Frost: Businesses Increasingly Cut Costs With VoIP Access, SIP Trunking

VoIP access and SIP trunking services are surging among business customers, with a 40.1 percent jump in number of users, and 22.3 percent higher revenue than last year, according to a Frost & Sullivan report. And the outlook looks bright for the near future, as frenzied provider competition drives down prices; good for customers, if not for providers profit margins.

These technologies are compelling not just because they reduce costs by integrating voice and data transport; IP-based services also enable customers to combine multiple communications elements into a unified communications solution that can bundle business apps with calling, messaging, presence and conferencing, for starters. Today, however, most businesses still rely on TDM-based access, forcing them to rely on separate providers for their voice and data connectivity.

The majority of the installed customer premise equipment is still TDM private branch exchange and therefore, a large percentage of the installed services base requires the deployment of media gateways for protocol conversion, while only a small percentage is direct/native SIP trunks connecting to SIP-enabled IP telephony platforms, said Elka Popova, program director at Frost & Sullivan. That ratio is bound to change as customers increasingly replace their legacy systems with new, hybrid, or pure IP telephony equipment.

The report paints a picture of networking that is still very much caught in the migration from traditional TDM-based protocols to IP-enabled solutions; thats led to declining legacy services revenues, without a corresponding, equivalent uptick in IP service adoption. But that will change as macro-economic conditions take hold and vendor issues like technology evolution, maturing standards and service performance are addressed. At that point, carriers will be well-positioned to market IP-based services and applications more broadly.  

SIP trunking services are expected to gain momentum as companies increase their investments in IP-based communications applications and extend their UC environments beyond the enterprise to communicate with customers and partners, continued Popova. Evidence of the return on investment benefits of SIP trunking has encouraged a number of service providers to start promoting these services more strongly. [They] are investing in enhancing their VoIP access/trunking services in terms of survivability, redundancy, and trunk pooling to be able to offer greater value. Service providers have more or less overcome voice quality issues with their ability to provide different classes of service, dynamic bandwidth allocation, and voice prioritization capabilities.

However, improvements in overall VoIP delivery have also led to higher-priced services, blunting one of the core advantages of VoIP: its low cost. Popova also reports a feeling among some service providers that despite increased customer interest in SIP trunking, many are unaware of its availability or full capabilities.

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