The Advanced Capabilities of VoIP and

SIP Trunking Exceeds Traditional Voice

Services

Research PREVIEW for the

North American VoIP Access and SIP Trunking

Services Market

@FS_ITVision

Sample of Key Highlights

• The voice over Internet protocol (VoIP) access and session initiation

protocol (SIP) trunking services market continues its rise to become the de-

facto communications link from business customers’ premises to service

providers’ networks.

• In 2012, the market grew by 25.9 percent in terms of installed users, and by

26.1 percent in terms of revenue. Revenue is expected to grow by 22.5

percent over the period 2012-2019.

• Consolidation in the VoIP access and SIP trunking services market quieted

down in 2012 compared to the rampant activity of previous years. After a

particularly active 2011, many market participants are focused on

integration of their acquisitions, rather than adding to their holdings.

• Adoption rates stabilized among different customer profiles. Large

enterprises (businesses greater than 500 employees), comprised 32.7

percent of the revenues for the year, with small and medium-sized

businesses (SMBs) making up the remaining 67.3 percent of the customer

base. The ratio between enterprise and SMB remains consistent with 2011

and reflects continued mainstream adoption.Source: Frost & Sullivan analysis.

Executive Summary—CEO’s Perspective

2Hosted IP telephony solutions are the most direct competition to SIP trunking, even internally within service providers.

3Simplification and optimization of deployments will accelerate mainstream customer adoption.

4Competitive differentiation will come from features and flexible options, rather than commodity pricing.

5Mergers and acquisitions that can be quickly integrated are still the shortest path to growth and scale.

Source: Frost & Sullivan

1In this early growth stage, the market focus is on migrating new customers to VoIP, and not competitive churn.

Market Distribution Channels

Total VoIP Access and SIP Trunking Services Market: Distribution Channel Analysis, North America,

2012

Key: VARs: value-added resellers

Source: Frost & Sullivan

Key Takeaway: While most VoIP and SIP trunking providers rely on direct and indirect sales in the retail market, a number of providers also serve the wholesale market to extend reach.

VoIP Access and SIP Trunking Service Providers

End User

Wholesale Sales

Access Trunks For Hosted

Telephony/UC, Contact Center, and

other 3rd party applications

Reseller Sales

VARs, Systems Integrators, and

Consultants Direct Sales

Drivers 1–2 Years 3–4 Years 5–7 Years

Modern unified communication platforms support SIP as

the default PSTN interface, incentivizing customers to adopt

SIP trunking alongside platform refreshes.

H H H

Advanced capabilities including mobility and disaster

recovery enhance the control and value of SIP trunking

services.

M M M

The return on investment (ROI) benefits of IP telephony

migration are pushing businesses to VoIP access and SIP

trunking.

M M M

Growing trust in the quality of VoIP and SIP trunking is

extending the technology past early adopters into

mainstream deployments.

M M M

Future hybrid cloud models will require a break from

physical circuits to dynamic IP-based links.L L L

Impact ratings: H = High, M = Medium, L = LowSource: Frost & Sullivan

Total VoIP Access and SIP Trunking Services Market: Key Market Drivers, North America, 2013–2019

Market Drivers

Restraints 1–2 Years 3–4 Years 5–7 Years

Contract restrictions are limiting customers’ choices,

keeping them locked into existing provider relationships and

TDM deployments.

H M L

Hosted UC solutions offer a compelling alternative to on-

premises systems and SIP trunking.M M M

SIP interoperability concerns and manual processes

complicate enterprise deployments.M M M

Required customer education about the benefits of VoIP

and SIP trunking services limits enterprise adoption.M M M

Aggressive pricing can seriously restrain market revenue

growth.M M M

Impact ratings: H = High, M = Medium, L = LowSource: Frost & Sullivan

Total VoIP Access and SIP Trunking Services Market: Key Market Restraints,

North America, 2013–2019

Market Restraints

Details of the Full Analysis

Contents

Section Slide Number

Executive Summary 5

• Key Findings 6

• Market Engineering Measurements 7

Market Overview 10

• Market Definitions 11

Drivers and Restraints—Total VoIP Access and SIP Trunking Services Market 17

Forecasts and Trends—Total VoIP Access and SIP Trunking Services Market 29

• Demand Analysis—Total VoIP Access and SIP Trunking Services Market 36

Market Share and Competitive Analysis—Total VoIP Access and SIP Trunking Services Market 39

The Last Word 45

List of Exhibits

Figure Slide Number

Total VoIP Access and SIP Trunking Market: Market Engineering Measurements, North America, 2012 7

VoIP Access and SIP Trunking Services Market: Distribution Channel Analysis, North America, 2012 15

Total VoIP Access And SIP Trunking Services Market: Key Market Drivers, North America, 2013–2019 18

Total VoIP Access and SIP Trunking Services Market: Key Market Restraints, North America, 2013–2019 23

VoIP Access and SIP Trunking Services Market: User and Revenue Forecast, North America, 2011–2019 31

VoIP Access and SIP Trunking Services Market: Percent of Users with Native SIP Trunking and VoIP Access with

Protocol Conversion, North America, 2011-201932

Total VoIP Access and SIP Trunking Services Market: Average Annual Revenue Per User,

North America, 2011–201934

Total VoIP and SIP Trunking Services Market: Penetration Analysis, North America, 2011–2019 36

Total VoIP Access and SIP Trunking Services Market: Market Share by Percent of Revenue,

North America, 201340

Total VoIP Access and SIP Trunking Services Market: Competitive Structure, North America, 2012 41

Total VoIP Access and SIP Trunking Services Market: SWOT Analysis, North America, 2012 42

Total VoIP Access and SIP Trunking Services Market: Market Engineering Measurements,

North America, 2012 51

Key Questions This Analysis Will Answer

Is the market growing, how long will it continue to grow, and at what rate?

How is the market impacted by the overall enterprise unified communications market?

How are traditional market participants faring against new challengers?

How will the structure of the market change with time? Is it ripe for acquisitions?

Do current deployment models meet customer needs and how will these models change?

When is the tipping point for VoIP access and SIP services over traditional telecom services?

Source: Frost & Sullivan

Partial List of Companies Interviewed

• 2600Hz

• 8x8

• AT&T

• Comcast

• CenturyLink

• FairPoint

Communications

• Intelepeer

• Level 3

Communications

• Megapath

• MTS AllStream

• Star2Star

• Verizon Business

• West IP

Communications

• Windstream

• XO Communications

Source: Frost & Sullivan research.

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Interested in Full Access? Connect With Us

Britni MyersCorporate Communications

(210) 477-8481

Britni.myers@frost.com

Research Authors

Lead Analyst:

Michael Brandenburg

Industry AnalystInformation &

Communications Technologies

Frost & Sullivan

Strategic Review Committee Leader

Rob Arnold Principal Analyst

Information & Communications

TechnologiesFrost & Sullivan

Research Director:

Elka Popova Program Director

Information & Communications

TechnologiesFrost & Sullivan

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