PBX Circuit Switching Design

PBX circuit switched network designs differ between each manufacturer’s product portfolio and even among models within a portfolio. Although there are differences in the individual PBX system switch network designs, the main functional elements are the same. All port circuit interface cards transmit and receive communications signals via a directly connected TDM bus, but the time and talk slot capacities are likely to differ between systems. A very small or small PBX system switching network design may consist of a single TDM bus backplane connected to every port interface circuit card, but a larger PBX system with more than one TDM bus must be designed to provide connections between the TDM bus segments. The TDM bus connections may be direct connections or center stage switch connections. The center stage switching system complex may be based on a space switch matrix design using circuit switched connections or a broadband TDM bus interconnecting lower bandwidth TDM buses. Two of the leading suppliers of PBX systems, Avaya and Alcatel, also offer customers of their very large PBX system models a center stage ATM switching option that can also support switched LAN data communications applications.

Center Stage Switch Complex
The primary function of the center stage switching complex is to provide connections between the local TDM buses, which support port carrier interface transmission requirements across the internal switching network. Complex center stage switching systems may be used in PBX systems designed for 100 user stations, although the smaller systems typically have a single TDM bus design or multiple TDM buses with direct link connections between each bus. A center stage switching complex may consist of a single large switching network or interconnected switching networks.

A very small PBX system usually does not require a center stage switching complex because the entire switching network might consist of a single TDM bus. Individual TDM bus switch network designs require a TDM bus with sufficient bandwidth (talk slots) to support the typical communications needs of a fully configured system at maximum port capacity. Most small PBX systems based on a single TDM bus design can provide nonblocking access to the switch network at maximum port capacity levels. If the TDM bus has fewer talk slots than station and trunk ports, the switch network can still support the communications traffic requirements, if properly engineered.

There are a few small and intermediate PBX systems that have multiple TDM buses but no center stage switching complex. For example, an Avaya Definity G3si can support up to 2,400 stations and 400 trunks using three-port equipment cabinets, each with a dedicated TDM bus, but does not use a center stage switching complex to connect the TDM buses. PBX system designs like the Definity G3si use direct cabling connections between each TDM bus for intercabinet connections between ports. This type of design can support a limited number of TDM buses without a center stage switching complex, but more TDM buses require more direct connections between each bus. When the system design includes more than three TDM buses, the switch network connection requirements may become unwieldly and often very costly. During the 1980s the Rolm CBX II 9000 supported up to 15 port equipment nodes that required dedicated fiber optic cabling connections to link each cabinet’s TDM bus switching network because it lacked a center stage switching complex. A fully configured system required 105 direct link connections (fiber cabling, fiber interface cards), resulting in a very costly alternative to a center stage switching complex. Every new nodal addition to the system required new fiber optic connections to every existing cabinet node. The advantage of a center stage switching com- plex in an intermediate/large PBX system design is to simplify switch network connections between endpoints.

There are several center stage switch designs typically used in digital circuit switched PBXs:

Broadband (very large bandwidth) TDM bus

Single-stage switch matrix

Multistage switch matrix

Broadband TDM Bus
Most local TDM buses have limited bandwidths capable of supporting between 32 and 512 time slots. A TDM bus functioning as a center stage switching complex capable of supporting switch connections between many local buses must have a transmission bandwidth equal to or greater than the total bandwidth of the local TDM buses it supports for nonblocking access. For example, a single TDM bus with a bandwidth of 128 Mbps (2,048 time slots) can support switch connections for sixteen 8-Mbps TDM buses or four 32-Mbps TDM buses.

The center stage TDM bus must also support a sufficient number of physical link connections to support all local TDM buses. If the bandwidth of the center stage TDM bus is not sufficient to support switched connections for every local TDM bus time slot, there is a probability of blocking between the local TDM bus and the center stage TDM bus. The number of local TDM bus connections is always limited to ensure nonblocking access to the center stage TDM bus.

Local TDM buses typically interface to the center stage TDM bus through a switch network element known as a Time Slot Interchanger (TSI). The TSI is a switching device embedded on the physical interface circuit card that supports the physical local/center stage bus connection. The primary function of a TSI is to provide time slot connections between two TDM buses with different bandwidths. The simplest definition of a TSI is a portal between the local TDM bus and the center stage bus.

