The Death of ISDN?

If you were on TV and in the Who Wants to Be A Millionaire hot seat with Chris Tarrant having just asked you a question on SIP trunks there would be no doubt who my phone a friend would be – Mat Townend of illume consulting. Unlikely as I am to be on the show, nevertheless industry analyst Mat, who has been tracking SIP along with VoIP for some years and upon whom you could bank the money for sure, was my first port of call for this article.

illume completed its latest SIP survey in January this year and the results showed that the SIP/IP trunking market shows no sign of slowing down with growth of 25% June-December 2012. The market was 757,928 trunks at the end of 2012, a growth of 60% year on year.

According to Townend the survey saw strong performance among key players in the market and an increasing focus from Softswitch vendors such as Broadsoft, Genband and Cisco on the need for their story to incorporate SIP/IP trunks alongside Hosted services.

“We explored with the providers what were the key customer drivers and although costs versus ISDN is still the most important there is an increasing understanding that other benefits such as ‘Flexibility’ and ‘Business Continuity’ are also key. Among the providers serving the larger enterprises we also saw the importance of SIPT as an enabler for Unified Communications growing in importance.

In the coming year we expect to see more focus on what applications can be layered on top of a SIP trunk, and how Services Providers can really address Hybrid Hosted and SIP environments and bring benefits of Unified Communications to both traditional PBX and hybrid customer scenarios.

This year we saw a number of new entrants in to the SIP market and a number of new announcements. In December we saw the launch from Talk Talk business of their ‘Next Generation ISDN30 service’ which caught our eye. In effect this service utilises a SIP network and a gateway to deliver a customer the choice to terminate; ISDN, SIP or a mix of channels, bringing the customer some of the flexibility and service benefits associated with SIP to a traditional ISDN environment. We have seen this approach used in other international markets; recently we have been working in the South African market where a number of competitors to Telkom used this approach to attack existing ISDN market, effectively offering like for like services.

One of the other issues on everybody’s lips has been what the impact of Microsoft Lync is; our survey showed that less than 20% of providers had tested with Lync. The providers who have been approved for Lync indicated that although they had seem some business coming through it was still a relatively small percentage of their overall base, although having the capability had opened up a number of customer discussion they may not have had if they were unable to offer such a capability. Microsoft are clearly generating a lot of enterprise interest behind Lync but it’s still unclear if it will really replace the PBX.”

The Journey to UC

One supplier that has developed a range of overlay services for SIP trunks is HIPCOM where Strategy Director Paul Aabryn says that a lot of businesses have switched from ISDN to SIP in the first instance to save on costs but this view of SIP trunks quickly moves on to the UC story.

“We view SIP trunks as being a journey towards unified communications and because not all SIP trunks are the same these companies that bought for price alone soon become annoyed when they find their chosen supplier cannot start them on that road to UC. Of course some users simply want a better price than they are paying for ISDN and any talk of a UC journey will probably confuse them and switch off the sales opportunity. Here HIPCOM can provide a functional SIP trunk that will of course meet that need. But there is so much more in terms of potential the user can leverage with our SIP trunk offering.”

HIPCOM believes there are three key areas for resellers to consider;

1. Resellers will make more margin selling SIP trunks than they would selling ISDN

2. Resellers will protect their income from reducing the churn of their LCR base.

3. They will also protect their customers in terms of what functionality and UC features they may want in the future.

Aabryn concludes, “HIPCOM SIP trunks can provide overlay services such as load balancing, mobility, IM, video conferencing, CLI from different sources, out of region numbers, call logging, which is bundled free of charge, and much more.

Our recommendation is that resellers need to work with a supplier that has a clear road map for their SIP trunk product – otherwise they will find themselves up a blind alley. HIPCOM SIP trunks are UC ready which for resellers means more revenue, more margin and a better dialogue with their customers – and that leads to greater customer retention.”

Another SIP supplier that has a core focus on services is VanillaIP where Marketing Manager Steve Tutt says his SIP Trunks are a bit like smartphones in that they have a core capability, which is ISDN replacement, but the real power is in the apps that can be overlaid across the top.

“We can provide PABX extension users with the ability to link their GSM mobile, international numbers, queuing in the cloud, attendant services, unified messaging and so on. In our experience, Partners need to play at this level to really build value into their trunking business.

