This error is often seen when the default_socket_timeout value is exceeded for the SOAP response. (See this link.)
Note from the SoapClient constructor: the connection_timeout option is used for defining a timeout value for connecting to the service, not for the timeout for its response.
You can increase it like so:
ini_set('default_socket_timeout', 600); // or whatever new value you want
This should tell you if the timeout is the issue, or whether you have a different problem. Bear in mind that you should not use this as a permanent solution, but rather to see if it gets rid of the error before moving on to investigate why the SOAP service is responding so slowly. If the service is consistently this slow, you may have to consider offline/batch processing.