The Cost Benefits of SIP

David Byrd : Raven Call
David Byrd
David Byrd is the Founder and Chief Creative Officer for Raven Guru Marketing. Previously, he was the CMO and EVP of Sales for CloudRoute. Prior to CloudRoute, He was CMO at ANPI, CMO & EVP of Sales at Broadvox, VP of channels and Alliances for Telcordia and Director of eBusiness development with i2 Technologies.He has also held executive positions with Planet Hollywood Online, Hewlett-Packard, Tandem Computers, Sprint and Ericsson.
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The Cost Benefits of SIP

This Thursday I will participate in a panel discussion titled “The Conversion from TDM to SIP: Evaluating the Benefits of SIP Trunking” at 3:00 PM during IT EXPO in Austin. Having covered this subject for sometime, I decided to preview my comments in this blog. Friday I addressed some of the issues with SIP Trunking most of which revolve around the loosely defined SIP standard, interoperability testing and bandwidth sizing. Today, however, I want to address cost savings. Over the last few years there have been detractors noting the certain estimates for savings when transitioning from TDM to SIP have been overblown. Consequently, some companies have delayed the effort or abandoned do so entirely. For most SMBs, the transition is easily monetized. It is in the enterprise space where simple VoIP support intra company calling may provide enough savings and optimization to preclude the effort of adding additional equipment to support SIP Trunking.

The major access savings are listed as follows:

  • Per line cost - Per line cost can be reduced by 60-80%.  Most SMBs purchase some type of phone line that includes a local calling area starting at $29.99 per month for a TDM line. While plans vary between different VoIP/SIP Trunk providers, this service can be as low as $10 per line per month. That is a savings of 66% with the additional 2-5% savings due to lower taxes and fees.
  • Usage/metered services cost for local inbound/outbound calling - Savings can be up to 100% as most ITSPs do not charge for outbound or inbound local calling.
  • Toll-free inbound calling - Toll-free calling can be as low as 2¢ per minute, depending upon volume. AT&T’s quotes a low of 5.9¢ per minute or 295% more.
  • Domestic long distance calling - Calling within the 48 contiguous United States and Canada is widely available and from an ILEC purchased for $55 per month with Canada extra. Selected ITSPs include Canada for as low as $24.99 or a 55% savings.
  • International calling –ILEC pricing is dependent upon the selected plan and the country called. In comparing certain country terminations the savings can 90%.  Given the number of countries and rates quoted an average number is difficult to determine.


Clearly, moving to a service provider that can reduce the cost of calling by using IP communications is well worth the effort. And as most ILECs evolve their networks to IP more of their customers will benefit. It is difficult for the ILECs to compete with the ITSPs since they will experience a revenue drop per customer. However, at some point the revenue drop is preferred over the lost of the customer.

More to follow during the session. See you in Austin.


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