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SIP Trunking in Europe:

Adoption Progress and

Reference Code: TE007-000692
Publication Date: 23 Jul 2013
Author: Mike Sapien

In a nutshell
Here we focus on the unique aspects of SIP trunking service adoption in Europe. Availability and
adoption of SIP trunking in Europe is clearly behind the US market. This report explains some of the
reasons behind the slower adoption and deployment, and how providers offering SIP trunking services
in Europe can learn from the US experience.

Ovum view
There has been progress in the availability and adoption of SIP trunking in Europe compared to the
situation as described in our report in 2009 ( SIP Trunking: US and European Trends). However, the
incumbent carriers and regulatory complexity continue to stall the availability and adoption of SIP
trunking, except for large enterprise customers and in a select group of countries.
The good news is that more providers are offering SIP trunking service in Europe than in previous
years. There has also been an improvement in the availability of wholesale SIP trunking services, which
is enabling more competition in the region and providing more choice for customers. The foreign carrier
entrants and even the European incumbents (outside their home countries) have expanded coverage
into more countries, with most carriers offering service in 10 to 13 countries. This is clearly progress, but
the progress has taken well over three years.
Europe trails the US market by several years in the overall adoption and availability of SIP trunking
services. There are demand-side and supply-side issues with adoption, with the supply side causing
most of the delays. The supply-side issues include the lack of service availability within each country by
the respective carrier but also professional services and related services such as managed SBC
services. On the demand side, enterprise customers will need to look beyond just the short-term

SIP Trunking in Europe: Adoption Progress and Challenges (TE007-000692) 23 Jul 2013
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savings and place more value on the flexibility, feature enhancement potential, and UC service
enablement provided by moving to IP and SIP trunking based ICT infrastructure. Ovum anticipates
increasing pressure from enterprise customers demanding the service and enlightened regulatory
bodies increasing support for the transition to IP-based voice services, which will encourage all service
providers to expand service availability in Europe.

Key messages

SIP trunking service is available in many European countries but most service providers focus
on around 10 countries.
MNC and large enterprise customers are the primary early adopters of SIP trunking services,
not mid-market or SME customers.
There is little variation in SIP trunking offers.
Immediate local access network savings from moving from TDM to SIP trunking are not a
motivating factor in Europe.
Managed SBC services are available from many providers, but not all.
The incumbent carriers are just starting to promote SIP trunking services to their large
enterprise customers.
The European market is about three years behind the US market in SIP trunking adoption.

Recommendations for service providers


Although there will be a negative revenue impact, the time has come to start moving enterprise
customers to IP (from TDM) and provide more SIP trunking services.
Move early with SIP trunking services to maintain relationships with MNC and large enterprise
customers. You will also be more likely to gain a larger European regional ICT services market
Develop the services and support for regional deployment of SIP trunking, including managed
SBC and related professional services.


Focus on the early adopters (large and MNC customers) and on 1015 countries to build a
strong base of customers in the region.
Use wholesale providers to expand into other countries and build up the base of customers until
the volume supports the investment to get licenses and regulatory approval for additional
Implement managed SBC services and professional services to support customers that are
ready to implement SIP trunking service now.

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Recommendations for enterprise customers

Focus on locations that lie within the 1013 markets where service is available now and where
there are a variety of service provider options.
Select the service provider that has the best existing coverage and support resources within
your ICT infrastructure footprint in Europe.
Verify the sales support and professional service resources to support your implementation with
reference checks on current and recent customers.
Continue to apply pressure on your providers for extended coverage in the countries that are
home to critical locations for your business.

SIP trunking service is concentrated on a core group of countries
Most retail service providers have service in at least 10 countries
Ovums research for this report included surveys with and briefings from service providers that provide
SIP trunking in Europe. The surveys included questions about service availability in Europe, countries
covered, service description, service adoption, countries with the highest growth, and related support
The retail service providers surveyed are concentrating SIP trunking service coverage on 10 countries
in Europe, and the average coverage was 10.9 countries among the providers. In our survey, we
defined service availability as the availability of local origination voice services (full PSTN replacement)
in addition to the standard, on-net voice service termination capabilities. So SIP trunking service
availability includes provision of local phone numbers and access to the emergency services. Many
service providers can provide SIP trunking and business voice services in the other countries and even
provide local phone numbers, but the customer may still require a local phone service for emergency
services or local-to-local calling.
The 10 countries are Belgium, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden,
Switzerland and the UK. Based on the survey, the countries with the highest growth potential are
France, Germany, Ireland, Spain, and the UK.
There are standouts in overall European coverage
Orange Business Services, Colt, and Telefonica are the top three retail service providers in terms of
country coverage for SIP trunking service (17, 13, and 13 countries respectively). Sprint, Vodafone, and
Verizon are not far behind these service providers in terms of the number of countries covered.
Voxbone (a wholesale provider only) has availability in the 27 EU countries and reach into other
European countries. Colt and Voxbone both provide wholesale SIP trunking services in Europe and it is
highly likely that many other retail service providers use them for extended reach in Europe.

