One of the most vital aspects of creating and running a company is telecommunications. Depending on your sector, size, and the number of clients and leads your staff is in contact with on a daily, weekly, or monthly basis, your phone system and IT needs can vary greatly. But between the plethora of solutions to choose from, the subtle differences among them and the increasing number of technical terms to master, the decision-making process can be daunting. This article is intended to illuminate the complexities of today's many phone system solutions by explaining the following:


What Centrex is

The difference between PBX/PABX, IP PBX & Centrex

How Centrex works

The pros & cons of a Centrex solution



What is Centrex?


Centrex is a simplified version of the term Central Exchange, which refers to a centralised phone service hosted and managed by an operator. Until its arrival in the 2000s, companies had to host their own PBX (Private Branch Exchange) on-site, which generated significant set-up and maintenance costs in terms of networks and equipment. Centrex, however, removes the necessity for companies to have to purchase and run their own voice communications system by outsourcing its management. The development of high-speed DSL links at competitive prices has recently made Centrex an even more appealing solution for businesses.

PBX/PABX, IP PBX, & Centrex: what's the difference?


PBX/PABX: the internal phone system


The Private Branch eXchange (PBX), or Private Automatic Branch eXchange (PABX) is hosted on a company's premises. It receives and transmits calls via the company's telecommunications network - which is separate from its computer network - just like a classic switchboard. Unlike its antiquated predecessor, however, it supports a number of features such as:
  • Call queues
  • Custom music on hold
  • Call forwarding
  • Call transfer
  • Conference calls
  • "Do not disturb" mode
  • Call interception
  • Computer telephony integration (CTI)

Though the PBX/PABX is still widely used, it's on the path to obsolescence due to the phasing out of the copper wire-based Public Switched Telephone Network (PSTN) in favour of IP technology. Companies that currently use a PBX/PABX will therefore have to adopt an IP PBX in the near future.


IP PBX: the IP phone system


An IP PBX (Internet Protocol Private Branch eXchange) is a private telephony exchange that uses IP to channel a company's phone calls. It works through IP phones connected to the same network as company computers and, through the PBX, provides access to the IP telephony operator's network. The IP PBX is therefore the next stage in the evolution of the traditional PBX toward IP.

In addition to supporting traditional PBX features, the IP PBX allows companies to:
  • Automatically distribute calls
  • Apply opening hours
  • Set up an Interactive Voice Server (IVR) to route incoming calls
  • Integrate phone system features with the company's IT and business applications
  • Add new phone lines independently


Centrex: the external phone system


With the Centrex solution, telephony is outsourced to an operator, which provides its clients with all-inclusive service. It allows the company's landlines to be managed via Internet while providing the classic functionalities of a PBX or an IP PBX.

A Centrex operator typically hosts an IP PBX shared between many companies, and is responsible for managing numbering plans, providing phones (if applicable), and provision and installation of the network link between its centre and the local area network (LAN) as well maintenance of the router or telephony gateway.
Centrex IP is therefore an alternative to PBX and IP PBX solutions.

How does Centrex work?


A Centrex system operates much like the internal PBX or IP PBX system in that it provides the same capabilities. The main difference is that the PBX is located at the Centrex operator facility rather than on the client company premises.

Concretely, a company subscribing to plan with a Centrex operator receives a certain set of phone lines according to its number of users. The operator will link the phone system to its network via a DSL router, to which the company's IP terminals are also connected. Using a customisable web interface, internal teams can then easily complete setup of a centralised phone system.

In general, Centrex plans include phone service and Internet connection. As a result, a multi-site company can pool its IT network and cut costs on its infrastructures by implementing a Centrex solution.

Centrex Features


While Centrex plans may differ from one operator to the next, most offer these basic phone system features:
  • Conference calls
  • Placing calls on hold
  • Call queues
  • Simplified numbering
  • Call transferPersonalised voicemail

    Centrex IP plans also provide clients the benefit of a wide range of services previously only accessible to large companies:
    • Caller ID
    • Abbreviated dialing (speed dial)
    • Call queues
    • Interactive Voice Response (IVR)
    • Direct Dial-In (DDI)
    • Least Cost
    • Routing (LCR)
    • Unified messaging (calls, faxes, emails)
    • Fixed-mobile convergence (calls to a single number ring to a landline or smartphone)
    • Call data tracking (statistics, dashboard, etc.)
    • Client file screen pop
    • Integration with CRM/business tools


    Contacting different Centrex operators will help you find out more about the range of features they offer.

    The pros & cons of a Centrex solution


    The advantages of a Centrex solution


    Reduced installation costs
    A turnkey solution for businesses, Centrex eliminates the need for any significant initial investment thanks to outsourcing. No specific equipment needs to be installed on the client premises other than softphones (phones connected to IT network). The process is as simple as setting up a traditional phone line. Physical space can also be saved, with the terminal located on the operator's premises rather than the client's.

    External maintenance
    With the terminal located on the operator's premises, clients have no equipment to run or maintain internally, so their staff requires no special related skills. This translates to lower costs compared to a PBX/PABX or IP PBX system.

    Flexibility of the solution
    A Centrex phone system has the ability to adapt to its clients' changing needs: addition or removal of phone lines, opening of new offices, international numbers, etc.

    Flexibility of location
    The Centrex solution can be put in place for a single building or in multiple locations. In the latter case, a Virtual Private Network (VPN) is installed to link the multiple locations. In this way, fixed-mobile convergence allows users to work from anywhere: in the office, from home or while traveling.

    Simplified billing & competitive prices
    With an all-in-one Centrex solution, businesses benefit from better visibility on their phone bills thanks to largely flat-rate plans. Clients are billed monthly based on their number of phone lines at a reduced cost for use. This pricing includes internal and often national or international calls.

    Unified communications
    Centrex IP makes it possible to switch to a unified communications system at a reduced cost and put in place new communication tools (instant messaging between colleagues, videoconferencing, screen sharing, etc.) from a single interface, accessible from anywhere on any device (smartphone, tablet, computer). Unified communications promote team connectivity, mobility, and flexibility. Adopting a Centrex solution therefore makes it possible to work remotely or while traveling just as one would at the office, improving team productivity.

    The drawbacks of Centrex


    Certain costs not covered
    While setting up a Centrex system is more economical than a PBX/PABX or IP PBX, it still requires clients to be adequately equipped in order to take advantage of its features. If your company needs a large number of lines, it may be more affordable to purchase materials and set them up in-house.

    Features limited by operator
    The technical solutions that a Centrex IP platform provides are not as flexible as those of an internal PBX, especially if your company has specific needs. Due to its externality, the functionalities available to you depend on those developed by the operator. It's therefore necessary to find out beforehand if operators offer features such as caller data screen pop, double-listening, whisper mode, call recording, videoconferencing, etc.

    Once you opt for a solution, you'll no longer have the opportunity to develop new features in-house.

    Powerful internet capabilities required
    To fully benefit from the advantages of a centralised IP phone system, it is essential to have a superior high-speed Internet connection to achieve optimal voice and data communications with minimal service interruption. The company's local network must be enabled to support IP telephony. Consequently, depending on the size and complexity of the network, an audit may be necessary before implementing Centrex IP service.

    In addition, each action (call, transfer, listening to a voice message, etc.) consumes a voice data channel. This makes it necessary to provide a bandwidth greater than that recommended based on the number of simultaneous users.

    Looking for a Centrex solution? Ringover is here to help


    Choosing a Centrex solution can bring many benefits to your professional communications, both in the office and on the road.
    Would you like to find out if it's possible to set up a Centrex phone system at your company? Contact one of our specialists today.