If a single broadband TDM bus cannot support nonblocking connections for all of the installed and configured local TDM buses, it may be necessary to install additional center stage TDM buses. A center stage switching complex based on multiple high bandwidth TDM buses requires connections between each center stage bus, in addition to switched connections to the local buses. Switched connections between any two local TDM buses in the PBX system may require transmission across two center stage buses, which are linked together, because each center stage TDM bus has dedicated connections to a select number of local TDM buses. The bandwidth connections between the high-speed center stage TDM buses must be sufficient to support the port-to-port traffic needs of the local TDM buses. For this reason, system designers use very high-speed optical fiber connections to ensure the switched network traffic requirements.

Single-Stage Circuit Switch Matrix
The most popular center stage switching design is a single-stage circuit switch matrix. A single-stage circuit switch matrix is based on a physical crosspoint switched network matrix design, which supports connections between the originating and destination local TDM buses. A single-stage circuit switch matrix may consist of one or more discrete switch network matrix chips. Most small/intermediate PBX systems use this type of design because of the limited number of local TDM buses needed to support port circuit interface requirements.

The core element of a crosspoint switching matrix is a microelectronic switch matrix chip set. The switch matrix chip sets currently used in PBXs typically support between 512 and 2,048 nonblocking I/O channels. A 1K switch matrix supports 1,024 channels; a 2K switch matrix supports 2,048 channels. Each channel supports a single TDM bus time slot. Larger switch network matrices can be designed with multiple switch matrix chips networked together in an array.

Based on the size of the switch network matrix and the channel capacity of a single chip set, a center stage switching complex may require one or more printed circuit boards with embedded switch matrix chip sets. The number of chips increases exponentially as the channel (time slot) requirements double. For example, if a single 1K switch chip can support 1,024 I/O communications, four interconnected 1K switch chips are required to support 2,048 I/O channels. Doubling the number of channels to 4,096 will require 16 interconnected 1K switch chip sets. Large single-stage switching networks use a square switching matrix array, for example, a 2 × 2 array (four discrete switch matrix chip sets) or a 4 × 4 array (16 discrete switch matrix chip sets).

A 1K switch matrix can support any number of TDM buses with a total channel (time slot) capacity of 1,024, for example, eight 128 time slot TDM buses or four 256 time slot TDM buses. The total bandwidth (time slots) of the networked TDM buses cannot be greater than the switch network capacity of the center stage switch matrix. The physical connection interfaces for the TDM buses are usually embedded on the switching network board, but this is not always the case. The intermediate/large Nortel Networks Meridian 1 models require an intermediary circuit board, known as a Superloop Card, to provide the switch connection between the local TDM buses (Superloops) and the center stage 1K group switch matrix.

Multistage Circuit Switch Matrix
A single-stage circuit switch matrix design is not feasible for the center stage switching system complex of a large or very large PBX system because such a system would have a system traffic requirement for as many as 20,000 time slots. A very large array of switch matrix chip sets would lead to design complications and require several switch network array printed circuit boards. The better switch matrix design solution for a large or very large PBX system is a multistage design. The most common multistage switch network design type is a three-stage network design known as a Time-Space-Time (T-S-T) switch network. A T-S-T switch network connects three layers of switches in a matrix array that is not square (Figure 1).


Figure 1: TDM bus connections: center stage space switch matrix.

In a T-S-T switching network design, each switch network layer consists of the same number of switch matrix chips. The first switch network layer connects the originating local TDM buses to the second switch network layer; the third switch network layer connects to the second switch network layer and the destination local TDM buses. In this design, the second network switch layer is used to connect the first and third layers only, with no direct connection to the local TDM buses. The term Time-Space-Time was derived from the fact that the first and third switch network layers connect to TDM buses, and the second switch network layer functions solely as a crosspoint space connection switch for the two outer layers.

In a T-S-T switch network configuration, each TDM bus channel entering the first switch network layer has access to each outbound switch connection to the second switch network layer. In turn, each outbound switch connection in the second switch network layer has access to each switch connection in the third switch network layer. Each switch matrix in the first and second layers is connected according to the same pattern.

The T-S-T switch network is contained on a combination of printed circuit boards. Multiple first and third layer switch matrix chip sets may be packaged on a single board, although the usual design is a single switch matrix per board to simplify connections between the local TDM buses and the second switch network layer. Multiple second layer switch matrices are usually packaged on a single board. The total number of boards required for the center stage switching complex will depend on the number of I/O TDM channels configured in the installed system. An 8K switch network will require fewer boards than a 16K switch network.

