VoIP vs SIP: Which one is winning the telecoms war?

Runners two race runner up

Back in 2008 the death knell of the PBX was being forecast -- albeit mainly by VoIP suppliers. Whilst sales have dropped and there was some amalgamation of suppliers there is still a strong market. The number of PBX extensions still outnumbers VoIP by around seven or eight to one.

So, to misquote Mark Twain -- reports of the PBX’s death have been grossly exaggerated. It is the rise of a parallel technology SIP that has blunted many of the arguments put forward by VoIP suppliers suggesting we should throw away that box on the wall.

VoIP suppliers tended to focus on the fact that VoIP would give you free intra site calls, help in retaining numbers when moving, improve business continuity and result in cheaper calls overall. SIP now enables the PBX suppliers to offer the same features.

Even the OPEX advantage of VoIP (i.e. no capital outlay) was countered with reduced prices and the offer of free or low interest financing from the SIP suppliers. (OPEX is operating expenses as opposed to CAPEX -- capital expenses. OPEX hits the P&L, whereas CAPEX affects the balance sheet and is usually paid out in one lump sum. OPEX is recurring and spreads the impact.)

Similarly the providers of SIP are focusing all their attention on ISDN. A look at 10 major providers of SIP reveal that the top reasons for considering SIP were: cheaper than ISDN (60 percent); cheaper calls (33 percent); and business continuity (25 percent).

Both groups are busy fighting different opponents when in fact they are heading towards a battle amongst themselves. That battle is now on with BT announcing that ISDN will end in 2025. The ultimate goal now is to win over the three million ISDN circuits and the 12 million PBX extensions that hang off them. Who will win and what do the various suppliers need to focus on?

So where are we today? Illume consulting reported that the number of SIP trunks rose almost 15 percent to 1.7 million in the first half of 2015, whilst VoIP numbers rose to almost two million in the same period. So, on the surface, VoIP is ahead, but when you factor in that each SIP channel supports about four extensions, whereas VoIP is one-to-one then there is a clear winner. At the moment.

Probably the only thing holding both technologies back is the absence of fibre broadband in many business areas. Far too many city centers and business parks do not have fibre, as the focus is on residential areas. A single fibre broadband can support almost 200 concurrent calls; enough for a site with 750 handsets. With the obvious exceptions of the super large companies that encompasses most businesses in the UK.

VoIP generally has the advantage that it is more scalable, flexible and easy to deploy. Yet many providers write contracts that penalize customers if they need to cancel some licenses within a three year contract. They are throwing away one of the advantages they have over the PBX where licenses are generally bought upfront. Portal management of VoIP systems is usually easier as is self-management for those organizations that want to do it.

PBX systems still have more functionality and until that 2025 cut-off date arrives they can offer greater resilience by supporting both IP and analogue connections. Cost variances have narrowed and with several of the PBX vendors, such as Avaya and Mitel, launching pay as you go -- equivalent to hosted versions of their products -- the battle is likely to intensify.

The unknown factor is what will be the success of Lync, or "Skype for Business" as it is now known? It is estimated that less than eight percent of SIP Trunks in the UK are used for Skype for Business, which suggests less than 500,000 users or under four percent of the handset market.

However, the distribution of usage is skewed towards larger corporations with only minimal the take-up amongst SMEs. If Lync is successful it will benefit the suppliers of SIP, many of whom have rushed to ensure their SIP trunks are certified to work with Lync.

In reality, it is unlikely that anyone will land a knockout blow. The trend is towards the cloud and the removal of ISDN confirms that direction. But with PBXs moving to the Cloud or even data centers in the short term, the battle lines are becoming blurred.

What it does mean is that businesses need to think very carefully about which horse they will bet their telecoms expenditure on over the next few years.

Dave Millett, Equinox.

Published under license from ITProPortal.com, a Future plc Publication. All rights reserved.

Photo Credit: Jacob Lund/Shutterstock

8 Responses to VoIP vs SIP: Which one is winning the telecoms war?

© 1998-2024 BetaNews, Inc. All Rights Reserved. Privacy Policy - Cookie Policy.