XO Communications is hoping to woo small business customers with a flat-rate integrated access service that combines high-speed Internet access with voice over IP for those with 16 phones lines or less.

The company today will announce its XOptions Flex package that offers simplicity in pricing and operation but also enhanced features, said Nicola Jackson, director of product management for IP services for XO.

While XO is hardly first to market in VoIP or even VoIP for small businesses, it is the first facilities-based CLEC to introduce flat-rate pricing for an integrated services offering, said Mark Winther, group vice president and general manager of IDC.

“By offering integrated access with unlimited domestic calling, they are first,” Winther said. “We've seen consumer companies like Vonage and UNE-P-based offers, but it hasn't appeared among facilities-based carriers.”

The XOptions Flex plan is a simplified bundle offer that includes local and long-distance voice, Internet access and hosting, in a 1.5 Mb/s version and a 3 Mb/s version, Jackson said. The plan includes features that businesses are used to, such as call waiting, call forwarding, call park and four-digit dialing.

“This is for smaller companies that don't have a PBX and may not have a key system,” she said.

Any easy-to-use administrative portal allows for basic management tasks, including moves and change, hunt group set-up and resetting of voice mail passwords. The service also offers dynamic bandwidth allocation so that voice services are given priority but data speeds can burst up to the amount of bandwidth not in use by a VoIP line.

“It's a great solution for customers who have a lot of traffic, such as sending update files to headquarters, that happens after hours,” Jackson said.

Winther fully expects other facilities-based competitors to follow XO's lead on flat-rate integrated services, including incumbent LECs.

XO is offering IP-based voice mail, but will layer integrated messaging on as an additional service later, she added.

“The small business market is a definite target for the Bells,” Winther said. “They are not neglecting that market. This is going to get very competitive.” For example, Winther cited BellSouth's 2004 financial results showing significant growth in its small business unit.

XO's service will be available in the Boston, New York and Washington metropolitan areas in early March and nationwide by the second quarter.