SIP Trunking Explained: What It Is and Who Needs It
By DialPhone Team
TL;DR: SIP trunking replaces traditional phone lines with internet connections for your existing PBX. Saves 30-50% on calling costs. But in 2026, most businesses are better served by hosted VoIP like DialPhone which eliminates the PBX entirely and costs less overall.
What Is SIP Trunking?
SIP (Session Initiation Protocol) trunking replaces traditional telephone lines — PRIs, T1s, analog lines — with internet-based connections to your existing on-premise PBX hardware.
Think of it as a bridge. Your PBX stays in the office and handles internal calls the same way it always has. But when a call needs to go outside your building, instead of traveling over expensive copper lines, it travels over the internet through a SIP trunk. The outside world cannot tell the difference, but your phone bill drops 30-50%.
How SIP Trunking Works
- Your on-premise PBX processes internal calls and features as before
- When a call leaves your building, it hits the SIP trunk provider
- The provider converts it to VoIP and routes it over the internet
- Calls to landlines and mobiles are handed off to the PSTN at the nearest point
- Inbound calls reverse the process — they enter via the internet and reach your PBX
The key point: your internal phone system does not change. Your extensions, features, voicemail — all identical. Only the external connection changes, and it gets cheaper and more reliable.
SIP Trunking vs Hosted VoIP
This is the critical comparison that determines which path makes sense for your business.
| Factor | SIP Trunking | Hosted VoIP (DialPhone) |
|---|---|---|
| Hardware | Keep existing PBX ($0 new) | No hardware at all ($0) |
| Upfront investment | $0 if PBX exists | $0 |
| Monthly per channel | $15-25/trunk | N/A |
| Monthly per user | N/A | $24-54/user |
| PBX maintenance | You pay ($3,000-6,000/yr) | Provider handles ($0) |
| Feature updates | Manual, expensive | Automatic, included |
| AI features | Not available on legacy PBX | 7 AI products included |
| Remote work | Complex VPN or SBC needed | Native mobile and desktop apps |
| Scalability | Limited by PBX capacity | Unlimited, add users instantly |
| Disaster recovery | Your responsibility | Built-in geo-redundancy |
The Real Cost Comparison
For a 50-user company over 3 years:
SIP Trunking (keeping existing PBX):
- SIP trunks: $500/month (20 concurrent channels)
- PBX maintenance: $400/month
- IT staff allocation: $500/month
- Hardware refresh (year 3): $15,000
- 3-year total: $65,400
Hosted VoIP (DialPhone Core):
- Service: $1,200/month (50 users x $24)
- Maintenance: $0
- Hardware: $0
- IT allocation: $0
- 3-year total: $43,200
SIP trunking saves money on the lines but keeps the PBX maintenance burden. Hosted VoIP eliminates the entire hardware stack and comes in 34% cheaper overall.
Who Still Needs SIP Trunking in 2026?
SIP trunking makes sense in a narrow set of scenarios:
Keep SIP trunking if:
- You purchased PBX hardware within the last 2 years and need to amortize the investment
- You have specialized PBX applications (custom IVR, proprietary integrations) that cannot migrate to cloud
- Regulatory requirements mandate on-premise call processing (some government, military, or classified environments)
- You have a dedicated IT team already maintaining the PBX
Switch to hosted VoIP if:
- Your PBX hardware is more than 5 years old
- You want AI features, CRM integrations, or analytics
- You have remote or hybrid employees
- You do not want to maintain hardware or manage IT for your phone system
- You want predictable per-user pricing with no surprise maintenance bills
The Migration Path
Many businesses use SIP trunking as a stepping stone. They move from traditional phone lines to SIP trunking first (immediate 30-50% savings, minimal disruption), then migrate fully to hosted VoIP when their PBX hardware reaches end of life.
If you are already on SIP trunking and your PBX is aging, the move to DialPhone hosted VoIP is straightforward. We port your numbers, replicate your routing rules, and add the AI and analytics capabilities that your PBX cannot provide.
Compare DialPhone plans or start a free 14-day trial. Number porting included at no charge.