SIP Trunking Cost Savings Redux

By David Byrd

On Monday I discussed why it is difficult to tie a single cost-savings number to transitioning your connectivity from dedicated PRIs to converged T1s or SIP Trunks. While most companies will see a savings, the amount is network-dependent. However, there are identifiable savings components that can be easily quantified:

Per-line cost can be reduced by 60-80 percent.  Most SMBs purchase some type of phone line that includes a local calling area, and the basic cost for this type of business line starts at $29.99 per month for a TDM line that includes unlimited local calling. While plans vary between different VoIP/SIP Trunk providers, Broadvox sells this service for as low as $12.75 per line per month. That is a savings of 58 percent with the additional 2-5 percent savings as a result of lower taxes and fees.

Usage cost for local inbound/outbound calling or metered services is also a differentiator of offerings between SIP Trunking providers and ILECs and CLECs. Most ITSPs do not charge for outbound or inbound local calling. Therefore, savings can be up to 100 percent for this sometimes basic TDM charge.

Domestic long-distance calling in the 48 contiguous United States and Canada is an often-stated major feature and the savings can be exceptional. An unlimited local and long distance calling package can be purchased from an ILEC for $55 per month with Canada extra. Depending upon the selected ITSP and term of the agreement the same plan including Canada was as low as $24.99, or a 55 percent savings with an additional country included.

International calling rates from the ILECs have improved but are very dependent upon the selected plan. And the cost savings varies by usage and the country called. However, using the U.K. and France as examples, a large ILEC will charge per minute rates of 11.8 cents and 24 cents, respectively. For the same call, Broadvox charges 0.5 cents and 1.9 cents per minute. This reduces the cost of calling by more than 90 percent.

Toll-free inbound calling plans for VoIP/SIP Trunk calling can be as low as 2 cents per minute, depending upon volume. The best domestic rate quoted on AT&Ts site was 5.9 cents per minute, or 295 percent more.

Given all of the above, it is clear that a savings of 70 percent is achievable. In fact, an enterprise customer with dedicated PRIs, remote offices and the need to make international calls experienced a savings of 75 percent with us versus their incumbent carrier.

So, the savings are real but what of the voice quality? Well cover that on Friday.

David Byrd is vice president of marketing and sales for

Broadvox
, and is responsible for marketing and channel sales programs to SMBs, enterprises and carriers as well as defining the product offering. Prior to joining Broadvox, David was the vice president of Channels and Alliances for Eftia and Telcordia. As director of eBusiness Development with i2 Technologies, he developed major partnerships with many of the leaders in Internet eCommerce and supply chain management. As CEO of Planet Hollywood Online he was a pioneer in using early Internet technologies to build a branded entertainment and eCommerce website company partnered with Planet Hollywood. Having over 20 years of telecom sales and marketing experience, he has held executive positions with Hewlett-Packard, Sprint and Ericsson.