SIP Trunking is a maturing market and for Partners that are offering legacy, dial-tone type SIP trunking it can be hard to differentiate, except on price. For the channel, the benefits of overlay services are clear; better revenues and reduced churn.

Because all the smarts are in the cloud you get extension dialling across sites by default and the ability to intelligently link any mix of traditional PABX, Hosted UC sites, home and mobile workers across the customers estate. When you build this out you are presenting a compelling and powerful business case for the customer that extends beyond simply reducing their access charges.

Another recent innovation is our introduction of burstable SIP Trunks. This means that a multi-site customer can oversubscribe the trunks at a site level to allow them to “borrow” spare capacity from other sites if their local traffic demands it. This ability to rationalise total trunks, and have them dynamically available at whichever site they are needed, is naturally a persuasive proposition for the customer. For our Partners it also provides an attractive margin opportunity, where the Partner charges trunks at the site level, while VanillaIP only charges at the total customer business level. Typically this works out at about 30% added margin for nothing. VanillaIP SIP Trunks are also now available on 1-day rentals, adding to the above flexibility.

We have also extended our credit locking for Hosted UC to SIP Trunking. To recap, this means that the Partner can specify business and PABX extension credit locks that, once breached, will automatically bar the extension 24/7. The importance of this absolutely cannot be overstated and the potential risks from not having this assurance are probably greater for the Partner than the customer.”

Key Questions:

Here are some key questions regarding SIP trunks that resellers tell us they want answers to that we put to suppliers.

1. Are users sufficiently confident in SIP to ditch their ISDN lines?

Stephen Ashley-Brian, Product Manager – SIP Trunking at Gamma, says that the figures speak for themselves; with over 1 million ISDN channels having ‘disappeared’ since 2008, SIP has been a major benefactor. We are also aware of some independently sourced research within the enterprise sector which revealed that in response to a comprehensive questionnaire aimed at IT and Telecoms Managers; of the several hundred responses received, SIP trunking was identified as the single most important new technology with approximately 50% in a readiness state to deploy.

The question of confidence is therefore largely redundant as pretty well all the elements needed to ensure call quality are well understood by both vendors and customers alike. And in the enterprise space particularly, we need to remind ourselves that Voice over IP using SIP or some other protocol has been in play on the LAN/WAN side for some significant time, the replacement of ISDN with SIP is therefore no great leap of faith.

Mark Rosson, Director of Indirect Channel at BT Wholesale: Yes, SMEs, major enterprises and government organisations are embracing SIP trunks and actively moving from ISDN based services. We estimate there is an installed market of 800K SIP Trunks, of which about 2/3 are in the SME segment. Our customers are providing SIP trunks to high street supermarkets, retailers, banks, car manufacturers and to smaller business and local government organisations. We’ve found the majority of customers are either agile SMEs or smaller businesses who review their cost base and capabilities regularly or large enterprises, with IT functions which constantly review the cost benefits of new services like SIP trunking. We believe that the SIP trunk market will grow by 25 per cent in the next couple of years, which is pretty impressive given today’s economic climate.

Jon Nowell, Head of Communication Services Product Management at TalkTalk Business: Not completely – telephony still remains the number one mission critical service and not all SIP services provide the SLAs and SLGs that businesses need. Resellers need to guarantee and deliver the same level of reliability that users have come to expect from ISDN, while providing easy migration and interoperability with existing PBX systems.

Resellers should continue to educate customers about the commercial and technological benefits of SIP technology, but must also be aware that migrating a PBX from ISDN to SIP remains a somewhat daunting prospect for many businesses. TalkTalk Business’ ISDN30/SIP service was designed with this in mind, incorporating next generation connectivity – presented either as ISDN30 or SIP – with seamless migration to SIP whenever the user is prepared to do so.

Tommy Powell, Marketing Manager, Telappliant: Yes, from small businesses to large enterprises, the vast majority or organisations we speak to are now confident enough in SIP to cancel their ISDN lines. But for that confidence to be well placed, organisations should ensure that they follow a few simple rules:

1. Ensure that you purchase SIP trunking from a trusted provider, with a resilient infrastructure and watertight SLA. If possible, try to go with a personal recommendation from another business that has already made the switch.

2. Ensure that your broadband is up to the job. SIP trunking is only part of the equation - If your ISP is unreliable, your broadband connection is not optimised for VoIP (too much latency or jitter), or you use the same connection for voice and data, you are likely to run into problems.

