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The Difference Between SIP Trunking and Hosted VoIP:  Which Is Right for You?

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The use of the internet and other local-area networks (LAN) is rapidly becoming the norm for business telecommunications. Businesses are increasingly turning away from using traditional phone lines to make and receive phone calls. These businesses are instead using data connections to transmit and receive phone messages; this is known as Voice over Internet Protocol or VoIP for short. One of the primary reasons that businesses have switched to VoIP is because call rates are lower with VoIP than with traditional phone lines; businesses have lower monthly phone bills which thereby saves them money. The global VoIP market has seen a year-to-year increase in growth over the past few years and is projected to surpass a revenue of $190 billion by 2024.

How VoIP Works

There are three requirements that have to be met before a business can be set up for VoIP calls; these are a Private Branch Exchange (PBX), IP phones, and an Internet Telephony Service Provider (ITSP). The VoIP PBX is equivalent to the phone switchboard on traditional phone lines and is a server that contains a listing of all the internet phones with their associated IP addresses; it is used to route calls externally to customers and internally to business employees. The ITSP provides the telecommunication services for the internet based calls while IP phones enable the user to make the phone calls.

VoIP can be deployed in two ways by businesses making the transition away from analog phones, namely Session Initiated Protocol (SIP) trunking and hosted PBX, otherwise known as a hosted VoIP. Depending on your preference, either of these models can be deployed to set up VoIP for your business. The discussion below provides a comparison of these two VoIP deployment models so that you can be adequately informed when making a decision about which model suits your business needs.

What is Hosted PBX?

Hosted PBX systems are typically cloud-based systems; the ITSP supports and maintains the PBX server in the cloud.  The ITSP is responsible for providing, installing, and maintaining all the equipment needed for a hosted PBX system. Businesses have the responsibility of ensuring internet connectivity to allow VoIP and providing IP phones that enable users to place calls over the internet or LAN. A regular monthly fee is charged to the businesses for the services provided by the ITSP. With this model, all calls whether in or out are routed through the ITSP's cloud servers to their destination.

What is SIP Trunking?

With the SIP trunking deployment model, the PBX system is installed, supported and maintained locally within the business premises. SIP trunks are digital equivalents to telephone copper lines; they directly connect the on-site PBX system to the telephone network. Businesses can use their existing hardware to set up SIP trunking as long as the hardware is SIP-compatible. With SIP trunking, businesses have greater control and latitude with the deployment of their VoIP system.

Differences between Hosted PBX and SIP Trunking

Even though SIP trunking and hosted PBX are both effective VoIP models, they have some significant differences that need to be taken into consideration before deciding the optimal model for your business:

  • Setup costs: SIP trunking has a lot of upfront costs as businesses have to pay for the equipment needed to set up VoIP. With hosted PBX, these costs are assumed by the ITSP and therefore, there are no initial setup costs.
  • Expertise: The installation and maintenance of VoIP require a high degree of technical expertise. With hosted PBX, this expertise is provided by the ITSP. Businesses using SIP trunking are responsible for hiring the experts to develop and support their VoIP.
  • Scalability: Both SIP trunking and hosted PBX can be scaled as needed to meet the needs of any business. However, cloud-based hosted PBX has truly unlimited scalability while SIP trunking has some limitation to how much it can scale up.
  • Flexibility: Since hosted PBX is cloud-based, there are no geographical restrictions regarding its use; it can be used from any location. SIP trunking can only be used in predefined geographical locations.
  • Maintenance: Maintenance tasks for hosted PBX are done by the ITSP while businesses assume responsibility for the maintenance tasks associated with SIP trunking.

The Bottom Line

At NewCloud Networks, we have experts who know how to set up VoIP to meet your unique business needs. Contact us today for more information about our services.

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About the author
Sydney Boman

Sydney Boman is the Marketing Assistant at NewCloud Networks

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