How Do Business Phone Calls Work Over the Internet?

Every modern business phone system makes calls over your internet connection instead of old copper phone lines, generally called VoIP. But how does that actually work? And what does it mean for your call quality, your internet speed, and your phone bill? This guide explains the basics in plain English. SIP is one signalling protocol behind this, and SIP trunking is a specific service that connects SIP-capable business infrastructure to a carrier or the PSTN, but you do not need to remember the details. What matters is understanding what is happening so you can make a good decision about your phone setup.

Worth knowing upfront: where it is supplied separately from your internet connection, your business phone system may be managed by a specialist phone company. Maxotel, Aussie Broadband Business, and Telstra Business are common Australian ones. Your internet carries the calls, but the phone system itself runs independently and you sign up for it separately.

What Is Happening When You Make an Internet Phone Call?

In nbn fixed-line areas, most legacy Telstra copper voice services were migrated or disconnected as the nbn rollout progressed. Copper PSTN voice remains in some areas, including parts of the Fixed Wireless and Sky Muster footprints, and Telstra is not currently exiting copper PSTN voice nationally. Moving to an nbn plan is not automatic, so businesses should contact their provider to discuss migration. If your business still has traditional copper line phones and hasn't been contacted about migration yet, you will be. Understanding how cloud phone systems work now means you can plan the switch on your terms, rather than rush it when forced. For a comparison of current options, see our guide to the best phone systems for small business in Australia.

The main concern businesses have about internet phone calls is call quality. On a standard NBN connection, a single voice call uses roughly 100Kbps of bandwidth. A 100Mbps NBN plan can handle hundreds of simultaneous calls. QoS on a correctly configured router can prioritise voice on the links and queues it controls, but it cannot fix packet loss, jitter or congestion elsewhere in the access or provider network. Configured on your router, QoS tells it to prioritise voice traffic over file downloads and streaming.

SIP stands for Session Initiation Protocol. A SIP trunk is a virtual phone line that connects your phone system to the telephone network using the internet instead of physical copper wires. The word 'trunk' comes from traditional telephony, where a trunk line was the main connection between a business PBX and the phone company's exchange. SIP trunking does the same job, just over your internet connection instead of dedicated copper.Here is the simplest way to think about it. Your business has a phone system (a PBX) that handles call routing, voicemail, hold music, extensions, and ring groups internally. That PBX needs a way to reach the outside world so people can call your business number and your staff can dial out. SIP trunking is that connection. It is the bridge between your internal phone system and every other phone number in the world.A SIP trunk can carry multiple simultaneous calls. Each concurrent call consumes one channel or call path, so required capacity is normally expressed as the number of simultaneous-call channels on the trunk. If your business needs the ability for 5 people to be on the phone at the same time, you need 5 SIP channels. If 3 staff are on calls and a fourth customer calls in, the call still connects because you have capacity. If all five inbound channels are in use, a sixth call normally cannot reach a queue on that PBX and may be rejected as busy. Queuing beyond the trunk limit requires provider-side queuing, overflow routing or additional inbound capacity.

How Business Phone Calls Travel Over the Internet

The technical flow is straightforward. When someone dials your business number, the call hits your phone line provider's servers first. The provider routes it to your PBX over the internet. Your PBX answers the call and sends it to the right extension, ring group, or auto-attendant based on your call flow rules. Outbound calls work in reverse: your PBX sends the call to the phone line provider, which connects it to the destination number over the public phone network (PSTN).The voice data travels as small packets over your internet connection, the same way a video call or a file download does. This is why internet quality matters for SIP trunking. Unlike cloud phone system where the provider manages everything in the cloud, SIP trunking connects to a PBX that you own or control. That PBX can be a physical box in your office (on-premise) or a virtual PBX running on a server you manage. The key distinction is that you are responsible for the PBX, and the phone line provider is responsible for delivering calls to and from it.

