It’s time for Centrex users to set themselves free

What seems to be a pragmatic decision may prove more costly for those who haven’t considered SIP trunking’s benefits

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Centrex vs. SIP trunking

Back in 1999, a friend of a friend admonished me at our local Ottawa pub for musing aloud that our homegrown tech giant, Nortel Networks, might be on the brink of disaster.

“Are you serious?” he said. “As if that would ever happen!”

Fifteen years later Nortel – which at one point seemed immortal – is no longer with us. (See Karl, I told you so.)  Yet one of the products it championed is still hanging around after all these years: Centrex. Created 50 years ago, Centrex basically allowed businesses to access enterprise grade voice features (deployed across multiple locations) from carriers for a monthly fee.

In a humorous blog post for, Tom Brannen also flashes back to 1999. He recalls attending a Nortel press junket at a high-end resort where the company touted its latest concept: Centrex over IP networks. As Brannen writes, the idea seemed impressively ahead of its time.

“In essence, Nortel gathered us together in the summer of 1999 to pitch cloud-based UC. Sure the guts were different, but the concept was the same.”

But he also adds that ultimately, “IP Centrex never went anywhere.” Brannen then asks, “How could such a great strategy fail before it even got off the ground?”

Answering his own question, Brannen concludes that unlike today’s cloud-based offerings, IP Centrex was initially priced too high to be cost-effective, too difficult to manage, too dependent on Local Exchange Carriers and too limited in terms of features and integration.

It’s true that IP Centrex was quickly usurped by other VOIP services. But believe it or not, traditional (i.e., pre-IP) Centrex isn’t exactly dead yet. Just two years ago, Verizon and AT&T still had a combined total of 10 million active analog Centrex lines in the U.S. In the words of one cheeky headline writer, “Centrex: It’s alive (for now)!”

Why are so many businesses still hanging onto old-school Centrex service instead of moving to newer options like SIP trunking?

The initial appeal of Centrex was easy to see. No need to buy, manage and maintain an entire advanced-features phone system for various offices; the carrier took care of all those headaches for you at a fairly low subscription price. Essentially, it’s easy to stick with what you know, especially when it seems so cheap.

In addition, some major carriers have made it difficult for customers to switch to SIP. For example, a few years ago AT&T introduced service clauses penalizing customers financially if they exited their contracts specifically to migrate to SIP.

Compared with SIP, UCaaS or Hosted Collaboration Service (HCS), Centrex has limitations that can make it more expensive to keep in the long run.

As Teresa Griffin-Muir, Allstream’s former VP of regulatory affairs, said at the 2013 Allstream Experts Forum: “You can just renew your Centrex contract for another five years and try to lower your costs but if you do that you’ll have done nothing to improve productivity.”

It might be time for Centrex holdouts to move on and move over to SIP trunking. Otherwise they may get stuck, like another one of my old Ottawa friends, holding on for far too long to something like Nortel stocks back in 1999: seemingly cheap and comfortably familiar yet costly in the long run.
photo credit: *Blunight 72* via photopin cc

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