SIP vs VoIP – Key Factors for Businesses to Consider in 2024

If you’re thinking about making the switch to a digital phone system, you’re probably wondering about SIP vs VoIP. Though SIP and VoIP are closely related technologies, there are important differences between them that can impact how your business communicates.

Here at Techopedia, we know these digital communication technologies can be confusing. That’s why we’ve put together this detailed guide explaining what SIP and VoIP are. Keep reading to find out which one is right for your business.

Key Takeaways

  • SIP is a protocol used to transmit data—including in VoIP phone calls. SIP trunking connects your phone system to both the internet and the landline network.
  • Most VoIP providers use SIP because it’s cost-effective, scalable, and enables employees to take calls on any internet-connected device.
  • Setting up your own phone system with SIP trunking may be cheaper if you have an existing landline phone system. Otherwise, most businesses are better off using a hosted VoIP phone system that includes SIP.

What is SIP Trunking?

Session Initiated Protocol (SIP) is a type of protocol—a set of rules—for how communications over the internet begin and end.

It’s often used as part of a telephone system setup known as SIP trunking, which involves connecting a Private Branch Exchange (PBX) to the internet using the SIP communication protocol.

PBX systems have long been in use for landlines. They enable you to establish multiple internal phone lines within your business while having only a single landline connection to the outside world.

Without a PBX, you’d need a copper landline with its own phone number running to every phone in your office.

The key change that SIP trunking brings is to connect your PBX to both the internet and the landline-based public switched telephone network (PSTN).

This allows you to make calls over the internet when dialing internet-enabled devices or over the PSTN when dialing landline phones.

Notably, SIP supports not only voice calls but any type of data. It’s often used for unified communications, which includes phone, video, and messaging.

Features and Benefits of SIP for Businesses

SIP trunking has several important benefits for businesses. This includes:

Lower CostsScalabilityMobile CommunicationsFailover

Lower Phone System Costs

One of the main reasons businesses switch from a PBX-based phone to SIP trunking is that digital phone systems can be much cheaper. You’ll typically pay lower rates for SIP-enabled calls than for landline calls, especially if you’re calling internationally.

Some SIP providers even offer flat rates for unlimited domestic calling, which makes your phone system costs more predictable.

Scalability

With a traditional landline system, you’d need to add physical wires from the PSTN to your business for more phone lines. With SIP trunking, you can create virtual phone lines on demand, making it much easier to add lines as your workforce grows.

Mobile Communications

SIP trunking digitizes calls, which enables employees to take them on any device—including their computer or smartphone. As a result, they’re no longer tethered to their desk to place and take calls.

This has a tremendous impact on availability. Employees can take calls on the go, including when they’re traveling or working from home. An incoming call can even ring multiple devices so that employees never miss important communications.

Failover

SIP phone systems have built-in “failover“. If your internet goes down, calls can be automatically routed over the PSTN. If the PSTN is down, for example, because of a damaged telephone wire, your phone system can automatically route calls over the internet.

This ensures that your business can always make and receive calls with no outages.

What is VoIP?

VoIP, or Voice over Internet Protocol, is a broad term that describes telephony over the Internet. VoIP requires protocols to function, and the most popular protocol for VoIP calling is SIP.

You can make VoIP calls without SIP by using an alternative connection protocol, such as H.323 or Real-time Transport Protocol (RTP). However, the advantages we discussed above make SIP the protocol of choice for most VoIP systems.

VoIP can be categorized as either hosted VoIP or non-hosted VoIP:

Hosted VoIP

Hosted VoIP involves using a cloud-based service provider. Your calls are routed over the internet to your VoIP provider, which in many cases, uses SIP trunking.

This enables VoIP providers to offer unified communications that include phone, video, and messaging. It also enables you to make calls to landline phones.

Non-Hosted VoIP

Non-hosted VoIP requires you to set up and maintain your own VoIP infrastructure. You can do this by installing a PBX and using SIP trunking.

Alternatively, you can establish a VoIP phone system without SIP trunking, but you’ll only be able to make voice calls to other internet-enabled devices in this case.

Related: VoIP vs PBX — Everything You Need to Know in 2024

Features and Benefits of VoIP for Businesses

If you’re comparing SIP trunking vs VoIP, you’re probably considering using hosted VoIP rather than setting up a non-hosted VoIP system. So, we’ll focus on the unique benefits of hosted VoIP.

No Equipment or InstallationAdvanced Calling FeaturesScalability + MobilityCheap Options Available

No Equipment or Installation Required

Setting up a hosted VoIP phone system is extremely easy. The VoIP service you use provides and maintains all the hardware underlying your phone system, including a PBX and SIP trunk.

You don’t need to install any hardware, and you can start taking calls on any internet-connected devices immediately. This means the upfront cost and time investment involved are very low.

You also don’t have to spend resources maintaining equipment. However, one disadvantage of a hosted VoIP system is that it can’t failover onto the PSTN network if your internet goes down.

This is because you have to connect to your VoIP over the internet to access the PSTN network. On the other hand, if you have a PBX with SIP trunking, you have a direct connection to the PSTN network.

Advanced Calling Features

Many VoIP providers offer advanced calling features, such as automatic call routing, call recording, and voicemail transcription, amongst many more, to boost employee productivity.

These calling features can also help you offer a better customer experience, and while you can replicate these using a non-hosted VoIP system with SIP trunking, it’s complicated and expensive.

Scalability and Mobility

Since most hosted VoIP providers use SIP trunking, you get some of the same benefits with a hosted VoIP system that you would with SIP trunking in a non-hosted VoIP system.

For example, you can easily increase the number of phone lines your business has, plus route calls to mobile devices, enabling employees to take calls from anywhere.

Cheap Options Available

If you only need voice communication, there are many cheap or even free hosted VoIP options available, meaning you may operate your business phone system for free.

However, keep in mind that many free VoIP providers don’t use SIP, so you may not be able to dial landline phones.

Conclusion

SIP trunking is the most popular protocol used for VoIP phone systems. It enables voice, video, and messaging when connecting a PBX to both the internet and the PSTN.

Many VoIP providers use SIP trunking for their hosted VoIP plans. So, most businesses can get all the benefits of SIP trunking with a VoIP service.

Check out our guide to choosing a multi-line phone system for your business today.

FAQs

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Michael Graw

Michael Graw is an experienced writer in the business and B2B tech fields. His articles can be found on Business Insider, Entrepreneur, Tom’s Guide, and TechRadar, and cover everything from corporate finance to crypto and international tech regulation. A prolific copywriter and entrepreneur, Michael has worked with a wide range of SaaS and tech companies and has his finger firmly on the pulse of B2B tech and finance.