What Is SIP Trunking? Do You Need It 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. Since SIP trunks are virtual, they require little to no physical equipment. This makes SIP a telephony protocol worth considering for small businesses looking to avoid the high cost of office space or a facility large enough to host business phone servers.

SIP 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.

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. Although on-site PBX is primarily for large and established businesses, many small businesses use cloud PBX, which also relies on SIP.

SIP trunking replaces the traditional method of the public switched telephone network, 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, you can expect your system to handle 50 (5 million 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.

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. For a small business, you might need just one trunk.

SIP trunking service providers

When comparing and contrasting SIP trunking providers, look for acompany 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. The company offers a pay-as-you-go pricing model and a committed-use discount as well as 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 to 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 flexible options, allowing your business to grow. Momentum’s SIP-trunking services are designed to complement your company’s existing phone system, and you can add features easily. The latter makes Momentum worth considering even if you don’t yet have a phone system, which is often the case with new and small businesses.

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

SIP vs. other types of business phone systems

SIP trunking vs. VoIP

SIP and voice-over-IP (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 outdated further.

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. For small businesses that serve a local audience, SIP trunking is still worth knowing about in case you expand or grow in the future.

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 scaled easily 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 if your small business begins to grow rapidly.

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. That said, this benefit of SIP trunking may be less meaningful to small businesses since modern personal phone plans don’t charge extra for long-distance calls.

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. However, toll-free numbers such as 800 numbers may benefit small businesses intending to appear larger than they actually are.

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.

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. Chances are you fall on the other side of this equation, though: Companies with fewer than 100 employees. If so, you’ll 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 (if you have them) with SIP-enabled IP phones.
4. Start collecting quotes. Whenever 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 certain 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 United States, Canada and Puerto Rico, are available for around $20 to $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, though your small business can likely forgo many of these.
• 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.

Is SIP trunking the best business communications option for you?

As business phone systems and communications technology evolve, there are more options than ever on the market. SIP trunking could be a strong choice if you expect your small business to grow quickly, as it’s a particularly scalable option for business communications. It’s also a resilient option that offers continuity in the face of natural disasters, so your customers can keep in touch with you even in the worst of times. 

If VoIP services don’t meet your expectations, give some thought to a SIP trunking service instead. Alternatively, consider a cloud-hosted PBX system or a softphone app. These options are so low-cost and user-friendly that solopreneurs, small teams, mom-and-pop shops and tiny e-commerce operations may prefer them. A variety of business phone technologies abound, and learning about each of them — including SIP trunking — can help you make an informed decision.

Tejas Vemparala and Kiely Kuligowski contributed to this article.