What is SIP Trunking and How Does it Work?

Updated Dec 6, 2022.
What is SIP Trunking and How Does it Work

As the internet is taking over, businesses, small or large, constantly aim to update their systems. If you are one of them, then SIP trunking is the next step to revolutionize your PBX (Private Branch Exchange).

It helps you to use the internet to manage your company's phone system. It is cost-effective and accurate, as it provides better voice and video quality. You will not be disappointed in SIP trunking capabilities.

Moreover, SIP trunking offers a number of benefits, including the ability for businesses to keep up with current linked communications. If you want to learn why and how to enable SIP trunking for your business, keep reading!

What is SIP Trunking?

SIP stands for Session Initiation Protocol. It is an application program that allows audio and/or video exchanges to take place in real-time between two end devices over the internet. In short, you can make phone calls over the web without any major disruptions.

The web of phone lines used by several users is linked to a telephone network. The interlinking of phone lines is referred to as trunking. A SIP trunk is the digital version of an analog phone system.

Thus, it no longer makes telephone calls that are carried over the Public Switched Telephone Network (PSTN). PSTN is your traditional phone system using physical lines. A SIP provider provides SIP trunking over monthly, annually, or pay-as-you-go contracts.

The system works with an IP-enabled PBX, providing access to a SIP trunk provider. With the package, you can make outgoing calls on your current network with no cap on the number of simultaneous calls. Also, you can call anyone with a phone number across the globe from the comfort of your home or office without paying exorbitant international fees.

You can also use your current PBX hardware to upgrade to an internet-run telephone network with the help of a good SIP trunking service. So, you can easily add new telephones and change your cell service without any waits.

How Does SIP Trunking Work

SIP trunking is now among the most popular business phone services and is known to have transformed the industry. It turns your current PBX into a cloud-based phone system without charging any significant costs.

You can also use features like smartphone applications and analytical tools (Artificial Intelligence) that are only accessible with cloud phone networks. In technical terms, SIP trunking is used to connect a PBX to a VoIP network.

SIP trunks make use of a packet switch network that converts voice calls to digital signals and sends them through a network to their intended location. It is also known as the VoIP technology that SIP trunks use.

The paired SIP trunking and VoIP systems enable communication between an existing phone system and the public switched telephone network, also known as PSTN.

As a result, SIP trunks serve as an intermediate between the office phone system and the Internet Telephony Service Provider (ITSP). The ISTP provides digitized communications services over the web.

How SIP trunks work
Source: Gradwell

The primary benefit of SIP trunking is that it operates online, eliminating the need for physical lines. It is mostly used to replace PRI technology. The Primary Rate Interface is your traditional voice delivery mechanism that uses copper cables.

The SIP trunk in a VoIP business phone system works as such:

  1. The SIP trunk named the business network (LAN) is connected to your server and a router.
  2. Your business server allows for various connections such as your smartphone with the downloaded VoIP application, an IP phone with a SIP trunk connection, a softphone on your computer, a desktop IP phone, or a wireless router that provides WiFi connection to mobile devices.
  3. The router is hereby connected to the internet and the VoIP provider over a cloud system.
  4. The cloud system is originally linked to your Public Switched Telephone Network (PSTN).

Additionally, you can have many phone numbers for your company through the Direct Inward Dialing Number (DID). It is a service that lets any phone number directly ring a particular SIP phone in your business.

You can save money by purchasing your DID along with a SIP trunk. This way, you will not incur extra maintenance expenses. Moreover, with SIP trunking and VoIP features, you can install extensions for each employee or department to facilitate fast internal communication among your company.

All you need to turn to SIP trunking are the following items:

  • A link to the internet
  • If you plan to use your current traditional phones, you will need a SIP-compatible PBX (Private Branch Exchange) package, also known as an IP PBX VoIP phone, or VoIP adapters.
  • Your phones' network connection

A SIP-ISDN gateway converts the current protocol to SIP. You might need to purchase one if you own an old PBX device. However, most VoIP providers offer IP phones that you can buy or rent, as extras from your VoIP package.

You can call a phone number to meet everyone across the globe once your PBX device has been transferred to the cloud. Regardless of how many people are on the phone, the voice call or video conference will run smoothly.

You can also take advantage of multiple messaging options and an automatic virtual receptionist that will redirect incoming calls to the appropriate department. Moreover, during incoming calls for a department, you can choose if the phones will ring sequentially or simultaneously to prevent any calls from being answered.

How Much Does SIP Trunking Cost

If you'd like to upgrade to SIP trunks, here is an overview of its cost system. SIP trunks have a clearer and more flexible cost structure since they are typically paid per user. Therefore, they can make your expenses more predictable.

You can also update your current PBX system without purchasing any additional devices, thus, lowering your expenses. First off, you can buy SIP trunk hardware from a provider just like you would buy a phone number from a landline provider.