ATM Center Stage
During the early 1990s, it was believed that traditional circuit switched voice networks would someday be replaced by ATM switch networks. Several PBX manufacturers worked to develop a PBX switch network based on ATM switching and transmission standards. An ATM switching network can provide the same high quality of service as traditional circuit switched networks can for real-time voice communications; it also offers the additional advantage of very high switching and transmission rates. Lucent Technology’s enterprise communications system division (now Avaya) and Alcatel developed, announced, marketed, and shipped ATM center stage switching options for its largest PBX models. Implementing the ATM center stage switching option requires a stand-alone ATM switching system equipped with customized interface cards to connect to the PBX processing and switch network subsystems. A gateway interface card is used to link the local TDM buses to the ATM switching complex for intercabinet communications. The gateway interface card converts communications signals from time-based PCM format to ATM packet format.

Shipments of the option have been negligible since its introduction for two important reasons: few customers have installed ATM-based LANs, opting instead to upgrade their IP-based Ethernet LAN infrastructure, and the cost to install the PBX option is greater than the cost of a traditional TDM/PCM center stage switching complex. In addition to the cost of the ATM switching system, there is the cost of high-priced interface cards used to convert TDM/PCM communications signals to ATM format for connecting the local TDM buses to the center stage switch complex. Nortel Networks tested an ATM-based version of its Meridian 1, but canceled development in the late 1990s after determining that the cost to upgrade a customer’s installed system was too high.

The Avaya Definity ECS and Alcatel OmniPCX 4400 ATM-based offerings are still being marketed, but too few customers have shown enough interest to make it a viable center stage switching option for the future. Growing market demand for IP-based PBX systems appears to have stunted development of the ATM center stage switching option.

Fundamentals of PBX Circuit Switching

Time Division Multiplexing
The core design element of a traditional digital PBX is the local transmission bus that connects to a port circuit card. Many port circuit cards may share a common local transmission bus, and a PBX system may have many local buses dedicated to designated port circuit cards housed in different port carrier shelves and/or cabinets. Port circuit cards are used to connect peripheral equipment devices, such as telephones and telephone company trunk circuits, to the internal circuit switched network, where the local transmission bus is the point of entry and exit. Voice signals transmitted from the port circuit card onto the transmission bus are in digital format. The transmission and coding standard used by all current circuit switched PBX systems is known as Time Division Multiplexing/Pulse Code Modulation (TDM/PCM). To fully understand the workings of the PBX circuit switched network, it is necessary to define the basic terminology (Figure 1).


Figure 1: TDM/PCM.

Multiplexing is the sharing of a common transmission line (bus) for transport of multiple communications signals. A communications transmission bus is a collection of transmission lines used to transport communications signals between endpoints. TDM is a type of multiplexing that combines multiple digital transmission streams by assigning each stream a different time slot in a set of time slots. TDM repeatedly transmits a fixed sequence of time slots over a single transmission bus. In a PBX system, the transmission bus is usually referred to as the TDM bus.

A PBX TDM bus is used to transport digitized voice signals that originate as continuous (analog format) sinusoidal waveform signals. Digital sampling of a continuous audio signal is a technique used to represent the analog waveform in digital bit format. The sampling technique that has become the accepted standard for circuit switched communications is PCM.

Pulse Code Modulation
PCM is a sampling technique for digitizing the analog voice-originated audio signals. PCM samples the original analog signal 8,000 times a second. This is more commonly referred to as 8-KHz sampling. The sampling rate used to code voice audio signals is based on the frequency range of the original signal. To accurately represent an analog signal in digital format, it is necessary to use a sampling rate twice the maximum analog signal frequency, a calculation based on the Shannon theorem. The maximum frequency of human voice is about 3.1 KHz. This frequency was rounded up to 4 KHz for ease of engineering design, resulting in an 8-KHz (2 × 4 KHz) sampling rate for digitizing voice audio signals. An 8-KHz sampling rate translates into a one sample every 125 microseconds (8 KHz–1; Figure 2).


Figure 2: PCM encoding.