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Figure 1: SIP trunking service availability (PSTN replacement) in Europe

Source: Ovum

The incumbent carriers are not promoting SIP trunking services

SIP trunking is available from the incumbent carriers, but in most cases it is not promoted and may not
be a standard, generally available offer. This is similar to the US market, where in the early adoption
stages of SIP trunking, the incumbents initially kept SIP trunking service as a custom offer, until demand
pushed them to standardize it and offer it more generally. Interestingly, most European incumbent
carriers that are downplaying SIP trunking availability within their home country do actually promote it
within their global services business units that cater to global customers.

Little variation in SIP trunking offers
There is very little differentiation between providers in terms of SIP trunking services in Europe. The
typical offers, in addition to the local access service, include voice channels, DIDs (phone numbers),

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voice usage, free on-net calls with an online portal, and a reporting feature. Most providers offer the
DIDs at no extra charge, which is different to most US providers.
Optional features are available
Common optional features include diversity re-routing, bursting or dynamic service, IVR/contact center
services, and fraud management. Fraud management is more commonly offered in Europe than in the
US and reflects the higher incident and risk of voice fraud in Europe. In the US, some providers offer
fraud detection and management but only as an option and are assessing an extra charge. In Europe,
all the service providers offer fraud management and many offer it as a free component of SIP trunking
Managed SBC offered by many, but not all
Only half of the service providers are offering managed session border control (SBC) as a standard
offer. Acme Packet was frequently mentioned as the major equipment vendor for the managed SBC
service but Cisco and Sonus were also mentioned. The remaining half of the service providers either
did not offer a managed SBC service or only offered it as a custom offer. This is another area of
difference compared to the US market, where all major service providers including the competitive
carriers offer a standard managed SBC service. Existing managed SBC services in Europe are
premise-based, with the carrier managing the SBC equipment for the customer. Some service providers
are considering a hosted or cloud-based SBC service.

Comparison to the US market

Reasons for differences
While many of the differences between the US and European markets for SIP trunking services can be
explained by geography, there are other reasons for the slower adoption of SIP trunking in Europe.

The US regulatory environment (federal and state) was more supportive of VoIP technologies
and encouraged competition.
The immediate network trunk savings compared to TDM-based local access were a major
driver in the early adoption phase in the US.
Unlike in Europe, the major incumbent carriers in the US (AT&T, Verizon, and Centurylink) have
offered SIP trunking as a generally available service for over three years now.
Many of the early service provider competitors in the US drove adoption in the SME market,
which grew awareness and national availability.
The US market had and has many more competitors in all of its major cities and regions.
The US has more wholesale service providers (including SIP trunking services), enabling
competitive providers such as foreign carrier entrants and US incumbents expanding out of

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Lessons learned from the US experience

The US incumbent telcos were slow to move to SIP trunking early on and kept SIP trunking as a custom
offer for far too long. This led to many of the competitive providers, systems integrators, and regional
VARs getting a foothold into many of the large enterprise customers that wanted to move to SIP
trunking and IP-based voice infrastructure. The European service providers need to move quickly to
standardize SIP trunking services and make them available in their home countries as well as other
European countries. If not, they will be faced with trying to win back the largest customers from some of
their larger regional competitors.
The SME market is a large opportunity for all service providers in the US, as SIP trunking was the
on-ramp for some creative bundling of business services that provided a very competitive offer to the
local incumbents. It was more than just cost savings on voice services but also included Internet and
data services (VPN) that were fairly new to the low end of the business market. This included dynamic
Internet bandwidth that allowed the customers to use their idle bandwidth for Internet and data
applications when the voice traffic was not being used. SIP trunking can enable these same creative
bundles in Europe.
The transition to SIP trunking is just the start of enterprise customers moves to voice infrastructure and
related UC services including conferencing, voice integration to other services, and mobility integration.
Service providers need to promote the transition to SIP trunking and IP communications, including
professional services to encourage the transition.

Large enterprises
MNC and large enterprise customers are driving early SIP trunking adoption in Europe. In our survey
there were frequent references to MNC and large enterprise customers with large sites in different
countries looking to consolidate their ICT, PBX assets or voice infrastructure in the region. Common
applications include conferencing, contact center, remote working, UC implementation, and disaster
recovery. Some providers were able to identify vertical-specific requirements in financial services,
automotive, transportation, and retail but, for the most part, the main driver for SIP trunking migration
and adoption seems to be horizontal.

Most providers were going after MNC and large enterprise customers, with a few providers focused on
the SME customers. This could reflect the lack of service availability from the incumbents or a lack of
benefits for the smaller customers (less of a requirement for inter-country voice traffic or room for major
savings on long-distance calling). This differs to the US market where many competitive providers
offered SIP trunking to SME customers, driving early adoption in that segment.