Connection Types: Direct vs Hosted Business Phone Systems

This is the question most businesses actually need answered, and it is where the confusion usually starts. SIP trunking and cloud phone system both use the internet for phone calls, but they are fundamentally different products aimed at different situations.cloud phone system (also called cloud phone system or cloud PBX) means the provider runs everything. The PBX is in their data centre. You plug phones into your network and they connect to the provider's cloud platform. You manage users and settings through a web portal. The provider handles all the infrastructure, updates, security, and call routing backend. You pay per user per month. This is the right choice for most small businesses with 1 to 30 staff. See the cloud phone system vs on-premise PBX comparison for a detailed breakdown.SIP trunking means you run your own PBX and buy the phone line connections separately. You are responsible for configuring the PBX, maintaining it, updating it, and securing it. The phone line provider just delivers the call channels. You pay per trunk (channel) per month, not per user. This gives you more control but requires more technical knowledge.Think of it like renting a fully furnished apartment (cloud phone system) versus buying a house and connecting the utilities yourself (SIP trunking). The house gives you more control, but you are responsible for the plumbing.

When You Need SIP Trunking (And When You Do Not)

SIP trunking makes sense when:
- You already have an on-premise PBX and want to replace your ISDN or analog lines with internet-based connections
- You run a self-cloud phone system platform like 3CX, FreePBX, or Asterisk and need carrier connectivity
- Your business has complex call routing requirements that a hosted platform cannot customise deeply enough
- You have IT staff (or an MSP) who can manage and maintain the PBX
- You need a large number of simultaneous call channels (20+) and want to control costs tightly
- You operate multiple sites and want to centralise call management on a single PBXSIP trunking does NOT make sense when:
- You have 1 to 10 staff and no in-house IT capability
- You do not currently have a PBX and do not want to manage one
- You want a plug-and-play solution where the provider handles everything
- Your call routing needs are straightforward (ring groups, voicemail, basic auto-attendant)
- You want to avoid ongoing maintenance, patching, and configuration workFor most small businesses in the 1 to 20 seat range, cloud phone system is the better fit. It is simpler, lower maintenance, and the monthly cost difference is minimal once you factor in the time and expertise needed to manage a PBX. SIP trunking becomes cost-effective and practical at scale, or when specific technical requirements demand it. If you are unsure which path fits your situation, the phone system sizing wizard can help you work it out.

How SIP Trunk Pricing Works

SIP trunking pricing is different from cloud phone system pricing. Cloud phone pricing is commonly user-based, but inclusions vary: call plans, numbers, devices, recording, integrations and usage charges may be separate. SIP trunk billing models vary: providers may charge per channel, by usage or through bundled and unlimited-call plans, and some elastic services impose no monthly channel rental.

Typical SIP Trunk Pricing Components

Trunk rental: This is the monthly fee for each SIP channel. Current Australian pricing cannot be represented reliably by a single $5-$15 band: advertised models range from low-cost PAYG channels to higher-priced unlimited channels, while some elastic providers do not charge per channel. Some providers bundle channels into packages (e.g., 5 channels for $40/month, 10 for $70/month). Others sell individual channels. Bulk discounts are common above 10 channels.Call charges: Most phone line providers charge per-minute rates for calls. Call pricing varies materially by provider and plan: some charge per call, some per minute and some bundle unlimited calling. Use current provider Critical Information Summaries rather than a single market-wide rate band. Some providers offer unlimited local/national calling bundles for an additional flat fee per channel. Always check whether your provider's 'unlimited' plan truly includes mobile calls or just landline-to-landline.DID numbers: DID (Direct Inward Dialling) numbers are the phone numbers people call to reach your business. You need at least one, and most businesses have several (main line, fax, direct lines for key staff). DID numbers typically cost $2 to $8 per number per month. Porting fees vary by provider and port category. Simple local ports may be free, while complex number-range and 1300/1800 ports can attract fixed batch or service fees above $50. See the number porting guide for the full process.Setup fees: Some providers charge a one-time setup or activation fee of $50 to $200. Many waive this during promotions or for larger deployments. Always ask.For a practical cost estimate based on your team size and call volume, try the VOIP cost calculator.

