have running concurrently, the more trunk channels you will need.

Tip: When looking for a SIP trunking service provider, make sure you have a good estimate of how many channels you'll need, as many vendors will use this information to provide an accurate quote.

SIP trunking service providers

When looking for a SIP trunking provider, you want a company that provides the features you need at a price within your budget, while offering strong customer support. Here are some of the most popular SIP trunking service providers:

• UniTel Voice SIP: UniTel offers high-quality service for a low price, and all its customer service reps are based in the U.S. It has two pricing plans – pay as you go and a committed-use discount – and a 24/7/365 monitoring system, so you always have someone looking out for your service.
• Bandwidth: Bandwidth is a great option for your business if you are looking to consolidate local and long-distance services. Bandwidth offers multiple pricing structures, including per number, per inbound/outbound calling minute and inbound/outbound message.
• Sangoma: Sangoma's mission is to help small businesses lower their communication costs. It offers easy transferring and the ability to use your existing phone numbers; pricing is calculated either per minute or per channel.
• Nextiva: Nextiva offers easy scaling and conversion from a traditional phone system. You can add SIP trunks into your existing PBX using Nextiva's instant deployment feature in the cloud. Nextiva offers two pricing plans – a metered plan and an unmetered one.
• Momentum: Momentum provides simple integration and flexibile options, allowing your business to grow. Momentum's SIP-trunking services are designed to complement your company's existing phone system, and you can easily add features.

For more information, check out our recommendations for the best business phone system providers.

SIP vs. VoIP

SIP and Voice over Internet Protocol (VoIP) are similar in many ways, but these aren't interchangeable terms. "VoIP" is a broad term that can be described as any internet-based phone service (including SIP). However, SIP is a specific protocol that enables VoIP by establishing start points and endpoints, and defining messages during a call.

SIP trunking vs. PRI

While both SIP trunking and Primary Rate Interface (PRI) support communication with your phone systems, they accomplish this differently. SIP trunking transmits communications over the internet, while PRI relies on traditional copper telephone lines to deliver voice and data. With PRI, upkeep on the bundle of wires is often required, and maintenance costs to support these systems increase as the technology becomes further outdated.

Benefits of SIP trunking

The most significant benefit of using SIP trunking with the business phone system you choose is that it's highly cost-effective. This is mainly because it eliminates the costs of long-distance calling. If your employees often make phone calls across the country or the ocean, SIP trunking may be the answer for you. 

Here's a look at more SIP trunking benefits.

1. Centralized network

SIP eliminates the use of both data and telephone voice networks. Because SIP is IP-based, you can enjoy one centralized network with multiple digital streaming capabilities that is easily scaled and requires no physical infrastructure, which means no maintenance or hardware costs.

Removing the PSTN gateway allows the SIP trunk to connect directly to your chosen internet telephony service provider (ITSP), removes subscription fees and gives you greater flexibility in how you scale your telecommunications services.

2. Local call charges

A SIP trunk enables all calls to be local calls by carrying them over the internet, avoiding the costs of international or long-distance calls. The SIP trunk sends the call to the provider's termination point, where the call is transferred to a local PSTN, therefore charging you only for a local call.

To compete with ITSPs, many SIP trunking providers have added services such as ENUM, or telephone number mapping, which allows you to use the same phone number remotely. They also offer the elimination of 800 numbers by providing a local number based on your location.

3. Scalability

SIP trunking is flexible and easily scalable, as it offers unlimited channels per trunk and no physical installation. You can add and enable new channels within hours.

4. Disaster recovery 

SIP trunking services tend to be far more flexible and resilient than legacy phone systems in a disaster. Whether it's a network failure, natural disaster or hardware problem, most services will have measures in place to make sure you can still make calls. These may include geographic redundancy, routing calls to different locations or data centers, or dispersed network operating centers.

Your SIP trunking service will also help you create a disaster preparation plan on your end, including steps such as routing your calls to a different predetermined number, using a backup trunk provider, or having a cloud system or softphone app ready for backup.

Did you know? SIP trunking eliminates the cost of long-distance calling, so if your staff makes frequent calls worldwide, SIP trunking may be an excellent choice for your company.

How to implement SIP trunks in 5 steps

Here's a basic rundown of the steps you'll need to take when implementing SIP trunks:

1. Determine how many channels you need. This will depend on the size of your business and how many phone calls will be going at once. For example, companies with 100 people or more should follow the 3-to-1 rule: For every three employees making calls, you should have one SIP channel. Companies with fewer than 100 employees will need more channels because you're more likely to have multiple people using the phone at one time.
   
   
2. Assess whether you have enough bandwidth and a robust enough network to support a SIP service.
   
   
3. Take inventory to determine whether you will need to replace any desk phones with SIP-enabled IP phones.
   
   
4. Start collecting quotes. You can learn about some of the best SIP trunk providers in our 8x8 review, RingCentral review, Ooma review and Nextiva review. When possible, speak with a sales representative directly, as they may be in a good position to quote you the lowest rate.
   
   
5. Be mindful of security features. Ask your potential providers about a Session Border Controller (SBC), which acts as a firewall for SIP traffic. SBCs also provide security against hacking and denial-of-service (DoS) attacks.

SIP trunking pricing

Generally speaking, you should expect to pay around $15-$25 per line each month. Factors such as metered vs. unlimited plans, and the potential need for international calling, can affect the price.  

If you have plenty of historical data on monthly usage, a metered plan could be a cost-effective solution. A metered plan can cost as little as 0.008 cents per minute for domestic calls and 1 cent per minute for international calls – to some countries. 

However, if you're unsure of your monthly usage, a metered plan may lead to overages and surprise charges. Unmetered plans, which typically include calls to the U.S., Canada, and Puerto Rico, are available for around $20-$30 per channel.

Pricing factors for SIP trunking

These are the main costs involved in SIP trunking:

• Subscription cost, which includes the price per channel
• Calling rates, which is the cost per call or minute for domestic and international outbound calls
• Add-on costs for extra features
• Setup fees

When you call vendors for SIP trunking prices, be sure to ask about setup fees, required equipment and monthly service fees. You can expect to save around 75% on telecommunication fees by switching to SIP trunking. The prices you're quoted will also vary by how many IP-enabled handsets you need, and if you want to add extra features like video conferencing or forwarding to mobile devices.

Tip: Schedule a call or meeting with a SIP trunking vendor to explain your needs and concerns. You'll often get a more personalized and cost-effective quote than what you'd find in advertisements.

Kiely Kuligowski contributed to the writing and research in this article.