Each digital sample is represented by an 8-bit word (28 = 256 sample levels) that measures the amplitude of the signal. The amplitude of the signal is based on the power (expressed in units of voltage) of the electri- cal signal generated by the telephone transmitter/receiver in the handset. This signaling technique has become known as Digital Signaling 0 (DS0), or 64-Kbps (8 bits × 8 KHz) channel transmission format. The term DS0 was defined based on the Digital Signaling 1 (DS1) format used to describe a digital T1-carrier communications circuit supporting 24 64-Kbps communications channels.

The PCM samples generated from each communications system port are transmitted onto the TDM bus in a continuously rotating sequence based on the time slot assignments given to each port circuit interface (see below). Only a single PCM word sample is transmitted at a time; that is the entire electrical transmission line is reserved for use by only one port circuit for transmission of its sample signal. The PBX processing system monitors each port circuit’s transmission time assignment in the rotating sequence, controls when the sample is transmitted, and coordinates transmission of the sample between the originating and destination endpoints.

There are two standards for coding the signal sample level. The Mu-Law standard is used in North America and Japan, and the A-Law standard is used in most other countries throughout the world, although each uses the 64-Kbps transmission format. For this reason, PBX systems must be designed and programmed for different geographic markets. Using firmware downloads, system vendors and customers can program their PBX systems to support the local PCM standard. The early digital PBX systems used different hardware equipment based on the location of the installation.

To summarize the fundamentals of PCM:

4-KHz analog voice signals are sampled 8,000 times per second (8-KHz sampling rate)

Each sample produces an 8-bit word number (e.g., 11100010)

8-bit samples are transmitted onto the TDM bus at a 64-Kbps transmission rate

The samples from each port circuit are transmitted in a continuously rotating sequence

TDM Bus Bandwidth and Capacity

Bandwidth is the amount of data that can be transmitted in a fixed period. For digital transmission, bandwidth is expressed in bits per second; for analog transmission, bandwidth is expressed in cycles per second (Hertz). The bandwidth of an 8-bit PBX TDM bus is determined by the internal switching system clock rate used to create time slots for each channel’s transmission. The faster the clock rate, the more digitized samples per second can be transmitted over the TDM bus. The clock functions merely as a counter; the faster it “counts,” the more sampled digital signals within a fixed period (usually defined as 1 second) can be transmitted over the TDM bus. For example, an 8-bit TDM bus operating at 2.048 MHz has a bandwidth of 16 Mbps. If you double the clock rate (double the operating frequency), the bandwidth capacity doubles.

If the operating frequency of the TDM bus is not provided but the number of time slots is known, the bandwidth of a TDM bus can be calculated by multiplying the number of time slots (as determined by the system clock rate) by 64 Kbps (the number of transmitted bits per communications channel). A TDM bus segmented into 32 time slots has a transmission bandwidth of 2.048 Mbps (32 × 64 Kbps ). A system with a faster clock rate that is capable of segmenting the TDM bus into 512 time slots would have a bandwidth of 32.64 Mbps (512 time slots × 64 Kbps). It is usually awkward to refer to the TDM bus bandwidth by the exact transmission capacity, so it is common to see the TDM bus bandwidth written, and referred to, as a 32-Mbps TDM bus. The most common PBX TDM bus bandwidths are usually based on exponential multiples of 2 Mbps (2n Mbps): 2 Mbps, 8 Mbps, 16 Mbps, or 32 Mbps.

Not all of the time slot segments on a TDM bus are designed to handle communications traffic. Most PBX system TDM buses reserve a few time slots for the transmission of control signaling across the internal system processing elements. For example, a control signal time slot is used to alert the main system control complex that a telephone has gone off-hook. The signal is passed from the telephone instrument to the port circuit card and across the internal processing/switching transmission network via the local TDM bus. A variation of this design is to dedicate an entire TDM bus for control signaling. Examples of PBX systems using a dedicated signaling bus for system port control are the Siemens Hicom 300H and Hitachi HCX 5000 products. When a single bus is used for communications and processing functions, the control signaling time slots are not available for port communications requirements and should not be considered in the analysis of the system’s traffic handling capabilities. Time slots that can be used for real-time communications applications are sometimes referred to as talk slots. The total number of talk slots and control signaling slots per TDM bus are equal to the number of time slots (Figure 3).


Figure 3: TDM transmission bus.

The number of available talk slots limits the number of active PBX ports that can be simultaneously supported by a single, common TDM bus. An active PBX port is simply defined as a port that is transmitting and receiving real-time communications signals—on-line. A port may be customer premises equipment working behind the PBX system, such as a telephone, or an off-premises trunk circuit. For example, a 2.048-Mbps TDM bus with 30 talk slots can support 30 active communications ports (telephones, modems, facsimile terminals, trunk circuits, voice mail ports, etc.).

