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For those considering IP telephony alternatives, the hosted PBX offers the key advantages and economies of scale of the centralized approach and the rich feature capability and flexibility of the IP-PBX: truly ,the best of both worlds.
Can Centrex survive or perhaps even thrive in the era of convergence? The PBX has dominated enterprise voice communications for many years. Hosted or "centralized" voice services, often called Centrex, had been in decline for some time when voice over Internet protocol (VoIP) started to accelerate in the late 1990s. The capabilities and possibilities of the emerging IP-PBX added to the attractiveness of premises-based solutions for the enterprise. Centrex has significant value for many users: It eliminates most of the expense of buying and operating a PBX, and it has key central-solution attributes, such as easy growth/ scalability and use of highly reliable carrier-class platforms. Centrex success has been limited, however, and has generally not kept pace with premises-based solutions in functionality, flexibility, and cost-effectiveness.
What can be done to revitalize Centrex and give telephone companies and other service providers a hosted offering that competes with the premises-based solution, especially the IP-PBX? The movement to communications convergence and the economic downturn have been accompanied by new challenges and new ways of looking at old problems. Some believe that a new breed of competitive hosted voice services has already arisen. These solutions are driven by a number of factors including the following: (1) the inherent advantages of IP communications, (2) advances that allow the limitations and inflexibility of original-generation Centrex to be overcome, and (3) renewed attention to outsourcing in the current economic climate.
There are analyses and trade-offs between hosted approaches?some of which include the Centrex label?and customer-premises voice systems. The terminology of these variations in IP-based telephony is itself confusing and a little intimidating to the uninitiated. For example, what are IP Centrex, Centrex IP, IP-PBX, and hosted PBX? How do these alternatives compare?
Historical Perspective: How Did We Get Here?
A brief historical perspective may make our examination of IP telephony alternatives more meaningful. Centrex or provision of PBX capabilities from the telephone central office (CO) was made possible by computer-controlled switch technologies. Early on (in the 1960s and 1970s), the feature and function set of the typical PBX was not particularly robust, so replicating it was fairly straightforward. Also, early on, the phone companies (AT&T, in particular) retained the dominant position in PBXs. However, over time, the gap between premises-based PBX capabilities and the less functional version "hosted" by the CO grew significantly.
The rules changed with divestiture in 1984. All of a sudden it wasn't just an internal accounting exercise when PBXs were sold? it was lost revenue. The phone companies needed a competitive price-performing Centrex product to do battle with the customer's PBX. In the last 15 years or so, PBX functionality has continued to grow and expand, and Centrex has hardly kept pace, even with ISDN added to the mix. However, Centrex has found some success in generic small medium enterprises (SME) and selected large-scale deployments in government, education, healthcare, and commerce.
The limited Centrex success in SME was due, in large measure, to the lack of cost-effective premises-based offerings for that segment. Penetration by Centrex in many of the larger deployments was because of limited staff, resources, and infrastructure in the user organization. In the main, however, feature/functionality richness, user control, and favorable ownership economics have maintained the PBX as the dominant approach. Moreover, Centrex providers were typically slow to respond to users' needs and charged high prices for even simple moves, adds, and changes (MACs).
Certainly the technologies of IP telephony and convergence have changed the landscape. As noted, the IP-PBX emerged in the late 1990s, posing not only new threats to traditional Centrex but also new opportunities for Centrex and Centrex-like hosted solutions.
IP Telephony Options
There are numerous ways to provide IP telephony at the premises of an enterprise or organization. In the legacy circuit-switched environment, the user site either had local switching equipment, such as a PBX or key system, or it did not.
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