More on the Cost Benefits of SIP (Lots of TLA and FLA – all defined)

Let’s try to keep this simple. Regular telephone technology – plain ordinary telephone lines and dedicated circuits are passe. All new communications technologies involve SIP – standard initialization protocol- which is the default new standard for all applications being developed. You need your equipment to be SIP compatible in order to take advantage of it- or you need to have a provider that can host your communications and their equipment has to be compatible with it.

Why is it important? Because it will save you money. You can decrease your monthly spend and get more functionality from these services. I recently came across a blog post that spelled this out. However, the post used too many three letter and four letter acronyms (hence the TLA and FLA in the title of this post). I like to speak and write in English. Yes, it’s a pet peeve of mine- I admit it. I own it. The style should not detract from the message. The message can be summed up: Various vendors (providers, service integrators, value added resellers) have used lack of end user understanding to cast doubt on the benefits of migrating services to the SIP standard. The fact is, you can calculate out your saving easily. It’s all about the math- how much can you save, how much will it cost to implement and is it worth it.

Here is the original post by David Byrd, as it appeared in Channel Partners Online on October 4, 2012. I have edited it a little (to make sure that almost all of the three letter acronyms are defined)…

“Over the last few years, there have been detractors noting that certain estimates for savings when transitioning from TDM (traditional phone services technologies like regular telephone lines, PRI circuits) to SIP have been overblown. Consequently, some companies have delayed or abandoned the effort entirely. For most small and medium sized businesses, the transition is easily monetized. It is in the enterprise space where simple VoIP supports 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 (Internet Telecom Service Providers)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 (Incumbent Local Exchange Carrier e.g. THE PHONE COMPANY) 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 be 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 (read: VoIP or voice over Internet protocol)  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 loss of the customer.”

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About Vic Levinson
Telecommunications and IT professional with over 20 years experience in Business Telecommunications. Specializing in voice over IP (VoIP) for business: hosted VoIP, business VoIP phone systems, SIP providers, carriers, T1's - the works. Founded Prime Telecommunications in 1993 and providing business communications solutions. Cloud Applications- everything from hosted network security, hosted Disaster Recovery, hosted printer management, data centers and colocation solutions for businesses.

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