"Can Centrex survive or perhaps even thrive in the era of convergence?"

Industry observer Jay Brandstadter thinks it can, but maybe not in the form you've known it: "For those considering IP telephony alternatives, the hosted PBX (News - Alert) offers the key advantages and economies of scale of the centralized approach and the rich feature capability and flexibility of the IP-PBX," he noted reently.

Hosted or “centralized” voice services, often called Centrex, Brandstadter explains, were declining when voice over Internet protocol came along in the late 1990s: "The capabilities and possibilities of the emerging IP-PBX added to the attractiveness of premises-based offerings for the enterprise."

As he notes, Centrex does offer value, it "eliminates most of the expense of buying and operating a PBX, and it has key central-solution attributes, such as easy growth/ scalability and use of highly reliable carrier-class platforms."

Much good stuff in the paper, far too much to go into here, but one useful part is where he provides a qualitative comparison of VoIP options:

The Centrex IP and IP Centrex options are fairly close, but the edge is given to the IP Centrex approach because of its flexibility in external servers, lower reliance on legacy Centrex, and migration ease to more robust hosted alternatives.

IP Centrex and hosted PBX provide Web integration for a variety of purposes, including browser-based tools for customer management of MACs and phone features. This is faster and more economical than previous Centrex offerings in which these functions were the responsibility of the service provider.

The hosted PBX alternative shares the economies of scale of Centrex, such as carrier-class reliability, scalability, and support, and the feature/application richness of the IP-PBX. In addition, it is, typically, the lowest cost option because of factors like access costs (T1 vs. PRI), use of open, standard CPE, and operational and maintenance staff and support cost reductions.