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In recent years, Internet Protocol (IP) telephony has been a real alternative to the traditional public switched telephone networks (PSTN). IP telephony offers more flexibility in the implementation of new features and services. The session initiation protocol (SIP) is becoming a popular signaling protocol for Voice over IP (VoIP) based applications. The SIP proxy server is a software application that provides call routing services by parsing and forwarding all the incoming SIP packets in an IP telephony network. The efficiency of this process can create large scale, highly reliable packet voice networks for service providers and enterprises. We established that the efficient design and implementation of the SIP proxy server architecture can enhance the performance characteristics of a SIP proxy server significantly. Since SIP proxy server performance can be characterized by its transaction states of each SIP session, we emulated the M/M/l performance model of the SIP proxy server and studied some of the key performance benchmarks such as average response time to process the SIP calls and mean number of SIP calls in the system. We showed its limitations, and then studied an alternative M/M/c based SIP proxy server performance model with enhanced performance and predictable results.