With the advent of SIP (Session Initiation Protocol), individual businesses may utilize them. But maximum benefits occur when these entities are able to exchange information over SIP. Previous SIP, businesses couldn’t interoperate, not with SIP, connection can occur over the internet. With SIP, SIP benefits are not isolated with individual businesses, more modes of communication are introduced (i.e. instant messaging,) higher quality of communication and reduced cost.

SIP users/entities can call each other, have multimedia exchange sessions, instant message and share presence information. There may be a couple of obstacles that interfere with maximum SIP utilization. These may include interoperation, entities being able to recognize each other, and managing the interactions.

A federation creates open communications over a network to aid entities in overcoming these obstacles. It allows for discovery services to allow enterprises to identify and recognize each other by making directories available. They also build upon SIP communications and allow for interoperability, in regards to voice, video, multimedia, and instant messaging. In addition, to streamline and smooth out communication, federation services authenticate users and has policies for acceptable use. If users do not follow these rules, if a user abuses the systems, with for example, spam, then they would have their privileges revoked. There is also the option of a caller ID-like application, which prevents identity manipulation.

There are other options different than federation, namely “direct peering.” Here, two entities set up their own relationship, complete with a shared directory and their own policy of use. This may work on a small scale, between a few enterprises, but it does not allow for universal exchange.