Friday, February 06, 2009

SIP Trunking Trends Up

I just got back from Internet Telephony Expo East in Miami Beach. It was co-hosted with Digium Asterisk World and the 4G Wireless Evolution. Main themes were UC (Unified Communications) and SIP trunking.

Garrett Smith from VoIP Supply has a blog post about SIP Trunking and the ISP which I agree with.

In talking with a number of regional ISP’s, the reason for their hesitation is actually quite simple - the access business is much different then the voice service business. In other words, selling and supporting access is a different business then selling and supporting voice service. ... Most regional ISP’s are small, meaning they have limited resources. From what they tell me, even at it’s cheapest, offering SIP trunking services would in many cases do more then good for their business.

The reverse of that is if you are a VoIP Wholesaler, unless the ISP has a sales force, they will not be a good partner for you. Uptake of a new service is roughly 10-15%. Most independent ISP's have less than 1000 subscribers, so that means, maybe 150 people would take VoIP via email and direct marketing. Is that enough? Is that enough business for you to go through the expense and effort of white labeling a service and supporting them?

The push in 2009 that I am seeing is for wholesalers to assist their partners in selling more lines any way that they can.

There are corollaries to that: if the telecom agent is a small shop without technical expertise: they probably won't be able to sell Hosted PBX. Another is that if you sell on price, Hosted PBX won't be a good fit either.

here's one issue: SIP trunking is being sold as a PRI replacement. That works except for 2 things: reality and revenue.

The reality part is that PRI is a time tested standard and SIPconnect (the SIP trunking spec) is just a specification containing numerous RFC's, which allows for many interpretations of configuration. In the case of SIP Trunking, the client must have a network assessment for deployment planning and the Internet bandwidth must be examined for metrics and capacity. Also, the IP-PBX interface must be checked for interoperability with the carrier. There is a gap in the sales process whereby normally these steps are ignored. (The fix here is to get an IAD that does PRI Emulation like the Adtran Atlas 550 and convert the SIP trunk back to PRI).

The revenue side is mentioned because PRI is TDM and can fetch higher revenue than anything with IP in its name. IP means cheap, which means less revenue. Less top revenue for the service providers books, less ARPU, and less commissions for agent or sales guy selling SIP Trunking. All with the extra headaches of inter-op.

Despite all this, SIP Trunking is all anyone talks about these days. "Save them money!" What about the added benefit of an IP Communications trunk? Oh, well, that's not important.

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