SIP Trunking is a method that allows businesses to save money on telecommunications by routing calls over the internet using VoIP using their existing PBX hardware. SIP Trunks are offered by Internet Telephony Service Providers.
There are 2 types of VoIP installations, Hosted VoIP and Premise VoIP. In a Hosted VoIP Solution, you lease the service from a Hosted VoIP Provider and pay a monthly service fee. With a Premise Based VoIP Solution you own and manage the VoIP hardware and software. SIP Trunking is similar to a Premise VoIP solution in that you continue to use your installed PBX hardware.
The primary benefit of SIP Trunking is cost savings. First, you can use your existing PBX hardware and second you should be able to save on your monthly telephone service since all your calls will be converted to VoIP.
Essentially, SIP trunking allows businesses to eliminate PRIs, T1s and local charges, replacing them with a single pipe to the Internet, which terminates directly to the IP PBX on the customer premise. Using VoIP, customer traffic is routed via that connection to a company like AVAD Technologies, which takes care of terminating the traffic, aggregating a stable of underlying providers.
A draw back of SIP Trunking is that it does not offer many of the features available on either a Hosted or Premise VoIP installation. Essentially, SIP Trunks covert a traditional PBX into a PBX that delivers calls in voice packets.