SIP Trunking vs ISDN: Why Businesses Are Switching

If you have been running ISDN lines (ISDN2, ISDN10, ISDN30), SIP trunking is the direct replacement. ISDN used dedicated copper circuits to deliver phone channels. SIP trunking delivers the same channel capacity over your internet connection. The switch is happening across Australia because the copper PSTN network is being decommissioned. Telstra ceased selling the covered ISDN services in 2018 and completed their scheduled final exits in 2022; this should be described as a completed migration rather than an ongoing progressive disconnection.The practical differences matter. ISDN2 delivered 2 channels. The SIP equivalent is simply 2 SIP trunks. ISDN10 delivered 10 channels, replaced by 10 SIP trunks. The mapping is direct. But SIP trunking adds flexibility that ISDN never had: you can scale channels up or down without waiting for Telstra to provision a new physical circuit, add channels in minutes instead of weeks, and pay significantly less per channel.A typical ISDN2 line in Australia cost $50 to $80 per month for 2 channels. Two SIP trunks from a specialist provider cost $10 to $30 per month for the same capacity. The savings are real and immediate. For larger businesses migrating from ISDN30, the per-channel cost reduction is even more pronounced.

How Many SIP Trunks Does Your Business Need?

The number of SIP trunks you need equals the maximum number of simultaneous phone calls your business needs to handle at any one time. This is not the same as the number of staff, the number of phones, or the number of extensions. It is about concurrent call capacity.SIP trunk capacity should be sized around measured peak concurrent call demand rather than staff count alone. An office of 10 people where everyone takes calls throughout the day probably needs 3 to 4 trunks. A reception-heavy business where calls come in bursts (medical practice, real estate agency, trades business) may need more trunks relative to staff count because of peak-time call clustering.Here is a rough sizing guide:

1-3 staff: 1-2 SIP trunks
4-10 staff: 2-4 SIP trunks
11-20 staff: 4-8 SIP trunks
21-50 staff: 8-15 SIP trunks
50+ staff: 15+ SIP trunks (consider burst capacity for seasonal peaks)Whether you can add or remove trunks monthly, and any minimum commitments, varies by provider and plan. Start conservative and add capacity if you notice callers getting busy signals or long queue times. Your PBX call logs will show concurrent call peaks, which is the definitive way to right-size.

SIP Trunking Technical Requirements

SIP trunking has a few technical prerequisites that you need to confirm before signing up with a provider.

Compatible PBX

You need a PBX that supports SIP trunking. Most modern PBX systems do, including 3CX, FreePBX, Asterisk, Yeastar, Grandstream UCM, and virtually all enterprise-grade platforms (Cisco, Avaya, Mitel). If you have an older analog-only PBX that only connects via ISDN or analog lines, you will either need to replace it or use a SIP gateway (an adapter box that converts between SIP and the legacy PBX interface). Check the PBX explainer for a breakdown of PBX types.

Internet Connection Quality

Each SIP trunk (active call) uses approximately 80 to 100 Kbps of bandwidth in each direction when using the G.711 codec (the standard for high-quality voice). The G.729 codec uses less bandwidth (around 30 Kbps per call) but with slightly reduced audio quality. For 5 simultaneous calls on G.711, you need at least 500 Kbps of reliable, low-jitter upload and download bandwidth dedicated to voice.Bandwidth is rarely the bottleneck. What actually kills SIP trunk call quality is jitter (variation in packet arrival time) and packet loss. Jitter above 30ms causes choppy audio. Packet loss above 1% makes calls sound robotic or causes dropouts. A standard NBN 50 or NBN 100 connection has more than enough raw bandwidth, but if that connection is shared with staff streaming, downloading, or backing up to the cloud, the voice traffic will suffer. Use the VOIP bandwidth calculator to check whether your current connection can handle the load.

Quality of Service (QoS) Configuration

QoS is a router setting that prioritises voice traffic over other internet traffic. Without QoS, a large file download by one staff member can cause call quality issues for everyone. With QoS enabled, voice packets get priority and the download slows slightly instead. Most business-grade routers support QoS. Consumer-grade ISP-supplied routers often do not, or have limited QoS options. This is one of the practical reasons businesses running SIP trunks often invest in a proper business router.

