What is SIP Trunking and How Does it Work?

What is SIP Trunking and How Does it Work?
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As a business owner, you are constantly looking for ways to cut costs and reprioritize your spending. With all the services you are tasked with managing (merchant services, shipping services, payroll services, etc.) it’s understandable you haven’t mastered the knowledge of each industry. Maybe you’ve heard of SIP trunking, and maybe a friend of yours saves money by using it with his business, but you’d like to know more about how it works before you contact providers. Understandable.

Below is a high-level overview of SIP trunking and how it works:

What Is SIP Trunking?

Session Initiation Protocol, or SIP, is the way you achieve a voice over IP (VoIP) call. It’s an application layer protocol for setting up real-time sessions of audio and/or video between two endpoints (phones). Simply put, SIP is the technology that creates, modifies, and terminates sessions with one or more parties in an IP network, whether a two-way call or a multi-party conference call.

A SIP trunk is the virtual version of an analog phone line. Using SIP trunks, a SIP provider can connect one, two, or twenty channels to your PBX, allowing you to make local, long distance, and international calls over the Internet. If you have an on-premises PBX in your office, a SIP trunk provider can connect to you and allow you to make outbound calls on your existing system, without restrictions on the number of concurrent calls.

Here is a diagram to show you how SIP trunks work:

What is SIP Trunking diagram


How Much Does SIP Trunking Cost?

The cost of SIP trunking can vary depending on your business needs, but typically businesses can expect to pay a setup fee of $0-$150, and monthly costs of $25-$50 per trunk.

Many SIP trunking providers offer plans that provide unlimited inbound and outbound, local and long distance calls on a per channel/call basis. Each channel provides the ability to make or receive a single call. Once you have filled all of your channels, you will be unable to make or receive additional calls. Additional channels can always be added for more capacity by contacting your provider. This type of SIP trunking service allows businesses a way to easily budget their telecom spending.

How Many Concurrent Calls Can Be Made with SIP Trunking? What About Bandwidth?

The limitation is based on Internet bandwidth capacity. Each non-compressed call uses approximately 85-100 kbps of bandwidth. In most Internet connections your upload speed is typically slower, so when determining the number of calls your connection will support, you should use your upload speed. If, for example, your upload speed on your Internet connection is 4Mbps, then the maximum recommended number of calls would be 40 (4,000,000/100,000).

Number of Concurrent Calls During Busiest Hours
100 Kilobits per Second
Bandwidth in Megabits per Second Required for SIP Trunking


Now that you know a little more about SIP trunking, you should determine if your network is ready to handle it:

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