Note: Many topics at this site are reduced versions of the text in "The Encyclopedia of Networking and Telecommunications." Search results will not be as extensive as a search of the book's CD-ROM.

A single telephone relies on the telephone company's switching equipment to set up call circuits. Organizations with many phones have a choice of relying on equipment at the telephone company to set up and control calls, or to set up their own switching equipment. A PBX is a telephone exchange device located at a customer premises site. All the company's phones are connected to this switch. The switch itself is then connected to the phone company via a single trunk line, usually a T1 or fractional T1 line.

Companies with PBXs typically have unique telephone numbers for each inside phone. The first few digits of these numbers are similar. In addition, people inside the company can call other insiders by dialing the last few unique digits of their "extension." Calls to the outside world go through the PBX over a trunk line connected to the local carrier.

Centrex is a PBX-like service offered by the RBOCs in which the switching equipment is located at the carrier site, not the customer premises. Basically, the carrier creates a PBX for a customer in their switching equipment. The main advantage of doing this is to get the PBX out of your building and locate it where qualified service technicians are available to service it. In addition, Centrex makes it easy to keep up with the latest telephone technologies. Carriers can easily offer you new Centrex phone services. In contrast, a PBX may require an expensive upgrade to support those same services. In a decision about whether to use Centrex or PBX, Centrex is usually the preferred solution for small to medium-size companies. Larger companies usually benefit from purchasing their own on-site PBX equipment.

The name "Centrex" is trademarked and was formerly owned by AT&T, but is now owned by the RBOCs.

As Internet telephony and voice/data networks take hold, managers should evaluate new VoIP (Voice over IP) equipment and standards as they emerge. An "IP PBX" installed on-site may be a viable solution. In contrast, many carriers are offering Centrex-like services that support voice/data networking. For example, AT&T's INC (Integrated Network Connection) services supports up to 40 voice calls simultaneously with 512 Kbits/sec of data and IP (Internet Protocol) traffic using an AT&T-owned ATM multiplexer located on the customer's premises.

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