What is Centrex?
by John Tyreman, Mason Communications
Centrex, or CENTRalised EXchange, is a service offered by some telecoms operators that allocates a section of a public telephone switch to dedicated use by a single organisation. It gives you the functionality of a private telephone switch without the need for in-house telecoms equipment or expertise, and is especially useful for small companies.
How does it work?
An organisation using Centrex is allocated the number of extensions it needs in a closed user group. The service can be used within a single building or across multiple sites, in which case a virtual private network (VPN) is installed. No special equipment is required on the customer's premises – the process is as simple as fitting a normal telephone line.
What functionality is available?
As a minimum the following features are usually available on each extension:
- direct dialling in (DDI) – including customer-controlled call barring, call transfer and "hunt groups" functionality
- voicemail – including call forwarding/holding
- camp on busy – ring back when free/call waiting
What does it cost?
Costs vary between providers, however installation is likely to be about £40 per extension, with line rental between £11 and £15 per month. Calls between extensions within your user group are free of charge, including those to extensions on a different site, as is use of any of the features. Calls to numbers on the public network are charged at the normal rate.
Cost benefit analysis
Before signing up to use Centrex you should conduct a cost benefit analysis, comparing costs with those for a small telephone system over a period of at least three years and taking into account any anticipated increases in telephony requirements.
The following should be taken into consideration for each option:
- capital outlay for equipment
- installation charges
- line rental
- maintenance
- system re-programming (this may not be included in maintenance costs)
- internal cost of system management
- cost of future expansion within the investment period
What are the advantages?
- no customer equipment to manage or maintain
- full private switch functionality
- no charge for calls between extensions in the same user group
- voicemail
- one-to-one telephone line ratio
- no requirement for a telecoms manager
- can be extended over multiple sites
What are the disadvantages?
- May be limitations on using an indirect operator, Carrier Pre-Selection (CPS) or Least Cost Routing (LCR) for lower cost calls
- control of public network access is with the supplier, which could be problematic during any dispute over billing or service levels
- less cost effective for larger organisations, with more than six extensions per location
- some features, such as automatic call distribution (ACD), may not be available
- converged voice and data services are not possible
Reviewed June 2007
last updated : 15/06/2007
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