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SIP trunking is revolutionizing the way businesses communicate. According to a market report from Yahoo! Finance, the market for SIP trunking is expected to reach $23.58 billion by 2026, having just hit $14.75 billion in 2022.

This technology is responsible for the chat functionality, video conferencing, and voice calling features that employees and staff use daily, yet few genuinely understand how it works.

If your workplace uses a Unified Communications as a Service platform, then your service provider will handle all the technical details for you. However, it’s still helpful to know how the technology works at a basic level.

Some background information on business communication

In the early days, companies would use a traditional telephone system known as the Public Switched Telephone Network, or PSTN. This network required a physical connection between both participants in a call and would involve copper wiring, physical phones, and phone numbers.

Digital communication has recently risen in popularity in the business world, and it’s actually separate from PSTN. The idea of SIP trunking is to combine the two together so that you can make phone calls through digital software.

Why would this setup be necessary? While digital communication is more efficient, some customers and business users still use regular telephones from time to time, and it’s always in the company’s best interest to support an omnichannel communication experience. Combining traditional PSTN with modern digital calling is the main idea behind SIP trunking.

What Is SIP trunking and how does it work?

First off, SIP stands for Session Initiation Protocol. It’s the protocol that allows users to send unified communications over the Internet and is the foundation of UCaaS services.

Replacing traditional telephone lines, SIP works with a business’s Private Branch Exchange (PBX) and allows the use of virtual phone lines that can dial phone numbers and make and receive phone calls over the Internet. It does so by converting analog voice audio into a digital signal that gets sent online.

SIP can create, manage, and terminate communication sessions between parties in an IP network. Those sessions can be either two-way or multi-way for a conference call.

Management teams are interested in SIP because it connects a PSTN network with on-site VoIP phone systems. This way, the cost of keeping legacy communication platforms is lower, and you get the chance to add in some modern features as well.

What Is a SIP Trunk Channel?

A channel is essentially any incoming or outgoing call. Every SIP trunk is capable of supporting multiple SIP channels. A business is capable of running on a single SIP trunk and scales its number of channels based on how many concurrent calls it expects to use.

What Does the SIP Architecture Support?

The features that SIP trunking enables are numerous and add to the appeal of working with a SIP trunking provider.

  • 911 routing for legal compliance
  • DoS protection for reliability
  • Interoperability with cellular networks to enable call forwarding
  • Usage reporting to measure performance

These are only a few examples of what some SIP trunking providers can offer. Get in touch with a few on your list to find out what else could be in store.

Clearing up the terminology

It’s also worth talking about some of the terms and acronyms you might hear when it comes to business-grade communication.

  • VoIP stands for Voice over Internet Protocol. The term encompasses any form of voice communication handled over the Internet, which includes SIP. SIP is essentially one way to enable VoIP in a business.
  • Codecs are procedures that convert analog audio into digital signals or vice versa. A codec is used to convert a sender’s voice into data packets that can be sent over the Internet. Once received, the recipient uses a codec to convert the data back into an audio signal. Codecs come in many types and offer various compression levels depending on the audio quality a business needs.
  • QoS stands for Quality of Service, which is a router setting that helps prioritize network traffic so that voice calls are always clear no matter what else the network is being used for.

Because SIP trunking is just a tool that enables an overall company collaboration platform, you will ultimately become familiar with it if you ever work with a Unified Communications as a Service provider.

How do businesses benefit from SIP trunking?

SIP trunking makes sense for business use partly because it cuts down on the cost of digital communication. SIP providers usually offer attractive rates, even if you need unlimited local or long-distance calling.

Scalability is also a big factor. Businesses can provision new channels on-demand so that they’re only paying for the lines they need. If additional capacity is ever needed in the future, scaling up is fairly inexpensive.

SIP trunking is such a mature technology, in fact, that service providers are able to package in special features now like network consolidation. That’s why SIP trunking is now the basis for UCaaS, a unified platform that offers various functionalities like instant messaging, video conferencing, integration with business tools and platforms, and employee status indicators, among others.

How do you choose a SIP trunking provider?

A SIP provider acts as the glue between your on-site IP-enabled PBX system and your traditional PSTN phone line. An experienced vendor knows how to tailor the system to the individual needs of your business rather than just throw you an “off the shelf” solution.

When looking for a service provider, look for these signs of a good one:

  • Reliability through redundant call routing or a failover system. You don’t want an outage or network failure to knock out your ability to collaborate.
  • Data security, which is especially important today in the age of cybersecurity risks and data breaches. Business communication often involves sensitive personal information of customers and staff, so make sure there are protections against fraud and cyberattacks.
  • Data analytics that can help you improve your customer service or optimize internal operations in real-time.
  • Technical support through documentation or troubleshooting assistance. In case you ever have a problem, it’s good to know you’re in good hands.

Finally, don’t forget to think about the pricing model, specifically the contract you agree to when you sign up. What’s the monthly fee? Is there an upfront charge? And what does the cancellation policy look like?