Internet Protocol PBX maker Fonality today introduced a low-cost option for small businesses that uses voice-over-IP technology to let small businesses get PBX features for about the cost of a key system.

Although Fonality started its existence in the VoIP space, the company is now focused on meeting the needs of small businesses--most with less than 100 employees--whether or not they want to use VoIP, CEO Chris Lyman said. The PBXtra product is aimed at those small businesses.

“We still have a VoIP network, but we stopped selling the service in early 2004,” he explained. “Today, we are more of a PBX play than a VoIP play.”

The transition occurred when Fonality realized that most small businesses would not have a good VoIP experience because they were using DSL and cable broadband connections, and had no control over the quality of service they received.

“To have a good VoIP experience, you need to be able to manage the quality of service over your LAN and over the WAN, and the implementation strategies have to be in concert,” Lyman said. “Because we can’t control the broadband provider, that’s almost impossible to do.”

PBXtra is based on Asterisk, the Open Source Linux PBX operating system, and Fonality claims the system eliminates 60% to 80% of the cost of a PBX. The basic system is $995, and fully loaded with 10 phones it is $2733.

For that price, PBXtra comes with click and call dialing, four-digit dialing, support for telecommuters to dial in, integration of Microsoft Outlook, MP3-based music on hold, unlimited extensions, unlimited voicemail, and support for both IP and analog phones.

It can be configured from a Web portal, eliminating the need for a PBX technician to handle moves and changes, and its Call Center Edition supports two to 10 stations for about $2000 extra.

“Most key systems cost from $3000 to $10,000, so fully loaded we are about the cost of a key system, but with PBX functionality,” Lyman said. “It’s like getting a Ferrari for the cost of a Ford.”

David Katz of Durand and Associates, a Twin Cities property management firm, admits he thought Fonality’s PBXtra was “too good to be true” at first, but now says the system exceeded his expectations and saved his company $12,000 in upfront costs.

“We needed to expand, and it made sense to get a PBX,” he said. “The other options I looked at were $20,000, and they were similar [to Fonality’s] but not as good.”

A major plus, Katz said, was the ability for either an administrator or individual users to go onto a simple Web portal and manage their own phone service, including forwarding calls. Other PBXs would have required a monthly maintenance fee, to cover moves, changes or other problems, but Fonality charged his firm $500 for the full year.

“Their customer service is about the best I’ve ever experienced, and we are in the service business,” Katz said.

Fonality is distributing its PBXtra through direct Web-based sales and through 300 agents nationally. Only about 40% of its current customers use VoIP, Lyman said.

“We are an affordable PBX company today,” he said.