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Hosted VoIP vs SIP Trunking

Updated on September 13, 2013

The Basic Difference

Having a reliable and cost effective communication system is a basic requirement for the growth of any business. Enterprises are increasingly using VoIP technology as it offers richer communications and flexibility. A company that wants to implement VoIP will face a choice between hosted VoIP and SIP trunking. The decision will depend on the size, budget and needs of each business.

Hosted VoIP provides organizations with hardware and software required to make VoIP calls and both are managed off-site by the service vendor. The only equipment needed on the premises are the IP phones. On the other hand, SIP trunks refer to the connection between the carrier and the customer’s offices, usually a broadband connection. VoIP calls are made using the Session Initiation Protocol (SIP) and the business needs to have a compatible PBX system already installed.

Hosted and SIP Trunks
Hosted and SIP Trunks

Type of Infrastructure

Hosted VoIP offers a lot of advantages, especially to small businesses and those that do not currently have legacy phones. All the features of an advanced PBX system are available at a reasonable monthly subscription fee. You do not have to worry about maintaining or upgrading expensive hardware. Capabilities such as call forwarding, advanced call routing, call hunt groups and virtual numbers allow employees to telecommute or work even when outside the office.

Calls can be made from computers, mobile phones and IP-enabled desk phones. The IP phones can be bought separately or rented from the service provider. You can start with a basic feature set and add others as and when required.

SIP trunks are an ideal solution for large enterprises that already have a reliable PBX system. The vendor does not provide any phone related features such as call waiting or forwarding. Certain services such as toll free numbers, automatic failovers may be provided but mostly you are limited to the capabilities of your existing PBX.

Which One is Right for You?

Every call requires one channel on an SIP trunk and therefore you need to estimate and pay for a certain number of channels in advance. Since you are only purchasing the connection, your phones need not be changed. Organizations with a large number of employees or high volume of voice traffic will benefit the most from SIP trunking as the cost per phone/call will be very low. You also need to take into consideration business VoIP uptime while determining your needs.

There are many factors to consider when making a decision between different phone systems and no one size fits every business. Whether you choose SIP trunking or hosted VoIP, all the benefits offered by modern communication technology are available to your company.


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