Is SIP Based High-Watermark Billing a Telecom Game Changer?

I continue to be amazed at how our industry can perpetuate bad habits. I am referring to the Telecom industry and its bad habit of charging for “facilities” that are un-used and no longer necessary when a customer migrates to SIP (Session Initiated Protocol) trunks. SIP is an open-standard, that provides for a means for the effective replacement of costly telephone lines, or primary rate ISDN or PRI circuits by customers seeking to streamline their monthly operational expense.

In telecom speak, facilities are a resource: a copper pair, a T1 card, a CSU/DSU- components that are provisioned on behalf of a customer enabling them to make X amount of simultaneous calls- or transmit Y amount of data (like a T1). If you still have a phone in your house (not a VoIP phone or Vonage-like service), then you have an actual pair of copper wires that are reserved in the local telephone company CO (communications office) with your number- reserved for you and your house. Hope I’m not showing my age, but you remember those operator’s (who would have the bulky headset and would operate the switchboard) pulling one line out and connecting another essentially completing the circuit between one copper pair and another? This is a great example of how the phone company had to maintain facilities on your behalf to make sure you could have a complete “circuit” between your home and anywhere else you wanted to complete a call.

SIP however, is just data – there are no physical facilities required to make or maintain your connection – no copper required. SIP does not require dedicated facilities. SIP based calls and simultaneous call paths are just data. Granted some packets are larger than others based on the negotiated codec by your device – but each call is still just data.

Although SIP has been around for quite some time – exclusive use of SIP for replacement of legacy telephone service is a new and developing trend. The SIP revolution is upon us! Take the time now to explore your options and contact a few SIP carriers to discuss your needs and begin the process of formulating your return on investment.

Be prepared however for the sales process. If you hear a pitch equating the number of existing phone lines (or facilities) with an eqivalent number of SIP trunks – be wary. You will have a connection via SIP – and you will need to commit to a certain number of trunks but the salesman will ask “How many lines do you want?” There really are no lines with SIP. In fact, what he should be asking is “How much data will you be sending me?” There are those however that are hard pressed to move beyond pricing in facilities to the equation because that is the way we have bought and sold telecom services in the past.

Full disclosure: At EtherSpeak we uniquely offer a an option with our SIP service called BurstaTrunk primarily for our customers within the ShoreTel, Microsoft, Zultys and Asterisk communities. It allows companies to simply pay for their highest amount of concurrent calls – regardless of the number of locations.

To illustrate, I remember speaking with a T1 sales representative at a Tier 1 carrier about two-years ago. This carrier that has buttered it’s bread by selling T1’s, PRI’s and broadband for years and years. When I asked him about SIP, he said “Ah yes, we now have a SIP T1 and you need a SIP T1 to deploy SIP”. Loosely translated it meant they have figured out a new way to sell T1’s and facilities – even where they might not be necessary.

Folks, SIP is just data! If your broadband or MPLS data pipe is big enough to handle the data – and is of good quality – don’t pay for facilities that are not reserved, or in-use on your behalf.

So fast forward. We have a major SIP account that we competed for last year. The prospective client checked our pricing by getting competitive bids from a range of Tier 1 providers. Now, this prospective client has a data center – they have mission critical bandwidth connecting their hundreds of sites to the firm’s data center. As our prospective client was checking out the competition, he commented that this Tier 1 carrier would not run SIP over his Internet connection – that we had to install additional facilities for SIP T1’s. I said, “But you have enough bandwidth to support the number of concurrent calls you expect – why do they want to pull T1s to your data center?” He said, “That’s the way they do it”. So I responded, “Do they know you have 200 meg of Internet and you only use 10% of the available bandwidth?”. He said “Yup”.

We closed the major account – and the Tier 1 did not.

So let me tell you: SIP is data that requires a good and reliable Internet connection with enough available bandwidth to support the highest amount of concurrent calls. Don’t be fooled into buying SIP T1’s – or any other wrapper a clever carrier decides to sell you.

Here are some points for you consideration:

1 – If you are going with SIP – do the math. A concurrent call will use between 30k and 80k. Make sure you have plenty of reliable and available bandwidth

2 – Ask about Bursting. Don’t guess how much data you might send. Why would anyone commit to paying for the ability to send data they haven’t sent yet? The answer is because we used to have to reserve and maintain facilities on your behalf – we don’t anymore. So the next time a salesman says “how many trunks do you want at each of locations?” Answer truthfully and say “I don’t know – can’t you just bill me for what I use?” If they won’t do that – call me, I’ll explain it to him.

3 – Know how much bandwidth you have available. I used to recommend Packet Island but they just got bought by Broadsoft and may be in transition. There a number of good tools available to help you determine how much bandwidth you have available – and examine it over a period of time to make sure you are not underestimating your needs.

SIP is a wonderful advancement in an evolving revolution that when combined with a leading Unified Communications platform from ShoreTel, Microsoft, Zultys or Asterisk should provide significant value to your business. Thanks for reading – Good luck!