Services : Voice and Centrex

The key services provided in public switched telephone networks include voice (audio bandpass), Centrex, switched data communications service, leased line, and digital subscriber line.

Voice service is the providing of audio communication circuits that can pass analog frequencies below 3.3 kHz. Voice service is commonly called plain old telephone service (POTS). Voice service remains the core of telephone service as in 2000, the amount of voice traffic transferred per month was more than 53,000 terabytes per month [5].

The newer CO switches have enhanced voice services to allow residential customers to have practically all the features normally associated with PBX’s that serve businesses such as: call waiting, distinctive ringing, voice mail (with signaling or stutter dial tone), feature telephones, and incoming WATS. Some of the newer features are packaged (bundled) together so their actual cost is not readily known.

Figure 1 shows the cost of local telephone service in the United States and that the costs are based on a recurring charge with unlimited usage. The customer may also pay additional recurring fees for advanced services. The cost elements are reasonably standard but the costs vary among LEC’s/CLEC’s. At times the variations between LEC’s in geographies are substantial.

Figure 1: Cost of Local Telephone Service in the United States. Source: Federal Communications Commission (FCC)

Outside the United States, the cost structure for local telephone service is often based on actual usage with a per minute rate ranging from 2 to 6 cents per minute.

Centrex is a service offered by a local telephone service provider (primarily to businesses) that allows the customer to have features that are typically associated with a PBX. These features include 3 or 4 digit dialing, intercom features, distinctive line ringing for inside and outside lines, voice mail, call waiting indication, and others.

Centrex services have had many names over the years, but, whatever the name, the purpose of this offering was always the same: an alternative to customer premises PBX’s. Centrex services flourished and still have a place for many large, dispersed entities such as large universities and major medical centers.

One of the major selling points for centrex is the lack of capital expenditure up front. That coupled with the reliability associated with centrex due to its location in the telephone company CO have kept centrex as the primary telephone system in many of the businesses referenced above. PBX’s, however, have cut into what was once a quite lucrative market for the telephone companies and are now the rule rather than the exception for business telephone service. This has come about because of inventive ways of funding the initial capital outlay and the significantly lower operating cost of a PBX versus a comparable centrex offering.

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