You can then connect your SIP trunk to your VoIP/IP PBX. On a per-channel/call plan, several SIP trunking providers provide packages that include limitless domestic and international, regional, and long-distance calls.

A channel allows you to place or receive a single call. If you need to increase its capacity, you can always notify your provider to add more channels. SIP costs come in different forms namely:

  • One time fee: a setup fee to start a SIP trunk service
  • A monthly subscription: The cost of a monthly subscription is normally determined by the number of channels.
  • Outgoing phone rates: They can vary on how much is charged per minute
  • Optional features such as call recording can incur more charges.

Since the cost of a SIP trunk varies, you can choose between two key SIP monthly cost options to match your budget and requirements:

  1. Metered contracts require a monthly fee as well as per-minute outgoing call charges. If you want to start saving money on your phone system and you don't have a lot of long-distance calls, this is a wise idea.
  2. Unmetered plans have a monthly fee and a set price for unrestricted calling. They don't charge per minute.

Rates can be greatly reduced if a SIP trunking system is compatible with several common PBX systems, such as Asterisk and Cisco.

Benefits of SIP Trunking

Now that you understand what SIP trunking is about, let’s dive into the different benefits of transitioning to SIP trunking. It makes your business’s communication systems easier to use for both internal and external communication.

By connecting all your employees’ devices, video and audio conferences among your clients and departments are available across the globe. Your business can now keep up with modern technology because of these factors:

1. Cost-Effective

SIP trunking is the best option for someone on a tight budget who wants to convert their business contact. Since it is charged on a per-user basis, you can have more control over your recurring expenses.

It is often compared to PRI, which can be expensive to maintain due to rapidly aging hardware and copper cables. PRI also requires the use of phone cables, which involves the cost of equipment repair. SIP trunking is relatively inexpensive due to these reasons while keeping your phone system up to date with technology.

2. Virtual Presence

SIP allows for the development of a single virtual presence. It gives people and companies the freedom to choose when and how they want to be accessible. Moreover, with VoIP packages, you can also configure your voicemail, call forwarding, or text messages options.

With those options, you ensure that no calls will remain unanswered from your end. For example, voicemails are sent to your account email for you to listen to while reminding you of unanswered calls. Therefore, you will no longer have to disrupt your business meeting for an important call.

Additionally, you can have an organized contact list thanks to SIP trunking. You can connect to the system by using a variety of devices including smartphones, your desktop computer at your office, desktop IP phone, and more. As a result, irrespective of where you are, your information is always synced.

3. Efficiency

SIP trunking is used for call setup and monitoring. This means you can concentrate on your company rather than on the details. Some VoIP providers also provide AI features in their packages to analyze the quality and performance of your calls.

SIP trunking can connect many devices at once. That means you can also use a SIP phone with a downloaded application as part of your communication framework. All your contact channels can be coordinated in actual time. This way, your company's performance can be improved along with encouraging teamwork.

4. Consistency And Reliability

SIP technology prevents possible disruptions such as bad weather and destroyed cables because it works over the internet. SIP trunking makes use of VoIP, which is known for its reliability.

Since the internet is resistant to several types of errors, you can continue to use your computers. Also, calls can be forwarded to different devices if needed. This allows you to work freely without extra stress.

5. Communication Optimization

Most of the time, upgrading your technology to keep up with the fast-changing pace is required to develop your company. SIP trunking allows you to combine your communications through different networks and offices into a single system.

For all these devices and applications, SIP assigns a single “address” to the user. One incoming or outgoing call is equal to one SIP channel. Since a SIP trunk can hold an infinite number of channels, no matter how many simultaneous calls are expected, users only need one SIP trunk. However, as your business grows, you can expand the bandwidth by using a high-speed internet service provider.

The Difference Between SIP and VoIP (Voice of Internet Protocol)

While both SIP and VoIP work hand in hand and follow similar processes, the systems are still different. Below we explain the differences between SIP and VoIP, hoping that you will grasp the concept better.

SIP and VoIP are both linked to internet telephony. The concept “internet telephony” involves the delivery of telecommunications such as voice, fax, SMS, and voice messaging over the internet instead of using the public switched telephone network (PSTN).

While the words SIP and VoIP are often used in the same manner, they are not identical.So, the difference between SIP and VoIP is not always clear. VoIP is an acronym for Voice over Internet Protocol.

Voice over Internet Protocol (VoIP), also known as IP telephony, is a tool and collection of technologies to deliver audio and multimedia interactions over IP networks. An example of an IP network is the internet.

VoIP is a general term that applies to any telephone conversation that is made over the internet rather than over a conventional phone line. Signaling, channel configuration, digitization of analog voice signals, and encoding are all steps and concepts involved in initiating VoIP phone calls.

In a way, VoIP is similar to your traditional phone system. It is all controlled by a single network. Applications such as VoIP phones and mobile phones, patented and accessible protocols have been used to introduce Voice over IP to companies.

