Carrier complacency vs. carrier fear: The SIP trunking example

I'm in San Francisco for the fall version of the VoiceCon conference, which I regularly attend and speak at. Over the past two years, one topic in particular has ballooned in interest at the spring and fall VoiceCon meetings: SIP trunking. That's a service you can purchase from carriers that takes the Session Initiation Protocol now used for VoIP call set-up and other signaling functions, and rides it over specific data networking links such as MPLS or dedicated Internet.

The ultimate hope of SIP trunking is that by purchasing a certain number of ports for concurrent calls based on a study of your peak voice traffic, and having the bandwidth for your VoIP dynamically allocated across your network, you can eliminate many if not all of the elements of traditional telephony that have remained in place under more rudimentary VoIP implementations. Among these are some of the stickiest in price in an otherwise deflationary industry: local telephone trunks and PRIs.

You may still have to pay what is in effect a toll for the switched end of a call (often the origination of a call to a contact center) as part of the SIP trunking package. But other pricing parts of the separate voice-network equation drop away, typically in favor of a voice-grade class of service on the MPLS network you may have installed anyway, and the potentially very scalable concurrent-call rate element.

While the interest in the service is real -- and justified, because SIP trunking is being sold and installed by a number of carriers -- it's fascinating to note the different perception of the broad user base and the carriers as to its practical availability.

I shared a panel today with Alla Reznik, Verizon's director of Global Advanced Voice Services, in which we discussed SIP Trunking and other services with moderator Eric Krapf, editor of NoJitter.com and long-time organizer of VoiceCon. Alla has served on my own VoiceCon panels in the past on the same subject, and she is one of the most conversant people on the subject. There's no question from her presentations that Verizon sees SIP trunking as a core offering in both national and, ultimately, international rollouts of integrated voice and data networks.

But in general discussion at VoiceCon, including in other sessions, it's clear that many users feel that the major carriers are holding back on them on SIP trunking. Account teams seem reluctant to bring it up, we repeatedly hear, and the first pass at asking about availability and pricing can be rocky.

Some of this is undoubtedly because many carrier reps really don't know much about the product. But the user perception is that as the main national enterprise carriers have merged back into combined local and long distance behemoths, they've become loath to present a product that may cannibalize the local telephony trunks from the old "RBOC" sides of their business.

Our experience at TC2 on this issue of re-monopolization is that there are two very different sides of the same coin. In the case of SIP trunking, the very fact that the two largest carriers have a huge installed base of local telephony to protect can actually be turned against them, if you play your cards right.

Sure, if you talk to a single carrier, and you ask in isolation to get a service that will wind up earning that carrier less money, you are likely to get the foot-dragging type of response that has bedeviled telecom users, in one way or the other, for decades.

But we are beginning to find that SIP trunking as an additional service is one of those tools that carriers in a competitive situation can positively employ to try to win your business. Say two carriers are bidding on a national data network that also prospectively can be used for voice and video. Now add the fact that if the user does go forward with convergence using the service, the losing bidder will not only lose the "long distance" business of that company, but also the local telephony part of that company's business in their native territory.

Now the need to protect an installed base is being leveraged against both carriers. So at least one of them may have to respond -- either with a competitive VoIP service that makes the other carrier lose their "POTS" business with no compensating new business, or with a better bid on the national network itself.

Clearly, many variables go into this kind of situation. In the real world, many enterprises are not willing to give up their local trunks because of issues surrounding E911 and diversity. But for some large enterprises, the greater number and uses of local trunks, T-1 access lines to long distance POPs, and high-capacity virtual LANs and WANs from SONET to Ethernet at numerous locations gives them a lot to play with. That means that even a partial elimination of local infrastructure that used to have to go to the incumbent carrier in each territory can have a big payoff.

This keen interest in SIP trunking provides a notable example of the "Jekyll and Hyde" carrier behavior that my colleague Ben Fox has discussed in his own NoJitter article, There Is Only One Sure Way To Get The Lowest Possible Telecom Prices. In fact, it's a multiplier effect: in this case, the tension between a legacy base and a next-generation service can swing in completely different directions depending on how competitively you are presenting yourself to the carriers.

We'll be watching to see how quickly the SIP trunking trend accelerates, and how well enterprises are effectively using competitive leverage to make it go. Even though many people in the big carriers don't want to acknowledge it, the carriers' businesses is changing, and if you're in a position to force them to realize it, you're probably doing something right. Getting yourself into that kind of position is what much of telecom procurement for the long run is all about.