Firewall and NAT Considerations

SIP traffic uses specific ports (typically UDP 5060 for signalling and a range of UDP ports for audio). Your firewall needs to allow this traffic. NAT (Network Address Translation), which almost every business router uses, can cause issues with SIP because of how it handles the two-way audio stream. The most common symptom is one-way audio: you can hear the caller but they cannot hear you, or vice versa.Follow the PBX and provider's firewall guidance. Some deployments, including 3CX, require SIP ALG to be disabled, while supported enterprise ALG implementations may be used in other NAT designs; do not change it as a universal first step without testing. Your phone line provider's support team will typically walk you through this during setup.

SIP Trunking Security

SIP trunking exposes your phone system to the internet, which introduces security considerations that ISDN and analog lines never had. The most common attack is toll fraud, where hackers gain access to your PBX and make thousands of international calls at your expense. This is not theoretical. It happens to poorly secured PBX systems regularly, and the bills can be tens of thousands of dollars.Protection is straightforward if you follow basic steps:
- Use strong, unique passwords for all SIP accounts (not admin/admin or 1234)
- Restrict SIP registration to your provider's IP addresses in your firewall
- Enable fail2ban or equivalent brute-force protection on your PBX
- Set international call barring on your trunks unless you specifically need international dialling
- Monitor call logs for unusual patterns (calls at 3am, calls to premium-rate numbers)
- Keep your PBX firmware and software updatedMost reputable phone line providers also offer fraud protection features: daily spend limits, international call alerts, and automatic trunk lockout if unusual activity is detected. Ask about these when evaluating providers.

Australian Businesses: SIP Trunking Specifics

SIP trunking works the same way globally, but there are several Australia-specific factors that affect your deployment.

NBN Connection Types and SIP Performance

Your NBN connection type directly affects SIP trunk reliability. Fibre to the Premises (FTTP) and Fibre to the Building (FTTB) deliver the most consistent performance for voice. Fibre to the Node (FTTN) can work well but is more susceptible to line quality issues because of the copper segment between the node and your premises. Fixed Wireless NBN adds latency and jitter that can affect call quality during peak congestion. Sky Muster has substantial inherent latency that can make conversation less natural, so voice performance should be tested. However, nbn supports VoIP carriage over Sky Muster, including a prioritised TC1 voice option, so it is not categorically unsuitable.Upload speed matters more than download for SIP trunking because both sides of a call need real-time data flowing. The nbn Home Standard wholesale tier is up to 20 Mbps upload on FTTP, FTTC and HFC, while FTTN and FTTB services may have wholesale peak upload rates between 5 and 20 Mbps; actual speeds can be lower. That is plenty for 20+ simultaneous calls on paper, but real-world upload performance can dip during peak hours on FTTN connections. If voice is business-critical, consider a service with committed bandwidth or voice-priority traffic options and check exactly what its SLA covers; a business-grade label or restoration SLA does not itself guarantee minimum internet speeds.

Number Porting to SIP Trunks

When you switch to SIP trunking, you will almost certainly want to keep your existing phone numbers. ACMA says individual local-number ports are generally completed within 8 to 15 business days, while more complex local-number ports can take up to 30 business days, with limited exceptions. 1300 and 1800 numbers follow the separate Inbound Number Portability process under C657:2024, involving the gaining and losing carriers or CSPs and the INMS system. Obtain the current estimated timeframe from the gaining provider. Keep the old service active until the port is confirmed. A correctly executed port is designed to cut over from the old service, but zero interruption should not be guaranteed.The critical step is to NOT cancel your old service before the port is complete. Cancelling early can release the number back to the carrier pool, making it much harder (sometimes impossible) to recover. Let the port complete, confirm calls are landing on your new SIP trunks, and then cancel the old service.