One of these protocols is SIP, which is a VoIP-specific algorithm. The protocol specifies the format of messages to be shared and the order in which they must be communicated. It is designed in such a way as to maximize customer participation. As a result, SIP is a VoIP subset.

SIP is a method for signaling and managing multimedia communication sessions in Internet telephony applications. Such applications include voice and video calls, private IP telephone systems, instant messaging over IP networks, and cell phone calls.

In simpler terms, SIP trunking is a technology that allows you to transfer any form of media over the internet. Below is a short list of the differences that lie between VoIP and SIP systems to guide you in choosing the best system for your business.

1. Data Transfer

VoIP is confined to voice data transfer over the web. It sends only voice messages among phone lines connected to the same network. In contrast, a SIP trunk can send and receive multimedia data packets.

These multimedia data packets may be in the form of audio, text, or video. Also, SIP only requires a modem, much like a classic phone. In comparison to VoIP, SIP can handle large quantities of data. Therefore, for growing companies, we recommend considering SIP trunking to support greater demands.

2. Voice Codecs

Codecs compress audio and speech signals so they can be sent over the internet at a faster speed. The packet is uncompressed into an audio signal and played back when it arrives at its final destination. It serves as the foundation for VoIP technology.

However, the compression levels for VoIP and SIP are different. SIP trunking utilizes codecs such as G.711, which, when uncompressed, provide better voice quality. G.729 is also used for SIP trunking. It is encrypted in order to use less bandwidth, often at the expense of quality.

However, the encryption of the voice messages ensures a more secure transmission of data over the internet. Depending on your preferences, you can choose between better voice quality or a more secure data transfer.

3. Quality Of Calls

As mentioned above, because of its codecs, VoIP has a lower voice quality than SIP. SIP call efficiency, on the other hand, can be greatly improved. As a result, using a successful SIP trunking service can help to increase the quality of sound being transferred to a large extent.

Especially now that high-quality audio over the internet is in high demand. So, it is important to pay attention to the carrier network quality used by your SIP provider.Tier-1 carriers are the only ones known to be linked directly to the internet framework. It provides the highest call quality while being very effective.

4. Quality Of Service (QoS)

SIP can handle large amounts of data at a time as compared to VoIP. It means that it can perform data-intensive tasks in the background, such as uploading large files or streaming video.

You must activate QoS in order for audio to remain at its highest quality. It is a router setting that tells the network to give voice calls priority over other data traffic. Users consuming data usually do not notice small delays in the signal entering the network or a small amount of data loss. These factors, however, may cause voice calls to be interrupted.

How to Get Started with a SIP Trunking Service

Do you want to upgrade your current phone system to one that matches modern requirements? Or are you paying for call power that isn't being used by your company? Before switching to a new program, you would want to ask yourself these questions.

SIP trunking does, in fact, answer the majority of your inquiries. Maintaining all of your equipment will no longer be costly, and you will no longer be disappointed by voice call declines. Moreover, SIP trunking is an ideal communication system for the new remote or “at home” employees caused by the pandemic.

Prior to SIP, businesses had different voice and data contact systems. This could lead to inconsistencies, which raise the risk of a business continuity failure. Previous systems couldn't support a high number of calls. Excessive telecom carrier rates were also costing businesses money.

However, unlike before the use of SIP, when the internet was not being used to its full potential, the internet is now the cornerstone of communication. Communications are synchronized and businesses can run smoothly thanks to VoIP and SIP.

There are also more options, such as email routing, tracking, and management. You can make a call and send a message at the same time! Communication has become much more dependable in recent years.

SIP trunk providers also give advice on how to get started with SIP trunking. They will guide you through the implementation and installation process and provide assistance if you encounter any problems.

However, you can have questions, such as:

  • How do I add more phone lines as my company grows?
  • Can I control my phone system from a simple control panel?
  • How much will I be able to save?
  • Will my telephone service be affected during the switching process?

Providers often come up with plans for you to choose from to match your needs and requirements that directly answer your questions. With several VoIP providers on the market, you will find a plan that caters to your exact demands.

The most common reason for using SIP is to save money on communication. You pay a fixed monthly installment instead of being charged large amounts for foreign calls. Its various other advantages are also well-liked. They have built-in business planning and network optimization functions.

To use SIP for your company, you do not need to be a networking or telecommunications expert. After completing the steps below, you will be ready to take advantage of the numerous options and benefits that SIP trunking provides:

  1. Have a look at the different plans offered by SIP providers and the features offered.
  2. Register an account with your SIP provider.
  3. The customer support team will guide you during the installation and implementation process.
  4. Uploading your PBX contents to the cloud while keeping your current phones and tablets
  5. Ring the phone number you want to call from anywhere in the world.
  6. Keep your call in vivid HD audio even as you introduce more people to it.

If you want to keep your local number, you only need to notify your SIP provider. The process usually takes up to 10 business days.

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Martin Luenendonk

Editor at FounderJar

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.