3. Always have a backup. With the cost of SIP trunking and business broadband reducing all the time, you can afford to have a backup SIP trunking solution and broadband connection from a different vendor, and still save money compared to ISDN. It’s worth investing in a UPS too – so your phones don’t die in the event of a power cut.

Stephen Dracup at Chess: It depends on what type of line they put in to run the SIP over. For example if SIP goes over a leased line, EFM or another type data connection with a guaranteed uptime then the answer is yes, over a basic broadband line I would say no. Whatever happens all Businesses still have to think about implementing a disaster recovery plan in the event of their TDM/IP services failing. At Chess we’ve had this in place for several years – with a belt and braces approach using SIP and TDM together. We are starting to consider removing our I30 – but only on the back of significant investment in resilient leased lines.

Paul Taylor of Voiceflex: There are two points to be addressed when moving to SIP, first and fore most connectivity. The connectivity needs to meet the requirements and expectations of the customer and disaster recovery should be a key component in any data installation. Secondly is the provider. There is an array of carriers with SIP exchanges and not all the exchanges are the same. It does astonish me that people are typically interested in price instead of platform, disaster recovery, provisioning, support and then commercials.

SIP is a main line product and has been for the past few years. Companies will only change from ISDN to SIP when there is a compelling driver or trigger such as, moving, changing telephony application, upgrading replacing a data circuit, disaster recovery applications etc.

Tim Nelson, Marketing & Product Manager, Channel Telecom: SIP trunks are now a mature technology that business users can and do trust and depend on for business communications. Last autumn saw new SIP trunk installations exceed ISDN for the first time. But we have now passed the tipping point for SIP trunks.

There is still a role for ISDN as a back-up to provide resilience where the customer is running a mission-critical operation. We would strongly recommend this if the customer is using broadband rather than an EFM or Ethernet leased line to carry their voice traffic owing to the relative unreliability of DSL and the length of time fault rectification can take. If it’s a new system without legacy ISDN in place and a leased line is being implemented for the data connectivity to site then we would be entirely comfortable for them not to take any ISDN because of the superior DR capability of SIP trunks.

Trefor Davies at Timico: The answer to this varies by size of customer and by the market in which that customer operates. Businesses in the world of Financial Services don’t care about cost but do care about reliability. Such businesses are likely to combine SIP trunks and ISDN even if those businesses are served by resilient Ethernet connections. Companies in the professional services sector however, with a fairly mobile workforce are more likely to drop ISDN totally.

Very small businesses are likely to only have a broadband running on an analogue line. Typically they are ok with the idea that if the broadband line goes down for some reason then they can shift their communications to a mobile device.

Richard Buxton, Voice Services Manager, Node4: “The answer is definitely yes. We are seeing more and more uptake in SIP from customers that were traditionally ISDN customers. In the past, a lot of providers were offering services without the proper infrastructure, and that obviously affected reliability. SIP’s reputation has improved enormously, and that is due to the improved quality of services offered.

Re-sellers are now becoming more comfortable in recommending SIP as opposed to ISDN. The infrastructure you get from a reputable provider such as Node4 in terms of our network, our datacentres, our platform, coupled with the higher bandwidth and higher reliability circuits available today, together make for a highly reliable service.”

Alexis Argent, founder and director, VoIPon Solutions, 4Gon Solutions: “Currently, SIP Trunks are of most benefit to smaller, newer businesses, for many of whom ISDN was never an option anyway. For others, the overriding priority is still keeping costs down and contract restrictions to a minimum. Of course they want to maximise their investment in broadband and have faith in that investment, but as the technology has improved, provision quality, upload speed and connection reliability has also increased on a daily basis, and continues to do so.

For many larger businesses however, ISDN is still under threat as in the long run, these users are still considering cost, support and availability. Also, whilst some established businesses are more hesitant to move from an existing ISDN set up to SIP, this hesitation simply doesn’t exist in businesses seeking brand new VoIP solutions - regardless of their size. With a blank canvas, many decision makers are choosing to ditch contracts and restrictions in favour of the lower cost and faster setup of SIP – although of course it’s important to ensure the internet connection will support their required capacity.”

2. Are there real cost savings to be made?

Ashley-Brian at Gamma: If the ROI model with SIP trunks gave the wrong answer, there would be virtually no VoIP in the market at all. As this is clearly not the case, the commercial model already makes sense for large sections of the market.

