Avaya E129 does not support Avaya Aura Advanced SIP Telephony (AST) features, because E129 is a basic SIP phone. Product details can be found here: http://www.avaya.com/usa/documents/e129-sip-deskphone---sme7492.pdf. (supports basic, generic, open-standards SIP features above (no Avaya Aura® Advanced SIP Telephony features are supported). Since ACR (Avaya Contract Recorder) communicates with the AES (Application Enablement Services) and since AES requires extended feature set from the endpoints, calls initiated by E129 will not be able to be recorded. An Avaya SIP phone that supports AST is needed in such a scenario for the recording to work.
Unfortunately this is working as designed. The E129 being basic SIP phones were not designed to be call recorded. Our recommendation is to use one of the 96xx SIP series phones that do support AST features.
