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November 13, 1988

THE EFFECT ON THE PRIVATE SWITCHING MARKET OF ISDN – 2: CENTREX

By CBR Staff Writer

In CI No 1,045, Ginny Fraser looked at the changing environment in which PABX manufacturers are having to operate following the arrival on the telecommunications scene of Integrated Services Digital Network. Today, she turns her attention to the implications for Centrex, a system in its infancy in Europe but a way of life for many large US users. With a Centrex system, the user foregoes the doubtful delights of giving house room to a big telephone switch, and instead leaves it to the phone company to house the thing – actually the Centrex software runs on a public telephone exchange, giving the user all the benefits of a virtual PABX with none of the hassles – and a whole lot of other users – he hopes – out there doing the same and meeting their share of the costs. In addition to the effect that access to the public network is and will – have on the PABX market, there are also the new approaches required to the extension interfaces behind PABXs in the ISDN world. Here there are basically three ways of looking at the situation: the non-ISDN approach where terminals have to have a locally standardised or proprietary interface to access the PABX; the interim-ISDN approach, where the PABX offers a proprietary interface but an adaptor at the remote end of the extewnsion wiring offers an S interface to terminal equipment; or thirdly, the ISDN approach, with an S interface like that for basic access to the public network. Here, it is the first option that is currently most prevalent amongst suppliers – particulary attractive to those companies which have a large installed base of PABXs – where the first solution, the use of a proprietary interface is most common, although the second option is likely to come into play towards the end of the decade. Different role The state of play in establishing international standards for networking between PABXs is also significant, with a number of suppliers launching their own inter-PABX networking products. One such is Siemens CorNet, based on the Q.931 signalling system, which could become a contender for a pan-European standard to fill in in advance of the CCITT standard. Last, there is the area of PABX to host interface – which could be either primary-access based or computer-integrated telephony. Here, DEC has been quick off the mark – signing agreements with a host of telecommunications equipment manufacturers, each of which will supply a PABX-specific computer-integrated telephony link; while AT&T Co and ECMA, the European Computer Manufacturers Association, each have interfaces based on primary access. While the communications scenario of the future encompasses both ISDN and PABXs within the same network, Centrex plays a slightly different role – because in some ways it can be seen as a direct competitor to the PABX, supplying all those familiar functions like direct dialling in, call forwarding and automatic call back when free – at a remote site rather than using up the customer’s own increasingly expensive office space. As provider of the only UK service, Mercury Communications Ltd, puts it, it is committed to providing all the features of an advanced switchboard without users having to plan, purchase, accomo.cw 8 date and manage their own systems. The main benefits of Centrex are thought to be the fact that no capital outlay is required – ideal if a firm is moving around or in temporary premises, because it removes the need to move the PABX; the fact that it is expandable as required; the reduction in staffing requirements; the flexible management and the cost effective geographic coverage. While there are those who do not see Centrex and PABXs as mutually exclusive, these are mainly suppliers with their own axe to grind. Mercury, for instance, is currently pushing this view, because, if the Cable & Wireless Plc’ bid for Telephone Rentals Plc comes off, there will be both technologies nestling under the same umbrella – Telephone Rentals providing the PABXs and Mercury offering Centrex. But not everyone agrees with this view. Stephen Timms, principle consultant on the Ovum Ltd

ISDN report, said, In the US, at least, Centrex is certainly seen as a viable alternative to the PABX. If a company is considering buying or replacing its PABX, one of the places it will go automatically is to the local phone company. After all, he added, That’s how Centrex first started, as a way for the phone companies – who couldn’t sell PABXs – to compete with the equipment suppliers. Another factor affecting the uptake of a service like Centrex is the philosophy of each individual country as far as renting is concerned. Rental-oriented Dataquest’s Wright explained that this varied from country to country, In West Germany, for instance, the market is very rental-oriented, and users very often rent their PABXs – often with rental contracts lasting up to 10 years. Here in the UK, we are much more inclined to purchase equipment – we moved away from the rental philosophy some eight to 10 years ago, and now have one of the highest proportions of private networks in the world. Again, as with ISDN, much depends on tariff structures.But where a real change is to be seen in the PABX market is in the emergence of a whole new breed of PABX purchaser. According to Stephen Timms, the small site within the large organisation will emerge as a key buyer in the future. While the very large coporate customers will stick with their private networks, for at least the next 10 years or so, smaller users will emerge who actually need ISDN to access the improved services the large corporates already have. Timms reckoned there would be a burgeoning market for speech plus-data switches in the 50 to 60 extension basic access arena a market where the data switch vendors could well try to muscle in.

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