The key though is to consider all the elements that factor into cost. It’s easy to try to draw comparison in terms of lines and minutes and in many cases, particularly with the introduction of competitive access options such as EFM and FTTC that’s all you need. Just as important though are the factors that help drive operational costs down; ones that can be directly attributable to SIP. Think of the operational management tasks such as flexing channels, new service deployments, adding DR capabilities etc.

Mark Rosson at BT Wholesale: We’ve found that SIP trunking is usually cheaper than ISDN. The set up can be half the cost and on-going operational costs are significantly lower too. On average set up and running costs over a three year period are about a third cheaper. The higher granularity of SIP Trunking means you pay for just what you need (e.g. avoiding buying additional ISDN30s when you only need a couple of extra channels), which provides real commercial benefits too.

Jon Nowell at TalkTalk Business: Absolutely – SIP-based services offer not just next generation networking, but next generation pricing and service too. The TalkTalk ISDN30/SIP service provides an IP-based ISDN service at a much cheaper price than a TDM-based product, without the end user needing to make any investment or change to PBX systems. TalkTalk Business’ Voice over Ethernet (VoE) product offers a genuine, cost-effective alternative for businesses that need 100 voice channels or more, for example call centres and head office switchboard systems.

Paul Taylor of Voiceflex: In any cost saving exercise there are a number of factors to take into account, primarily your starting position. There are two main reasons why end users opt for SIP and the two reasons can and do overlap. The flexibility SIP offers companies large and small over ISDN has saved thousands of pounds as companies are not restricted to a locally hardwired based exchange. With SIP the exchange moves into the cloud. Wherever a data circuit is connected calls can be made and received, voice is an additional application delivered over a data connection so no need to pay for an ISDN circuit and a data circuit. The saving whether in pounds, shillings and pence or via flexibility are real.

Mark Curtis-Wood, Head of Networks at Nimans: In terms of cost, then SIP has a strong advantage over ISDN. Excess construction charges are still a problem for ISDN if there isn’t fibre in a building. But thanks to EFM then potentially that’s going to win because you can utilise existing copper pairs rather than investing in fibre. Even if that’s not a problem the flexibility of SIP - where you can install 40 trunks for example and take them off the following month – ISDN simply can’t compete. In most cases to get a decent ISDN price a business has to commit for between three and five years. Cost savings combined with flexibility are the trump cards for SIP as businesses don’t want to tie up their cash for long periods of time. Today’s business models are more about upscaling and flexing down and that affects how they consume bandwidth and server technology. They are going to get used to buying services on 30-day rolling contracts. ISDN is too static whereas SIP trunks are a lot more flexible.

Andrew Saunders, Head of Product Management and Marketing at Zen: The wholesale cost of ISDN30 is £11.75 per channel and with Business Talk SIP as low as £3 per channel, the savings on rentals are clear.

However there is more to this story than just savings on rentals. SIP also brings with it other benefits legacy technologies can’t, such as flexibility and additional functionality, such as remote workers and infrastructure consolidation. Using a single pipe to deliver voice, data, and other business critical applications is the key to the success. It is this convergence of connectivity and applications over the top that is delivering the real savings to businesses of all sizes.

Tim Loveday at Coms Plc: If priced sensibly, a reseller can make at least the same amount of margin if not more from a SIP trunk as they would do on an ISDN installation whilst still making hugely substantial savings for the end user. “Deployed over a high bandwidth broadband connection or EFM, you can easily deploy as many channels as you would on an ISDN30 for a much reduced cost. The urban myth that the call costs are much lower is still out there but the reality is that they are pretty much the same in value so the savings are to be made on the monthly service charges.”

3. Do the business continuity features stack up?

Ashley-Brian at Gamma: It’s actually the DR capabilities of SIP that makes it even more attractive. The concept of resilient designs should be considered as a ‘business as usual approach’ to SIP trunking. Taking advantage of the softswitch nature of SIP means that services can be pre-provisioned to automatically failover and divert traffic instantly and in a far more cost effective manner that traditional TDM services. Just compare ISDN’s service assurance options with those of a carrier grade SIP provider and the choice is obvious; with SIP it’s all about IP routing, it doesn’t get more flexible than that.

Mark Rosson at BT Wholesale: Business continuity on SIP trunking is leagues ahead of that possible on ISDN. For a start numbers are virtual, not geographic, so switching can be done automatically. And because your phone number effectively lives in the cloud, you can take it with you; use it on your mobile or another person’s landline. You’ll be charged to your number, not the device or line you’re using.

