The Resurrection of Centrex

An old concept returns in a new form:

Remember when you had a private branch exchange (PBX) on-site, or you used Centrex offered up by the local phone company? As technology ramped up, PBX pricing started coming down; then Internet protocol (IP) entered the mix, and things started to get confusing all over again.

Now, new hosted solutions have entered the market, and Centrex is creeping back in to conversation once again. IP has blurred the lines between voice and data, and many have found it necessary to use a PBX to truly harness IP’s potential power.

When PBXs first started to become common features of phone systems, local exchange carriers (LECs) offered up Centrex as an option for customers who wanted the functionality of a PBX without the cost. For a monthly, per-line fee, users would have a fully functioning PBX they could use as their own.

In the IP age, things have turned around. As hosted solutions begin to come back, hosted IP PBX (sometimes referred to as IPBX) is thought of as the new era of Centrex, and many refer to it as such.

Take the AT&T hosted IP PBX service offering. For roughly $10 to $20 per month, per line, users can experience the advantages associated with an IP PBX environment without physically having switches in their own location. And at the same time, more companies are entering into the hosted offerings game, which means that contractors—who have been tagged as voice/data leaders—are getting requests about hosted IP PBX.

To understand what makes it “hosted,” one needs to be aware of the difference between PBX and IP PBX.

A PBX is a switch that moves users to the phone company via analog lines. The PBX can bring additional features that have become mainstays in business, such as caller ID, three-way calling and auto attendant.

An IP PBX serves essentially the same purpose except that it taps into a high bandwidth connection to route those calls. IP PBX offers additional features such as “Find Me Follow Me” and Unified Messaging.

Hosted or not?
However, the hosted-or-not debate lingers. There will always be users who enjoy having their own equipment on hand, despite the time and cost associated with having such sophisticated technology at their physical location.

The other half feels that the hosted option allows for them to free themselves from the maintenance and service requirements IP PBX demands. By having the actual IP PBX located elsewhere, the hosting entity ensures that it stays in proper working order, and also makes sure that, if something goes wrong, it is fixed right away. Cutting out that call to a service provider about a downed switch (and no phone service) is something everyone could do without.

Is this option too good to be true? Maybe. The biggest disadvantage with a hosted IP PBX (or a hosted PBX) is that users keep paying for something, mainly equipment, which never is their own. The hosted solution truly has a stronghold on the residential and low user market, but some larger-sized entities are giving this option a second chance as information technology (IT) budgets take a beating.

Some customers appreciate that the hosted option frees up their in-house IT staff for other duties since the IP PBX host is in charge of those functions. On the flip side, it could be viewed as a cost-saving measure by those not ready, willing or able to hire additional IT staff members for the sole purpose of managing and maintaining a PBX.

The hosted IP PBX solution is best suited for those who are interested in adopting a full-blown IP PBX setup but not the high price tag. By opting for a hosted solution, they can lower their up-front costs and the long-term ones associated with maintaining the service as well. Of course, hosted IP PBX has monthly fees. However, some businesses would rather swallow small monthly tabs, rather than large expenses.

Contractors should be aware of the differences between hosted and on-site because it is bound to come up in conversation as companies and organizations adopt IP. Knowing which direction to point one’s customers is good, as it helps promote that contractors just seem to get this whole crazy IP concept. EC

STONG-MICHAS, a freelance writer, lives in central Pennsylvania. She can be reached via e-mail at


About the Author

Jennifer Leah Stong-Michas

Freelance Writer
Jennifer Leah Stong-Michas is a freelance writer who lives in central Pennsylvania.

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