SIP vs. VoIP Is a False Choice – Most Modern Business Phone Systems Use Both

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If you’re in the middle of researching a new phone system for your business, you may have come across the terms SIP and VoIP and thought that you might have to choose between one or the other, but that’s actually not the case. In reality, most modern communications solutions utilize both SIP and VoIP technologies together.

When figuring out which kind of solution is right for you, it’s important to know more about what SIP and VoIP are so you can select a phone system that does exactly what you need it to do.

Differences between SIP and VoIP graphic from Nextiva.

A Closer Look at SIP vs. VoIP

Today’s cloud-based phone systems typically use both SIP and VoIP technologies in a way that may seem indistinguishable to the naked eye, but upon closer inspection, you’ll see that these two elements serve very different individual functions.

SIP (Session Initiation Protocol), for example, is a signaling protocol that allows your business’s desk phones, cell phones, softphones, video conferencing equipment, and other endpoints to locate each other on a shared IP network.

You can also think of SIP as a phone operator that connects all your devices for communication. It acts as a coordinator, enabling your cell phone, office phones, and computers to find each other and make calls possible. Just like an old-fashioned operator physically connecting calls by plugging cables into a switchboard, SIP sets up the call in a digital way.

VoIP (Voice over Internet Protocol), on the other hand, is used to transmit voice communications over a network that’s based on Internet Protocol, such as the public internet. It works by converting analog voice signals into digital data packets that can then be sent over a data network instead of traditional telephone lines.

When put together, SIP helps establish the call session, and then VoIP takes care of the rest—it encodes your voice into data packets at one end, transmits these packets over networks, and then decodes them back into an audible voice on the receiving end.

To put it simply, SIP handles the connection between your communication devices, and VoIP ensures the transportation and delivery of your voice across a network.

How SIP Works

When you make a voice or video call using a modern phone system, SIP is the first thing that comes into action while setting up your call session.

Whenever you make a call, your desk phone or softphone sends an “invite” message via SIP to the recipient you’re calling. Then, intermediary SIP proxy servers step in to route and relay your invite message to its intended destination.

The SIP then helps the two phones or endpoints negotiate which voice or video encoding methods (codecs) they both have available. These codecs compress audio and video signals so they can be transmitted efficiently over a network. Older or basic endpoints may only support basic codecs, while newer ones support more advanced codecs that provide better quality.

Anyway, once the receiving phone or device accepts the invite, a direct media connection is established between the two endpoints through VoIP. Finally, when the call is over, a termination message is sent via SIP to conclude the session.

Some of the essential components within a SIP network include:

1. SIP Clients: These are the devices used by individuals who want to communicate, such as IP phones, softphones, and mobile apps.

2. SIP Proxy Servers: an SIP proxy server acts as an intermediary server. It receives SIP requests and determines the most suitable route for forwarding them. These proxies play a vital role in directing messages to their intended recipients.

3. Registrar Server: This server accepts register requests from SIP clients to update their current location. This ensures that when a call comes in, it can be properly routed to the device’s most recent IP address.

In addition to facilitating communication setup through SIP signaling, there are other protocols involved in transporting actual chat, voice, or video media data:

1. RTP (Real-time Transport Protocol): Once a SIP call is established, RTP takes charge of transporting the actual media content.

2. SDP (Session Description Protocol): SDP defines and describes the specific details of streaming media sessions.

Altogether, while SIP manages signaling and setting up your calls, additional protocols like RTP and SDP handle the transportation and management of media streams once the two endpoints are connected.

How VoIP Works

VoIP technology enables real-time transmission of voice and video calls over IP data networks.

From a technical standpoint, your VoIP desk phone is equipped with a microphone and speaker, along with a codec chip that converts your analog voice into data packets that are suitable for internet transmission. These packets are encoded and compressed using advanced audio codecs like G.711, G.729, or Opus, which optimize them for efficient network transmission.

Once digitized, these data packets travel through various network paths on the internet until they reach the intended recipient’s phone or endpoint device.