1300 and 1800 Numbers on SIP Trunks

If your business uses a 1300 or 1800 number, these work seamlessly on SIP trunks. Your phone line provider can port the 1300/1800 number to their platform, and incoming calls route to your PBX just like any other call. The one difference is that 1300/1800 numbers have a separate 'Responsible Carrier' designation, so porting involves an additional step compared to standard numbers.

Emergency 000 Calling

Australian CSPs that provide a public number must supply and update the customer and service address in the IPND. Because VoIP and PABX endpoints can be used away from that address, verify the IPND record, configure the provider's emergency address correctly and be ready to state the caller's actual location. Confirm this is set up correctly during deployment, especially if your business has staff who may need to call 000 from the office.

Power Outages

SIP trunking relies on your internet connection, your router, and your PBX all having power. If the power goes out, your phones go down. Traditional PSTN lines were powered from the exchange and worked during blackouts. This is a real consideration for businesses in areas with unreliable power. Solutions include an uninterruptible power supply (UPS) for your router and PBX (provides 30 to 90 minutes of backup), configuring your PBX to failover calls to mobile numbers during outages, or using a cloud phone system component that can reroute calls to mobiles when the on-premise system goes offline.

AU phone line provider Landscape

Australia has a healthy market of phone line providers serving businesses of all sizes. The major categories are:

Specialist business phone companies: Companies like Maxotel, VoIPLine, and Symbio that focus on business VOIP and SIP services. These tend to offer better pricing per trunk, more flexible configurations, local AU support, and deeper technical assistance for PBX integration. They are the best fit for small to medium businesses.

Major carriers: Telstra, Optus, and TPG all offer SIP trunking products. These suit larger enterprises that want everything under one provider umbrella and are willing to pay premium pricing for the brand. Expect higher per-trunk costs, longer contract terms, and less hands-on technical support for PBX configuration.

Wholesale/carrier-grade: Providers like Symbio and Vocus sell SIP trunking at wholesale level, often through MSPs and IT resellers. If you work with an MSP that manages your IT infrastructure, they may provision SIP trunks through one of these carriers on your behalf.

What Most Businesses Get Wrong

1. Choosing SIP trunking when cloud phone system would be simpler and cheaper. The most common mistake is buying SIP trunks because they sound more 'professional' or 'serious' without having the PBX infrastructure or technical knowledge to support them. If you do not already have a PBX and someone who can manage it, cloud phone system gives you the same call quality and features with none of the maintenance burden. SIP trunking is not inherently better than cloud phone system. It is a different product for a different situation.2. Underestimating internet quality requirements. Businesses buy SIP trunks, plug them into a shared NBN connection with no QoS, and then wonder why call quality is terrible during busy periods. SIP trunking works brilliantly on a properly configured network. It works terribly on a congested one. Budget for a business-grade router with QoS if you are running more than 2 to 3 trunks on a shared connection.3. Not disabling SIP ALG on the router. This single setting causes more SIP trunking issues than any other factor. One-way audio, dropped calls, registration failures, calls cutting out after 30 seconds. Disable SIP ALG on your router before you even start configuring SIP trunks. It should be step one of every SIP deployment.

Your Next Steps

If you are considering SIP trunking, work through this checklist before contacting a provider:1. Confirm you actually need SIP trunking. Do you already have a PBX, or are you planning to deploy one? Do you have technical staff or an MSP to manage it? If the answer to both is no, cloud phone system is likely the better path.

2. Determine how many trunks you need. Count the maximum number of simultaneous calls your business handles at peak times. Add 1 to 2 for headroom. That is your starting trunk count.

3. Check your internet connection. Run the bandwidth calculator to confirm your connection can handle the load. Check your NBN connection type and upload speed.

4. Confirm your PBX supports SIP trunking. Check the manufacturer documentation or ask your IT support. Most modern PBX platforms do.

5. Get pricing from 2 to 3 providers. Compare per-trunk cost, call rates, DID number fees, and contract terms. Ask about fraud protection features and porting support.