Port-to-Port Communications over a Single TDM Bus
When a station port is about to become active, the PBX processing system will assign that port a talk slot on the local TDM bus connected to the port’s circuit interface card. For the remainder of the call, the port will use the designated talk slot to transmit its digitized voice communications signals across the internal circuit switched network. The port receiving the call may be another station or a port interface connected to a trunk circuit. If the originating station port places an internal system call to another station, the PBX processing system will assign the destination port a designated talk slot on its interface circuit card TDM bus. If the originating station port is making an off-premises call requiring a trunk circuit connection, the processing system will assign the trunk circuit port a talk slot on the TDM bus supporting its interface circuit card. The same process takes place for incoming trunk calls to user stations: the trunk interface port circuit is assigned a talk slot, as is the destination station interface port circuit. The circuit switching system will use the two designated talk slots to connect the two ports together to transmit and receive communications signals for the duration of the call. The two talks slots will work in tandem for talking and listening between ports, with each port physically linked to both talk slots.

The number of talk slots required per call will depend on two conditions:

1. The number of connected ports per call

2. The number of TDM bus segments required for port connections

A two-party conversation between PBX ports interfacing with the same TDM bus will require two talk slots, but multiparty conference calls will require as many talk slots as conference parties. For example, a four-party conference call would require four TDM bus talk slots. A small PBX system based on a circuit switched network design consisting of a single TDM bus will require only two talk slots per two-party call, but intermediate and large PBX systems designed to support hundreds or thousands of station and trunk ports will have switching network designs based on many interconnected TDM bus segments, and more than two talk slots will be required for an internal two-party call. More than four talk slots will be required for a four-party conference call if the ports are housed in different port equipment cabinets. The answer to the question of how many talk slots are needed per call in an intermediate or large PBX system requires some knowledge of the PBX switch network design.

Multiple TDM Bus Design
Most PBX systems have multiple TDM buses supporting the communications needs of the system ports. The individual TDM bus segments can be linked through a variety of methods based on the topology of the switching network design. Two user stations connected to port interface circuit cards housed in different port equipment cabinet frames would each be supported by different local TDM buses. A PBX switched network TDM bus may support a few port circuit cards (perhaps half a port carrier shelf), an entire port carrier shelf, or even multiple port carrier shelves within the same cabinet frame. Stackable single carrier cabinet designs sharing a common backplane for process- ing and switching functions also may be supported by a single TDM bus, but it is more than likely that port circuit interfaces housed in different cabinets will not share the same TDM bus. Based on these TDM bus segment scenarios, it is possible that a call between two user stations housed on the same port carrier shelf would require four talk slots per call and two station users on different port carrier shelves in the same equipment cabinet frame would require only two talk slots. The number of required talk slots will depend on the switch network design.

Whenever two communicating ports do not share a common TDM bus, the PBX processing system will assign the originating port a talk slot on its local TDM bus (the TDM bus directly connected to its port interface card) and a talk slot on the TDM bus that is local to the destination port. The destination port will likewise be assigned two talk slots: one on its local TDM bus and another on the originating port’s local TDM bus. This scenario requires at least four available talk slots divided between two TDM buses. Additional communications channels may be required to link the TDM buses, and the PBX processing system makes the necessary assignments per call. Multiparty conference calls across multiple TDM buses will require one talk slot per party per TDM bus used to complete the call connection. For example, a three-party conference call among three internal station users, each supported by a different TDM bus, may require nine talk slots: three talk slots per party (one per TDM bus) × three parties = nine talk slots (Figure 4).


Figure 4: Call across multiple TDM buses.

To minimize the number of inter-TDM bus connection requirements and increase the traffic handling capability of the PBX system, it is often recommended that groups of station and trunk circuit ports share a common TDM bus, instead of dedicating different TDM buses to different station or trunk interface port circuits. Station user groups with high intercom traffic requirements also should share common switch networking facilities to minimize inter-TDM bus connection requirements.

