1. PBX vs Centrex Garry Meadows Steve Klesper Tom Ondick Aaron Hurt
Ron Pridemore
Tim Wade

2. Considerations Introduction Definition of PBX Definition of Centrex
Cost
Responsibility / Control
Flexibility
Support
Security
Drawbacks
Advantages
Small Company Options
Medium Company Options
Large Company Options
Summary
Bibliography

3. PBX Definition
Newton, Harry “Newton’s Telecom Dictionary” CMP Books, Feb 2002: 556- Private Branch Exchange is a privately owned version of the phone switches used in central office. This allows for the user to have more features on hand while allowing the exact needs of the business to be designed when the PBX is purchased. IP PBXs today handle voice and data traffic simultaneously enabling users to transport both over the same pipe. This provides large cost savings when implementing VOIP solutions. Even though the PBX is a small switch, it must access the CO to connect to the PSTN to make external calls. There are several advantages and drawbacks to the PBX which will be covered in more detail later in this presentation.

4. Centrex Definition
Newton, Harry “Newton’s Telecom Dictionary” CMP Books, Feb 2002: 146- Centrex is a business telephone solution offered by the local telephone company from the CO. Centrex adds several custom calling features that businesses require but still maintain the equipment and the floor space. Centrex systems are generally easier to grow that a PBX as the phone company is responsible for ordering new equipment and dealing with installation. This frees the business from having to have personnel on staff to do provisioning and maintenance for a complicated piece of equipment. Centrex services today do allow users to make changes to their individual lines remotely as well as receive call detail records which were previously only available on PBX systems. Two large drawbacks are that Centrex services are cable intensive and the company is at the mercy of the CO as to the total number of lines that are physically available in the CO.

5. Cost Cost must be considered in several categories
Acquisition – High initial cost for PBX, little for Centrex but a recurring monthly charge is applied
Network Access – PBX requires fewer lines; Centex requires a line for each extension
Maintenance – Dependent upon PBX; Centrex MAC’s cost are substantial
Facilities – PBX owner pays the bill; Telco does for Centrex
Security – Telco not as susceptible to attack; PBX trained staff needed
Predictability – Hardware and software changes in PBX; Centrex rates subject to regulation (read contract)
Most cost analysis data shows the benefit of using PBX for small to mid-size companies but that larger organizations may find cost saving in a Centrex solution due to high overhead of owning and maintaining the system.

6. Responsibility / Control
PBX
Controlled entirely by purchasing business
Limited only by system constraints and financial limitations of the business
Centrex
Controlled by the Telco
Capabilities designed to meet the needs of major market demand
Questionable flexibility for smaller organizations
Somewhat subjective, but to many is a critical factor in the decision.

7. Flexibility PBX Centrex Hundreds of features and software packages
Managed easily with no service contracts required
Finite limits based on capital expenditure
Centrex
Limited features in comparison to PBX
Real time MAC’s can not be performed and may be very expensive
Special features usually limited to large organizations
Small to Mid-size companies will tend to lean toward PBX in this area due to being unable to get the Telco to provide the same features.

8. Support
PBX
Dependent on availability of trained staff and vendor technicians
Technician turnover rate very high
System failure may be expensive and labor intensive
Centrex
Large, well trained staff
Minimal downside
Monitored constantly with spare parts on hand.
Included (usually) in leasing agreement with little to no cost to the user

9. Security PBX Centrex DISA Trunks Remote Maintenance Ports IVR
Traditional PBX systems more vulnerable than Centrex to outside attacks
Centrex
Responsibility of Telco
Taken very seriously
Assumes Centrex user has taken steps to avoid credit card abuse
In this respect small, medium, and large organizations benefit from using a Centrex solution

10. Drawbacks PBX Centrex Possible system crash
Floor space and technical knowledge required
Large amount of money up front
CPE equipment (in certain cases) must be purchased from the same vendor
Technology could become obsolete making it difficult to find parts and service
Centrex
Every extension requires its own copper line
Call made within office must first go to CO to be routed back to office
Reconfiguration of the switch must be done by CO
Features fewer than that of PBX
Tax savings by leasing a Centex lines are nonexistent
Many more choices for PBX owners, but also introduces many points of failure as well.

11. Advantages PBX Tax benefits for purchasing PBX can be seen
Calls made internally are switched at the PBX; requires less outside lines
Extensions possible: 9999
Vast service combinations may be purchased
Configuration updates accomplished by trained staff
Five digit in house dialing
Multiple PBXs may be connected to create large virtual PBX
Centrex
Implementation fast and inexpensive
Service is not required by the customer
Features similar to many on PBX
Limitless number of outside lines available
Upgrades accomplished without end users knowledge
Floor space and power requirements met by Telco
Security responsibility of Telco
Reliability generally higher

12. Small Company Needs
A company with ten people or less will likely not want to spend excess money on a large system, nor want to hire a technical person to operate the system. Therefore, a Centrex system would be the best solution. Purchasing 10 lines at an approximate cost of $20-$25 per line would be significantly cheaper than a PBX system. Telephone sets would be the only CPE required.

13. Medium Company Needs
In this area, numbers and future growth are very important. Leasing 100 Centrex lines at $25 per month would be reasonable compared to buying a PBX. However, if the company is fairly young and plans to grow rather quickly, a PBX would be the best solution. This would allow the company to add extensions without wasting time or money waiting for Centrex services from the phone company. Generally, a company with 100 people will have its own IT personnel which could easily be trained to operate and maintain a PBX system. Nevertheless, there are many variables that could cause a medium sized company to lean one way or the other when it comes to Centrex or PBX.

14. Large Company Needs
Large companies usually have requirements for a PBX system. Generally speaking, 90% of calls are made internally. This means that only 10% of the number of calls made go to the CO; therefore, out of 1000 lines in a PBX only 100 would need to connect to the CO. This presents a large savings over a Centrex which requires a minimum of one line per station. Companies of this size also have large turnover which would lead to high costs if maintenance was left to CO. The PBX also offers access to internal voice mail as well as call transfer, conference call and speed dial features. If employees are not located in the same building, multiple PBXs may be tied together to create a virtual PBX allowing for 5 digit dialing between buildings.

15. Summary
The age old battle of Centrex Vs PBX is not a cut and dry issue. Many variables such as future growth, cost, and ability to maintain systems needs to be taken into account. Both systems have distinct advantages and disadvantages. Therefore, overall requirements drive the final decision. Today PBXs are getting smaller and cheaper, while Centrex services are being added that are comparable to that of the PBX. Companies need to meet with appropriate vendors to get estimates before making their final decision. Future requirements for voice over IP (VOIP) and video calls are being met by IP PBXs and emerging Centrex services. IP PBXs will allow the company to migrate slowly from TDM to IP with less cost to the company.

16. Bibliography
Newton, Harry “Newton’s Telecom Dictionary” CMP Books, Feb 2002: 146,556
Bates, Regis J & Gregory, Donald W “Voice and Data Communications Handbook” 4th edition, Osborne/McGraw Hill, Jan 2001:
Cole, Marion “Introduction to Telecommunications” 2nd Edition, Prentice Hall, Jan
Dix, John Gloves come off in IP Centrex vs IP PBX