The PBX used to be the front gate to many organisations, an expensive specialised machine guarded by a fierce gatekeeper who all calls had to go through.

Now a company's private branch exchange or internal telephone switch is more likely to be software on a standard PC server, priced at a point where even small organisations can afford relatively sophisticated solutions.

From there it's a short step to Voiceover Internet Protocol (VOIP), a technology which allows organisations to combine their phone and data networks to create a widely distributed virtual office.

Stephan Goodburn, general manager of Cogent Communications, says as phone systems have changed from analogue to digital, the greater power at lower cost equation has changed Cogent from being a seller of PBXs to an integrator of application-based solutions.

"People are looking for wireless solutions," Goodburn says.

Cogent sells systems based on Nortel, NEC or Samsung switches, depending on the size and complexity of the customer.

Goodburn says VOIP is taking off slowly, in part because of the reluctance of the telcos to embrace something which is eating into their telephony revenues.

"Every switch Cogent sells is VOIP capable, but only about 20 per cent of sites use them that way," he says.

While the argument for VOIP used to be cutting down calling costs for organisations which were spread over multiple toll zones, telcos have responded to the threat by lowering toll costs and offering more attractive deals into frequently-called zones.

Now VOIP deployments are more about the ability to have visibility of all branches and business units and to deliver data and voice on the same channel, Goodburn says.

"It is not a price-based market, people are looking at benefits for the business."

It is the applications which can be put on top of PBAXs and VOIP which make the difference.

"Most applications have to be custom-built, which small and medium businesses struggle with."

That is where rival Agile is getting good traction selling IP Office, a product which telecommunications giant Avaya developed for the small business space. It will scale from two to 250 extensions.

"IP Office does all the voice and data so it is a converged solution," says Agile general manager Tony Jayne.

"As well as managing the keyphones and PBX, it handles conferencing, firewalls and IP gateways, and bundles in applications like voicemail management, email and computer telephony,