ISDN is purely site based so losing a site means loss of all your intelligence such as number routing. If you lose a site with SIP trunking, you keep the cloud based intelligence.

Jon Nowell at TalkTalk Business: Business continuity remains paramount for users considering a change in their voice or data infrastructure. By phasing the introduction of SIP into a business network, resellers give users time to adapt and familiarise themselves before the full roll-out is complete. As an example of this, TalkTalk Business’ service enables businesses to retain up to 30 ISDN channels while introducing 20 SIP channels over the top.

Stephen Dracup at Chess: Yes they do – but they need careful consideration and integration with the customers IT infrastructure. More often than not it’s a solution sale not a product sale. It is vital that the customer advisor is capable of understanding the customers infrastructure and how the voice solution will fit in to it.

Paul Taylor of Voiceflex: The way we view business has changed and will continue to change and evolve over the years to come. The IT department used to be the ‘chap with an interest in computers’, now if your computer is down, you switch to your mobile to send and receive emails. If your internet goes down, you go home or to Starbucks and log on. As voice is now rapidly moving from ISDN to a data pipe the flexibility of how we use voice as an application will continue to evolve. With SIP you are not constrained to one pipe from one exchange, business continuity is far easier to design and use within the world of SIP.

Tim Nelson at Channel Telecom: Disaster recovery is on one the big selling points for SIP trunks as against less flexible ISDN connections. Our SIP trunk service allows each DDI number to have its own individual ‘unreachable’ destination set such that if a call cannot be delivered to the PBX for any reason, all inbound calls will be diverted to the alternative number automatically (for example to the DDI owner’s mobile phone). In addition the end customer’s IT team can be given admin rights so that they can login to our SIP trunk portal to make changes at any time before or during a DR situation. Customers really love the idea of being in total control of their inbound traffic during these times of stress.

Andrew Saunders, Head of Product Management and Marketing at Zen: The flexibility of call routing, and location independence are key features of SIP. These can be applied as part of business continuity plans but are really valuable to any dynamic organisation that wants to make best use of its staff resources – no matter where they are located.

With Business Talk SIP alternative routing can be implemented for customers, so if a site is lost, all calls are automatically routed to the disaster recovery site. This is provisioned at point of order so no need to call in to request re-routing. With Business Talk SIP calls can be delivered to multiple end points, also known as SIP Forking. So again in disaster recovery situations important calls are not lost. This is also provisioned at point of order, and is fully automatic.

4. Is SIP truck security adequately addressed?

Paul Taylor of Voiceflex: This will depend on the SIP Trunk carrier and the security or fraud prevention detection they have in place. 99% of PABX’s will be connected to the World Wide Web via a router for purposes such as remote maintenance. If ports on the router are open hackers will get in. If the password on the PABX is the default password, hackers will be in within seconds and they then have control of the PABX and the ability to route calls via ISDN, PSTN and SIP. Voiceflex has a number of measures in place to quickly detect fraudulent calls.

Fraudulent calls have accounted for £500.00 worth of calls across our whole customer base during the past 12 months. When Voiceflex SIP trunks have been disabled hackers then route via ISDN or PSTN where there is very limited fraud protection. Depending on the SIP carrier, security is far tighter than carriers providing ISDN and PSTN services.

Mark Rosson at BT Wholesale: Our customers are providing SIP trunks to banks, local police forces and councils who clearly require high levels of security. Our own SIP trunking services have been ISO27001 credited for more than two years, and we plan to get the government PSN accreditation, IL2, later in 2013.

Reseller Comment

Niall Anderson, Sales & Marketing Director, G3 Comms says that over recent years, he’s seen SIP, overtake ISDN to become the network protocol of choice for enterprise communications, enabling greater cost savings and step-changes in efficiency and productivity.

“We believe that the increasing popularity of SIP is testament to its evolution, a growing confidence in its capabilities and an ever-expanding list of benefits. Many of the earlier problems associated with installing SIP have now been addressed and, in our experience, deployment of SIP across the most progressive technologies is straightforward, subject to having the experience, understanding and skills to correctly configure systems and improve network quality.”

Ed Says…

This is a vibrant market for resellers where, as HIPCOM says, the journey to unified communications can begin. Yes, some users will deploy SIP purely on price but our advice is to work with a supplier that can deliver a road map of features rather than a price led dead end street.