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Centrex is a portmanteau of central exchange, a kind of telephone exchange.
Use of Centrex
Centrex is a PBX-like service providing switching at the central office instead of at the customer's premises. Typically, the telephone company owns and manages all the communications equipment and software necessary to implement the Centrex service and then sells various services to the customer.
No switching equipment resides on the customer's premises, as the service is supplied and managed directly from the phone company's exchange site, with lines being delivered to the premises either as individual lines over traditional copper pairs or by multiplexing a number of lines over a single fiber optic or copper link. In effect, Centrex provides an emulation of a hardware PBX, by using special software programming at the central office, which can be customized to meet a particular customer's needs. As with a PBX, stations inside the group can call each other with 3, 4 or 5 digits, depending on how large the group, instead of an entire telephone number (unit number).
Centrex obviates the need for separate exchange lines delivered to a site for use with a 1A2 Key System or similar, or PBX. Instead, telephone extensions, called Centrex lines, are delivered directly from the local exchange to the user. Some customers, however, still like to use a key telephone system for a small office within the large corporate Centrex, in an arrangement called "key behind Centrex". Unlike with a conventional PBX, it is a simple matter to have extensions at different locations while allowing them to function as if they were within the same building. Newer IP PBX systems also allow phones at any location with a WAN or Internet connection to act as a local extension. Facilities such as Direct Inward Dialing (DID), where individual extensions are offered a direct and unique telephone number for incoming calls, are standard features in a Centrex environment. Stations may also be part of a hunt group, allowing for automatic distribution of incoming calls to two or more extensions.
With the high price of Long Distance service, many large companies had their own network of private lines crossing the country or to distant countries. Managing these networks of 'Tie Lines' and connecting users to them was also an important part of Centrex.
Birth of Centrex
Centrex was invented in the mid 1960s by the Engineering Department of New York Telephone to replace the PBX switchboards of large customers. It was a feature package of the 5XB crossbar system. Much equipment had to be redesigned, including incoming trunks and markers. The redesigned equipment was so expensive that usually a separate 5XB switch was used just for Centrex customers, while POTS (Plain Old Telephone Service) customers were wired to an unmodified exchange.
The PBX had the important feature that someone who received a call in error could jiggle the switchhook, causing a light to flash to recall the operator to connect the caller to the desired extension. The feature was implemented in Centrex with a timing circuit to detect this hook flash and set up a three way connection among outside party, inside party and operator. For this purpose the incoming trunk also needed its own data storage in the form of reed relay packs to store the identity of the connected line.
The operator or "attendant" had a large and complex attendant console, replacing the old, larger and even more complex switchboard and giving additional control of a connection. Its buttons and lights needed approximately fifty pairs of wires. Incoming calls arrived on an Attendant Trunk which, for customers with more than one console, waited for one to become idle and then connected to it, initially via Step by Step switches arranged as a Trunk Finder and Position Finder making up a small Automatic call distributor some years before that term was invented. Customers who preferred the old cord switchboards could use an adapted "608" board. In either case the console communicated with the incoming trunk with coded plus and minus 130 VDC signals on Tip, Ring or both wires.
Bell Labs took over Centrex development in the late 1960s. The NYTel version was designated Centrex I, and the Bell Labs revision Centrex II with additional features. The unreliable Step switches were replaced by a Centrex Position Link Circuit (CXPL), a small, dedicated two stage crossbar network. In the early 1970s Centrex III arrived, a complete redesign bringing more versatility to the old 5XB system. Rather than incoming trunks having appearances on the ordinary Line Link Frame for transfer purposes, Centrex III (or Phase 3 Centrex) had a separate four stage Transfer Network of six-wire crossbar switches to connect to a Transfer Trunk. CXPL continued in use for connecting to consoles. Among other changes, the Phase 3 consoles used DTMF rather than multifrequency pulsing. The Centrex product line was also extended down-market, with Centrex Small Business for customers having mere dozens of lines and no attendant console.
Meanwhile Stored Program Control came to live up to its promise of versatility, and Centrex customers were among the first in the middle 1970s to be removed from 5XB to 1ESS switch. Complex logic and storage was cheaper in a central computer than in individual trunk circuits, hence outgoing calls could be transferred as easily as incoming. Other manufacturers produced similar services, usually calling them something else due to trademark considerations. Northern Electric (later known as Nortel) called their version IBN or Integrated Business Network and enhanced the service with their proprietary P-phone sets in the 1980s.
In the United States, the usage of Centrex lines has fallen over the past decade from 16.5 million in 2002 to 10.7 million in 2008 as users transition to IP-PBX (through VoIP).  Centrex continues to be used by large institutions, government agencies, and universities as most of the equipment has already been paid for, though leasing Centrex lines may be more expensive.
Types of Centrex service
The Centrex customer is not restricted to using the features available to POTS customers, but can choose from a wide variety of special services and features. In fact, telecommunications companies generally offer numerous types of Centrex service, including "Packaged Centrex", "Centrex Data", and "Customized Centrex".
Packaged Centrex customers could be offered a fixed set of features in package "A", a different set of features in package "B", and so on. These packages can be offered at a relatively low cost as little or no customization is permitted, minimizing the operational costs of programming and maintaining the services for the telephone company.
Centrex Data services can provide relatively low speed (56 and 64 kbit/s) data services utilizing the circuit-switched telephone network. Although they are now overshadowed by the internet and other data networks, Centrex Data services can offer very flexible and wide-reaching network configurations since connections can be made almost anywhere within the reach of the telephone network.
Customized Centrex is the most flexible (and most expensive) Centrex service as it offers a highly customizable set of options that require specialized programming and troubleshooting skills to maintain. A typical Customized Centrex setup will allow 4 digit dialing between "locals" (perhaps even if they are located in different parts of the city), customized routing through the telephone network (such as Least Cost Routing or Time of Day Routing), and customized codes for invoking features.
- Small business start-ups (growth and costs)
- Banks and financial institutions (branch offices/multi-departmental branches)
- Professional offices (reliability, connectivity and customer service)
- Local government (reliability, cost, multi-location)
- Hotels and guest houses (customer service)
- Colleges and Universities (reliability, cost, multi-location, growth)
- Temporary locations where permanent PBX services are impractical, such as a campaign office.
- Call transfer
- Call diversion – on no reply /on busy
- Call Waiting
- Three Party Conference
- Call pickup (Group)
- Ring Back
- Reminder / Alarm call
- Last Number Redial
- Centrex Hotline (non-dialed connection)
- Centrex Warm Line (delayed Hotline)
- Centrex Hunt Groups, with optional bypass numbers
- Key behind Centrex
- Reed, Brad (February 13, 2012). "Centrex: It's alive (for now)!". Network World 29 (3): 10. Retrieved 22 February 2012.
- "TIA'S 2009 ICT MARKET REVIEW AND FORECAST". The Telecommunications Industry Association. 2009. pp. 3–20.
- Hochmuth, Phil (September 20, 2006). "VoIP converts say good riddance to Centrex". Retrieved 22 February 2012.
- Greene, Tim (October 26, 2007). "PBX v. Centrex". Network World. Retrieved 22 February 2012.