In some instances there will not be talk slots available on a local TDM bus when a station call is initiated. Voice-based communications systems traditionally have been designed to support more system ports than available local TDM bus talk slots. In a typical PBX system environment, it is rare that every station or trunk port will be active simultaneously, but there may be a blocked call if there are more provisioned station/trunk ports than total local TDM bus talk slots. PBX systems are designed with traffic engineering calculations to minimize blocked call attempts. Call blocking situations have a low probability of occurring if the system is correctly traffic engineered, but they may occur if there are more potentially active ports than available talk slots required to provide the circuit switched connection between the ports.

Fundamentals of PBX Circuit Switching

Time Division Multiplexing
The core design element of a traditional digital PBX is the local transmission bus that connects to a port circuit card. Many port circuit cards may share a common local transmission bus, and a PBX system may have many local buses dedicated to designated port circuit cards housed in different port carrier shelves and/or cabinets. Port circuit cards are used to connect peripheral equipment devices, such as telephones and telephone company trunk circuits, to the internal circuit switched network, where the local transmission bus is the point of entry and exit. Voice signals transmitted from the port circuit card onto the transmission bus are in digital format. The transmission and coding standard used by all current circuit switched PBX systems is known as Time Division Multiplexing/Pulse Code Modulation (TDM/PCM). To fully understand the workings of the PBX circuit switched network, it is necessary to define the basic terminology (Figure 1).


Figure 1: TDM/PCM.

Multiplexing is the sharing of a common transmission line (bus) for transport of multiple communications signals. A communications transmission bus is a collection of transmission lines used to transport communications signals between endpoints. TDM is a type of multiplexing that combines multiple digital transmission streams by assigning each stream a different time slot in a set of time slots. TDM repeatedly transmits a fixed sequence of time slots over a single transmission bus. In a PBX system, the transmission bus is usually referred to as the TDM bus.

A PBX TDM bus is used to transport digitized voice signals that originate as continuous (analog format) sinusoidal waveform signals. Digital sampling of a continuous audio signal is a technique used to represent the analog waveform in digital bit format. The sampling technique that has become the accepted standard for circuit switched communications is PCM.

Pulse Code Modulation
PCM is a sampling technique for digitizing the analog voice-originated audio signals. PCM samples the original analog signal 8,000 times a second. This is more commonly referred to as 8-KHz sampling. The sampling rate used to code voice audio signals is based on the frequency range of the original signal. To accurately represent an analog signal in digital format, it is necessary to use a sampling rate twice the maximum analog signal frequency, a calculation based on the Shannon theorem. The maximum frequency of human voice is about 3.1 KHz. This frequency was rounded up to 4 KHz for ease of engineering design, resulting in an 8-KHz (2 × 4 KHz) sampling rate for digitizing voice audio signals. An 8-KHz sampling rate translates into a one sample every 125 microseconds (8 KHz–1; Figure 2).


Figure 2: PCM encoding.

Each digital sample is represented by an 8-bit word (28 = 256 sample levels) that measures the amplitude of the signal. The amplitude of the signal is based on the power (expressed in units of voltage) of the electri- cal signal generated by the telephone transmitter/receiver in the handset. This signaling technique has become known as Digital Signaling 0 (DS0), or 64-Kbps (8 bits × 8 KHz) channel transmission format. The term DS0 was defined based on the Digital Signaling 1 (DS1) format used to describe a digital T1-carrier communications circuit supporting 24 64-Kbps communications channels.

The PCM samples generated from each communications system port are transmitted onto the TDM bus in a continuously rotating sequence based on the time slot assignments given to each port circuit interface (see below). Only a single PCM word sample is transmitted at a time; that is the entire electrical transmission line is reserved for use by only one port circuit for transmission of its sample signal. The PBX processing system monitors each port circuit’s transmission time assignment in the rotating sequence, controls when the sample is transmitted, and coordinates transmission of the sample between the originating and destination endpoints.

There are two standards for coding the signal sample level. The Mu-Law standard is used in North America and Japan, and the A-Law standard is used in most other countries throughout the world, although each uses the 64-Kbps transmission format. For this reason, PBX systems must be designed and programmed for different geographic markets. Using firmware downloads, system vendors and customers can program their PBX systems to support the local PCM standard. The early digital PBX systems used different hardware equipment based on the location of the installation.