Here, some of the additional protocols come into play during this process as well. For instance, SRTP encrypts the packets to ensure their security, while RTP sequences and timestamps them to enable smooth reconstruction at the receiving end.

Finally, once the digital packets have been sent, the receiving VoIP phone uses these packet headers to reassemble and decode them into an analog audio signal that can be heard through the handset speaker.

Buying SIP vs. VoIP Services

You should have a pretty good idea of how SIP and VoIP work together at this point, but there’s still one big factor to consider: the cost. There isn’t a lot of information out there on how to buy a VoIP system, so it can be difficult to determine what your monthly costs should look like.

Pricing for these solutions depends on several factors, so it’s important to have a breakdown of the costs involved and what variables will impact the total price tag.

SIP Trunk Services

You may already be familiar with the PBX vs. VoIP debate. That said, if you don’t want to rely on traditional phone lines, then one option you have for your business is a SIP trunk service.

SIP trunk services deliver both incoming and outgoing calls over your IP network using SIP. They offer virtual “lines” that can either replace or enhance traditional PSTN phone lines.

With a SIP trunk service, your existing PBX (private branch exchange) system can connect to the public phone network through SIP instead of through regular telephone lines.

When it comes to costs, the price of a SIP trunk service is usually based on the number of concurrent call paths or “seats” you need. Some of the other factors that influence the overall cost may include:

  • The quantity of DID (Direct Inward Dialing) numbers
  • The types of calls and emergency services
  • The amount of bundled minutes versus metered calling

VoIP Phone Services

A VoIP phone service provides a complete phone solution powered by VoIP technology—this means there are no traditional telephone lines involved, so your outbound calls, inbound direct inward dialing (DID) numbers, and fax lines are all delivered via VoIP.

Pricing for VoIP phone services is typically based on factors like the number of lines/DIDs, the number of users, and the calling plans you need based on metered usage or bundled options. The availability of VoIP technology in different geographic locations and the type of phone numbers you need (toll-free or local) may also impact the costs.

Unified Communications as a Service (UCaaS)

Finally, UCaaS platforms are another great cloud-based communication option for enterprise-sized businesses. These platforms typically include your entire business phone system, along with added features like video conferencing, team messaging, contact center capabilities, and collaboration tools.

Since UCaaS replaces your entire on-premises phone system, the pricing is often determined by the number of user licenses or seats you require. Advanced features such as automated attendants, call recording, and AI can also impact costs.

Factors That Will Impact Your Final Cost

Given all of the options at your disposal, determining your total cost will depend on tallying up all of the features and optional variables that will affect your bottom line—including the one-time upfront costs and the recurring monthly costs.

Keep these factors in mind:

  • The number of user licenses you need
  • Your desired call capacity and whether or not you want the ability to handle multiple calls simultaneously
  • The geographic coverage needed for businesses operating globally
  • Certain advanced features, such as call recording and AI call attendants
  • The service tier and uptime guarantees offered by the provider
  • The availability of mobile and desktop capabilities

The pricing for these services can generally range from less than $10 per user per month to hundreds per user per month, depending on the item. However, many SIP and VoIP providers structure their pricing based on different tiers of functionality.

Our Recommended VoIP Providers

It’s no secret that the VoIP market is crowded, and it can be difficult to figure out which are the best business VoIP phone services. If you need help narrowing down your search, we recommend taking a look at Nextiva, RingCentral, and Ooma first.

Nextiva stands out due to its reliable connectivity, affordable pricing, and user-friendly interface. It’s a solid choice for companies that prioritize things like customer service, the flexibility to transfer existing numbers, and dedicated call center features.

RingCentral is another excellent choice for big businesses that require unlimited scalability and global capabilities. It offers advanced call management tools, support for international calling, and a wide range of integration options.

Lastly, Ooma is more suitable for smaller companies with on-site employees who prefer to utilize their existing phones or hardware. It provides a user-friendly platform with a quick setup process and plenty of essential call-routing features that many small and medium-sized businesses need.

Regardless of the solution you choose, investing in a cloud-based phone solution ensures that everyone in your business can collaborate and stay connected without having to rely on traditional PBX technology.

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