Businesses are seeing ROI benefits in SIP trunking, converged IP access services, says analyst

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Businesses are increasingly seeing value in using VoIP access and Session Initiation Protocol (SIP) trunking services as they offer new capabilities without the requirement to rip and replace their existing IT network infrastructure.

Frost & Sullivan has forecast that market revenues for SIP and VoIP services are expected to grow at a compound annual growth rate (CAGR) of 21.5% from 2015 to 2020, and a user base at a CAGR of 18.1%.

SIP trunking has become an attractive service that allows businesses to lower capex spending and obtain significant returns on investments (ROIs).  

In particular, the research firm said that businesses are being drawn to SIP trunking's attractively priced services, layered with value additions such as voicemail, mobility and collaboration tools.

RELATED: SIP trunking adoption set to rise to 62 percent by 2017, says Infonetics

Additionally, the research firm said that disruptive pricing, packaging, feature/functionality and business models within the existing VoIP access and SIP trunking market, as well as the emerging Communications Platform as a Service (CPaaS) space, are accelerating adoption among enterprises and heating up competition among service providers.

Michael Brandenburg, analyst of digital transformation for Frost & Sullivan, said in a release that service providers that offer IP-based voice services are finding new opportunities in the emerging CPaaS arena.

"CPaaS offerings are emerging as an on-demand alternative to traditional communications services, prompting companies to build, buy or partner, to enable an application program interface (API)-level integration with voice services,” Brandenburg said.

Brandenbug added that although the current adoption of CPaaS has been mainly driven by app developers and aggressive startups, customer demand for multiple ways to communicate with businesses, including voice, video and text messages will drive adoption among larger enterprises as well.

"This is the right time for service providers to penetrate the emerging CPaaS arena through mergers and acquisitions that add breadth and depth to the existing portfolio and customer base," Brandenburg said.

Service providers like Vonage have been seeing opportunities in CPaaS, for example.

Vonage noted in its fourth-quarter earnings call that its business revenue growth will be driven by two main services: Unified Communications as a Service (UCaaS) and Communications Platform as a Service (CPaaS).

The service provider reported $84 million in UCaaS service revenue and $27 million CPaaS pro forma service revenue, up 43%.