To summarize the fundamentals of PCM:

1. 4-KHz analog voice signals are sampled 8,000 times per second (8-KHz sampling rate)

2. Each sample produces an 8-bit word number (e.g., 11100010)

3. 8-bit samples are transmitted onto the TDM bus at a 64-Kbps transmission rate

4. The samples from each port circuit are transmitted in a continuously rotating sequence

Enlarging the IP Centrex Marketplace

Even though the host hardware, software, and support for IP-Centrex can be more easily scaled to match demand than that for legacy Centrex, the system still represents a significant investment for the service provider. There is, therefore, a good incentive to use the following strategies to enlarge the market and so optimize the return on this front-end expenditure.

Reselling
Because of the availability of discounts (for quantity of lines and contract duration) in Centrex's tariff structure, resellers can take advantage of the margin at the retail level.

Over the last two decades some of the telcos have actively encouraged these aggressive, sales-oriented companies to sell Centrex-based local and long-distance packages. Some resellers grew to have tens of thousands of Centrex lines rented by their customers. Unfortunately, in recent years, the rapidly falling rates for toll calls and the costs of serving many small customer sites have pushed many CLECs into bankruptcy, and forced others to dilute their ownership as a way of reducing their excessive debts.

In closely related telecom markets, such as selling key telephone systems or retailing cellular/mobile phones, independent companies continue to handle most of the business, and these are obvious candidates to sell IP-Centrex successfully.

Application Service Providers
According to market research published by Nortel Networks, "over 40% of medium and large enterprises want to outsource the implementation of IP telephony solutions and lease the technology from a service provider." The service provider that can package complex applications, such as contact center operations or unified messaging, with the multimedia services of IP-Centrex, should be able to make a powerful sales proposition to at least half of the businesses in its area.

Experienced system integrators who understand LAN-based traffic are in a good position to implement an effective IP telephony system with an excellent QoS.

IP-Centrex is not always easy to install on an enterprise LAN, as it is essential to ensure that no switch ports are generating jitter, to determine which IP phone's NIC is sending out unwanted bursts of data, and to design a VLAN to segregate priority traffic correctly. Companies that have built up a team of systems engineers with current IP-networking expertise will be in high demand as the pace of IP-Centrex implementation accelerates.

Who Will Buy IP Centrex?

The availability and characteristics of IP-PBXs have somewhat changed the factors that define excellent opportunities for IP-Centrex. For example, an organization with multiple locations was considered a good prospect for legacy Centrex. Now that IP telephony can be implemented with either an IP-enabled PBX or IP-Centrex, this consideration is no longer distinctive.

If you know the profile of the organizations that are likely to rent IP-Centrex, you should be able to focus on those good prospects and do a complete job of specifying the optimum solution for those customers. The concerns of a typical IP-Centrex customer now consist of two parts: considerations that are general to Centrex (as a rented, outsourced service) and considerations that are more specific to IP-Centrex (with powerful call-processing capabilities and related applications situated in the network, rather than on the customer's premises). The general Centrex-favoring factors are:

- Purchases are based on value, not simply on cost.

- Operating expenses are preferred to capital investments.

- Office size or telecom needs are changing quickly.

- Do not want to own or manage telephone systems.

Those additional factors, which tend to favor IP-Centrex, may be summarized as follows:

- Multiple business sites, especially nationwide or international, with a managed intranet is in use or planned.

- There are major requirements for flexible video or multimedia communications.

- More than 10% of employees are at-home workers, telecommuters, or travel extensively.

- There is significant need for contact center or unified messaging capabilities.

- Seasonal activities change telecom requirements considerably;

- Major IT activities, such as Web sites, are outsourced.

Small businesses, with up to 50 employees, are good IP-Centrex prospects, especially if they provide professional services, such as law firms, insurance agents, financial advisors, real estate agents, or health care centers. These small operations do not have any dedicated IT or telecom personnel, and thus rely on technical support from the service provider. Additionally, the advantages of combining all access lines into one are more significant for the smaller-scale offices.

The senior management of large organizations now view telecommunications as a strategic resource. These corporations expect high standards of quality, reliability, support, and vendor reputation, with ease-of-use and a full range of advanced features that enable outstanding customer service levels. Major businesses that handle large volumes of inbound or outbound calls worry about jeopardizing sales and customer service operations when their system is running at full capacity.

The redundancy of servers and network accesses that is the hallmark of carrier-based IP-Centrex is especially attractive in this environment.

These five questions may help a manager make the IP-Centrex or IP-PBX choice:

Is it significantly easier to obtain an annual operating budget rather than a capital budget for the purchase of telecom and IT technology? That is, does your company prefer "pay as you go" solutions?

