SIP Trunking in Latin America and Europe

Ask the SIP Trunk Expert

SIP Trunking in Latin America and Europe

By TMCnet Special Guest
Joel Maloff
  |  April 01, 2011

This article originally appeared in the April 2011 issue of INTERNET TELEPHONY.

The American VoIP and SIP trunking services market grew by 40.1 percent in users and 22.3 percent in revenues in 2009, with revenues expected to hit $3.9 billion by 2016, according to Frost and Sullivan. Such gaudy reports might cause us to extrapolate this to all regions of the world. Nothing could be further from the truth!

SIP trunking will grow internationally, but with impediments. The driver in the U.S. has been reduction of telecommunications costs. Estimates assert savings of 35 percent to 70 percent based on reducing PRI fixed costs, toll charges, and carrier’s fees. These are U.S.-centric and not the same internationally. In addition, broadband Internet access in the U.S. is taken for granted. That is not true elsewhere in the world.

In Latin America, the highest percentage for broadband availability is in Chile with 17 percent! Without broadband, SIP trunking is a problem. Conditions are changing however. Broadband penetration will nearly double across Latin America, from 7 percent in 2010 to 12 percent by 2015, according to January 2011 data from Research and Markets. As a result, ITSPs in Chile are expecting the demand for SIP trunks to double in 2011.

Beyond broadband Internet, there are other issues. Regulators have been slow to address the evolution of VoIP, and they retain archaic rules inhibiting the use of these services. For example, in Argentina, a softphone on a laptop with a Buenos Aires telephone number is technically illegal if used anywhere other than Buenos Aires! Regulations are changing, but it will be years.

Cost savings may not be available internationally. In some cases, major telcos require a minimum charge service agreement for business. Reducing costs is useless if the business still must pay the carrier regardless. In other instances, major carriers have dropped their rates so low that SIP trunking may offer little savings.

The dominant carriers in each country have greater control than in the U.S. They can constrain competition unless forced by government. A truly competitive VoIP environment is not prevalent in many parts of the world. This too will change in time.

SIP trunking will become dominant for voice communications worldwide, but it will happen more slowly than in the U.S.

Joel Maloff (News - Alert) is founder of Maloff NetResults (

TMCnet publishes expert commentary on various telecommunications, IT, call center, CRM and other technology-related topics. Are you an expert in one of these fields, and interested in having your perspective published on a site that gets several million unique visitors each month? Get in touch.

Edited by Stefania Viscusi