Bandwidth.com Launches Free Hosted PBX for SMBs

Phonebooth Free provides customers with 200 inbound calling minutes a month at no charge.

By Adam Stone | Posted Mar 10, 2010
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Already a well-established supplier of VoIP phone and data services to small and mid-size businesses, Bandwidth.com today announced a free incoming phone service, as well as a full-featured phone system priced at $20 per month per user.

An inbound cloud phone system, Phonebooth Free offers 200 inbound minutes a month, with additional minutes at 6 cents each. Phonebooth On-Demand includes unlimited local and long-distance minutes. Both come with an auto-attendant, voicemail, and other features.

Bandwidth.com is a reseller of bandwidth as well as a VoIP provider with its own nationwide VoIP network. It operates as a CLEC in 48 states. The 10-year-old company took in $86 million in revenue last year. With the latest product releases, "we are really expanding our voice footprint," said vice president of marketing Todd Barr.

There will be inevitable comparisons between the Bandwidth.com services and much ballyhooed market presence Google Voice. Barr said the two should occupy different spaces, with Google targeting individual users and Bandwidth.com aimed toward the SMB market. "Most people are not going to set up an auto-attendant for their house," he said. Likewise, SMBs may not find sufficient features in the Google offering. "If you actually want to have multiple users and route calls, that’s what phone Phonebooth can do for you."

Bandwidth.com also is betting heavily on its Contact Us Plus widget. Customers can install the widget on their web sites, allowing visitors to call directly into the company with a click. The tool routes calls to the appropriate people or departments, giving SMBs a much-desired degree of polish and integration. "For a customer it makes the ‘contact us’ experience much cooler for your Web site, without your having to do much," Barr said.

As a branded feature, Contact Us Plus could also help boost Bandwidth.com’s stature on the horizon. "For us, it gets our phone system used on Web sites in a more visible way, a reminder that they are using Phonebooth Free," Barr said.

As a business proposition, the launch of Phonebooth Free and its fee-based sibling is very much a product of Bandwidth.com’s existing foothold in the market. With its own network and an existing base of intellectual property, Barr said, the company has some latitude in its ability to bring a free product to market without taking a bath.

"Because we have a network and because we build the software from the ground up, we have owner economics both from a minutes perspective and a software perspective that allow us to go low," he said.

While that may be the case, the decision to come out with a free offering was by no means an easy one. The economics of giving away free product required a lot of assumptions and a lot of tough questions.

"There is that whole business of ‘free’ that you have to figure out," Barr said. "Are people going to convert from free to on-demand? Is this something that really has the potential to change the way you go to market? We did a lot of that math and we started to realize there is a lot of power in ‘free,’ if you can convert at any reasonable percentage."

With conversion the crucial question, Bandwidth.com considers itself in an advantageous position.

VoIP products already are the company’s highest-margin offering, Barr said. That established base of business allows the company the luxury of being able to tinker with different business models as it attempts to upsell Phonebooth Free users onto Phonebooth On-Demand.

The company already has a number of marketing mechanisms in place. When users receive their voicemail via e-mail, for instance, they will encounter an ad for the fee-based product placed within that email. The company also will send out a weekly usage report that may justify an upgrade based on usage. Upgrade features also will be highlighted in the administrative portal through which users manage their Phonebooth Free accounts.

Looking ahead, Barr suggested the Phonebooth line of products could incorporate a higher level of mobile services, enabling businesses to more seamlessly bring together premise-based and cloud-based services. There’s nothing definite on the books yet, "but there is a lot to talk about that," he said.

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