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Drivers for adoption
Primary drivers
Customer adoption of SIP trunking has been driven by consolidation and convergence of data and
voice networks. Contact centers, IVR, and conferencing services are often part of such consolidation.
Standardization of ICT and voice infrastructure is driving early adoption as part of consolidation projects
such as PBX harmonization. UC implementation or standardization was also included in customer
projects or planned consolidation, with some mentioning Microsoft Lync implementation.
Secondary drivers
Surprisingly, cost savings are a secondary driver of SIP trunking adoption in Europe according to our
survey. One explanation for the lower ranking is that local access for voice trunking services in Europe
is either free or almost free for most large enterprise customers. US market adoption was driven by the
immediate voice trunking cost savings (from moving from primary rate ISDN to SIP trunking service),
which usually represented a saving of at least 40%. The lack of local access network savings in Europe
is clearly slowing adoption and limiting the business case rationale for moving to SIP trunking.
Mobility, remote workers, disaster recovery/redundancy, reduction of voice usage charges, and
reduction of conferencing costs were also mentioned as secondary factors.

Barriers to adoption
Demand-side barriers
Customer information from responses to our survey identified the following barriers to adoption of SIP

The business case is very complex and customers dont have strong return on investment or
savings to gain approval. Customers will need some additional support to identify the near-term
and future benefits of making this transition to SIP trunking.
The high front-end capex of the related SIP trunking equipment has held back project approval.
Customers need support in verifying the impact to their equipment and voice infrastructure
The lack of information on the costs for the existing voice infrastructure and services increases
the difficulty of developing the appropriate business case. Service providers will need to
develop case studies and early adopter customer datasets that can be shared with other
customers as well as provide some help for inventory of legacy voice infrastructure.
For most ICT and UC projects, including the transition to SIP trunking, the decision-making
process to approve funding remains an extremely slow process. Customers need help to

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identify stronger business case benefits, including those around employee productivity and
Service providers will need to develop detailed pre-sales information, pre-sales support, and
professional service options to address the customers who are highly likely to make the transition to SIP
trunking services. Professional service options will need to include inventory and business case support
to document the present mode of operation and future mode of operation for customers to develop the
business case, and identify all costs and savings in both scenarios.
Once the sales material, standard sales support, and professional services are developed, the
customers should have sufficient information to both build the business case and have funding
approved. The business case should also include the service enhancements such as UC, conferencing,
and voice service redundancy/flexibility. Again, professional services will provide support in the
pre-planning, program management, and implementation of large ICT projects.
Service providers may have to develop pricing and financial terms that allow the initial capex to be
amortized over multiple years to lower capital requirement in year one. Anything that will decrease the
complexity and quantify the near-term and long-term benefits of making the transition to SIP trunking
needs to be articulated and well documented.
Supply-side barriers
From the supply side, there are several major barriers to adoption.

The existing local access services for voice trunks are already free (or almost free), which
eliminates the immediate network savings benefit. In addition, long-term contracts for voice
usage are holding back customers. Many large enterprise customers have voice usage
agreements that provide the local access link for free based on a volume purchase of voice
Incumbent carriers are still only slowly rolling out service within their country and regionally
within Europe. Most are providing limited SIP trunking services but only to the large enterprise
customers. In contrast, the global services divisions of the large carriers are supporting SIP
trunking more aggressively for MNCs outside their respective franchise areas.
The high number of countries, different carriers and various regulatory bodies make it difficult to
implement a European-wide SIP trunking based ICT project. Customers and service providers
need to spend additional research and planning time to verify the availability and specific SIP
trunking offers by country and then determine the best design to consolidate each customers
voice infrastructure within the region.

The adoption of SIP trunking is clearly behind the US in overall service adoption. Service providers and
customers have focused their efforts on the common 10 to 15 countries where SIP trunking service is
available and the regulatory environment promotes IP-based voice services, including local service
The lack of immediate savings in local access for customers who make the transition to SIP trunking will
delay but not stop the eventual transition to SIP trunking services. The existing contracts will expire and
service providers need to track the expiration and promote the additional benefits of moving to SIP

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trunking and IP-based voice infrastructure. These benefits include centralizing many corporate
applications (e.g. email, UC and conferencing) and the ability to integrate voice infrastructure into other
IT resources and services. Ovum expects to see more widespread adoption in 2014, expansion beyond
the 10 to 13 countries, and extension to the lower end of the enterprise market.

Ovum surveyed nine service providers that provide SIP trunking services (both wholesale and
enterprise) in the European market: BT, Colt, Gamma, Orange Business Services, Sprint, Verizon,
Telefonica, T-Systems, and Voxbone. The survey included questions about SIP trunking service
availability, customer adoption, barriers to adoption and customer use cases for deployment of SIP
trunking. We also carried out interviews with related vendors that support SIP trunking infrastructure
and managed SBC services.

Further reading
SIP Trunking: Second-Wave benefits, TE007-000317 (January 2011)
SIP Trunking: US and European Trends, TE007-000592 (May 2009)

Mike Sapien, Principal Analyst, Enterprise Practice

Ovum Consulting
We hope that this analysis will help you make informed and imaginative business decisions. If you have
further requirements, Ovums consulting team may be able to help you. For more information about
Ovums consulting capabilities, please contact us directly at consulting@ovum.com.

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Please note that the findings, conclusions, and recommendations that Ovum delivers will be based on
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