Is management concerned about head count? Would they prefer to run operations with limited internal support personnel?

Are you finding it difficult to recruit competent network support personnel?

Does your company experience fluctuation in staffing levels?

Are you concerned with the ability of telephony system vendors to provide reliable service and support?

Two or more "yes" answers to these questions indicate that an organization should at least consider IP-Centrex service, if and when it becomes available in its location(s).

To summarize, in the medium and large telecom markets the organizations that are considered to be good IP-Centrex prospects are as follows:

- Financial services, especially banks;

- Retail store chains;

- Governments at all levels;

- Educational institutions of all types;

- Businesses that prefer outsourced solutions.

Where IP Centrex Will Win

The dominant manufacturers of Centrex systems have adopted the philosophy that the marketing of the service is a three-sided arrangement, a partnership of the system supplier, the service provider (often the telco), and the customer (or end user). The aim of this partnership is to provide the most cost-effective, multimedia telecommunications services, while keeping the customer's transactions on a shared public network.

A survey by Nortel Networks asked telecom and IT managers to rate the relative importance of a number of needs, on a scale of zero to three. The results of the survey appear in Figure 1. A significant finding from the survey is that managers identified less expensive networks and less costly administration as their two most important needs.


Figure 1: Enterprise convergence needs.

The benefits to an enterprise of using hosted VoIP (in other words, IP-Centrex) are as follows:

- Network consolidation that results in long-distance savings;

- Reduced costs of MACs;

- Productivity improvements with collaborative services;

- Extended service reach and ubiquity.

While some of these benefits can be claimed for IP-PBXs, which are owned and (usually) operated by the customer, the advantages of IP-Centrex can be quantified for those organizations that have a significant number of telecommuters and mobile professional workers (say, more than 10% of their employees), who also benefit from unified messaging and shared applications. A Nortel study that compared IP-Centrex and PBX costs for a company with several fairly large branch offices (at least 100 employees per office) is summarized in Table 1. The business model used for this case study included the full purchase cost of hand- or headsets and was inclusive of LAN upgrades.


Table 1: IP-Centrex Versus PBX: Cost Savings

Most studies of the competition between Centrex and PBXs clearly show that PBX vendors gain most of the business for medium-sized, single-site enterprise communication systems. Where multiple office sites are served by one telco within a Local Access and Transport Area (LATA) in the United States or within an extended area service, legacy Centrex has been attractive, compared with multiple PBX systems and a network of leased lines.

Those owners of small businesses and home offices who were aware of Centrex have gained benefits from that service. The concept of national Centrex, with harmonized features and billing, has been developed, and international Centrex has been demonstrated, but not really used so far.

The advent of IP-Centrex should change the shape of the telecommunications marketplace, as it could be made attractive to small businesses and to organizations that are geographically distributed, to the national or international level, as summarized in Table 2.


Table 2: IP-Centrex Market Segmentation

Two more dimensions that are difficult to portray in this table are:

1. The users' requirements for integrated applications;

2. The proportion of mobile/remote users within the organization.

These two factors should make the choice of IP-Centrex decisive. If an organization has already decided to outsource its Web site or its messaging service to a provider on a contract, then it is a prime candidate for IP-Centrex services. A Lucent executive was quoted in 1999 as stating that "there couldn't be a better time for Centrex, as network convergence creates options for new business services and better efficiency."

In order to identify which organizations should be the targets for Centrex marketing efforts, it is useful to know the distribution of companies by type of industry. Figure 2 (taken from U.S. Census Bureau statistics) shows that more than 70% of large companies (companies with over 500 employees) can be classified as being within six industry groups. These numbers can be safely extrapolated to most countries with a modern infrastructure.


Figure 2: Large companies by industry classification.

Another set of figures shows that 18% of these large organizations are local in scope, while 20% are nationwide and 26% have an international presence. It is easy to guess that education and health care organizations are frequently local operations. However, large financial and professional services companies often have national or international activities and, therefore, should be prime prospects for IP-Centrex.

Significantly, while these quoted statistics show publicly funded organizations, direct governmental administrations that operate at three or four levels in most countries are not included. Most governments have offices in many locations and, frequently, find it difficult to recruit and retain well-qualified telecom and IT professionals. We can state unequivocally that government organizations are excellent candidates for IP-Centrex.