6. Plan your number porting. Identify all numbers that need to port. Do not cancel old services until porting is complete and confirmed.If you are not sure whether SIP trunking or cloud phone system is the right fit, get a free recommendation and we will help you work it out.

Once you understand how SIP trunks carry calls between your phone system and the public network, the next practical question is how many you need. Our guide to how many SIP trunks an Australian business needs covers the concurrent call calculation, the standard sizing formula, and the common mistakes that lead businesses to over-pay or run out of capacity at peak times.

For a detailed breakdown of what SIP trunks cost from Australian providers, including per-channel pricing, included call minutes, and how SIP trunk costs compare to managed hosted cloud phone plans, see our guide to SIP trunk pricing in Australia.

If you are trying to understand the difference between the SIP protocol and VoIP as a general category, our guide to SIP versus VoIP explained for Australian businesses covers exactly what each term means and which type of service your business actually needs.

What is the difference between a SIP trunk and a SIP channel?

In practice, the terms are used interchangeably. Technically, a SIP trunk is the overall connection between your PBX and the phone line provider, and a channel is one simultaneous call path within that trunk. When providers sell 'SIP trunks,' they are usually selling individual channels. If you buy 5 SIP trunks, you can make 5 simultaneous calls.

Can I use SIP trunking without a PBX?

No. A SIP trunk needs compatible SIP infrastructure, such as an IP-PBX, session border controller, SIP call server, contact-centre platform or unified-communications platform; it does not strictly require a PBX. If you do not have a PBX and do not want to manage one, cloud phone system (where the provider runs the PBX for you in the cloud) is the right option.

Is SIP trunking cheaper than cloud phone system?

It depends on your scale. For small businesses (1 to 10 users), cloud phone system is usually comparable or cheaper when you factor in the cost of owning, maintaining, and securing your own PBX. For larger businesses (20+ users) with existing PBX infrastructure and IT staff, SIP trunking typically costs less per user because you are only paying for trunk channels, not per-user licenses.

What happens to my SIP trunks if the internet goes down?

Your phone system goes down with it. SIP trunks rely entirely on your internet connection. You can mitigate this by configuring failover routing on your PBX (redirect calls to mobile numbers when the system is unreachable), using a UPS to keep your equipment running during short power cuts, or having a backup internet connection (e.g., 4G/5G failover).

Can I port my existing phone numbers to a phone line provider?

Yes. Number porting to phone line providers works the same as porting to any other carrier in Australia. Standard geographic numbers take 5 to 10 business days. 1300 and 1800 numbers may take 10 to 15 business days. Your provider handles the paperwork. The critical rule is to not cancel your existing service until the port is confirmed complete.

Do I need a static IP address for SIP trunking?

It depends on your provider and PBX configuration. Some phone line providers require a static IP to whitelist your PBX for security. Others support dynamic IP registration. A static IP is generally recommended for business SIP deployments because it simplifies firewall rules, improves security, and avoids re-registration issues when your IP changes. Most business-grade internet plans include a static IP.

What codecs should I use for SIP trunking?

G.711 (also called PCMU or PCMA) is a common narrowband codec for PSTN SIP trunk interconnection, using about 80 to 100 Kbps per call with overhead, not necessarily the best available voice quality. Wideband codecs such as G.722 can deliver higher quality where supported. G.729 uses less bandwidth (about 30 Kbps per call) with slightly reduced quality, suitable if bandwidth is limited. Codec support, including G.729 and wideband options, is provider-specific, confirm what your provider and hardware support before assuming a default.

Can I mix SIP trunking with cloud phone system?

Some businesses run a hybrid setup where the main office uses SIP trunks connected to an on-premise PBX, and remote workers or branch offices use cloud phone system handsets or softphones from the same provider. This is a valid approach, but it adds complexity. Discuss this with your provider before committing to ensure the two systems integrate cleanly.

If you're still not sure whether your current internet connection can handle business phone calls, or whether a cloud phone system is the right move for your business, don't guess. Tell us your current setup: what internet connection you have, how many staff need phones, and what your main concerns are. We'll give you a straight answer. We reply personally, usually within one business day.