Here is what I suggest:
Setup a dedicated machine to run the 'Asterisk' open-source PBX phone system. It doesn't have to be that powerful, a 1 Ghz PC with 256 MB of ram should be quite enough to handle a small business. Asterisk is a fully featured Private Branch Exchange phone system that provides a robust platform to build and manage business telephony.
Cost of Asterisk: $0
Cost of PC: $0 (assuming you have an old PC lying around somewhere you can use, you can also use the fax PC for this as Asterisk has built-in Fax handling)
You will then require a Telephony Interface card to connect the Asterisk to the AT&T phone lines.
Digium ('The Asterisk Company') has their own brand of cards, but they are a bit pricey.
This telephony card will allow you to connect up to 4 telephone lines to the Asterisk box for $645.
http://store.digium.com/productview.php?…
Now there is an alternative to Digium cards. I personally use an Openvox card and it has worked very well for me. They are nearly exact replicas of the Digium cards made by a Chinese company and they are only a fraction of the cost.
An Openvox card costs $170 for 4 lines. Note: Make sure to order it with 4 FXO ports, and not 4 FXS ports (FXS is for internal phone extensions... I'll talk about that later).
http://cgi.ebay.ca/Openvox-A400P-4FXS-FX…
Total cost so far is $170. That gets you a fully working and customizable business phone system that can handle up to 4 external phone lines. So far it will only work with soft-phone internal extensions though (i.e. calling through your computer & headset), I'll talk about phone extensions next.
Asterisk can interface with internal phone extensions in different ways. The first way is to use that telephony card above, but get FXS ports instead of FXO ports. That will allow you to connect any standard desktop/cordless phone as an extension on the Asterisk server, and for $170 that gives you 4 internal extensions (and you could pair up phones to have them on the same extension if you wanted).
The other option is to go with IP phones which connect to asterisk directly over the Ethernet network. IP phones are more expensive than standard analog phones, but they are also more feature full.
One of the most affordable (and still high quality) IP phones available is the GXP2000.
What I particularly like about the phone is that you can custom program the display using XML formatted code. E.g. brand the phones with your business name, or create an Interactive phone directory, or even program games into it. The possibilities are really endless.
http://www.voipsupply.com/gxp-2000
The phone costs only $90 a piece (which for an IP phone is a good deal). It comes with all the standard features like Caller ID, Line Appearances, Hold, Transfer etc. built-in and has two Ethernet ports so you can plug the phone into the Ethernet line and then the computer into the phone to share the network connection without having to run new Cat-5 lines.
You can also look into the 2020 for $140. It is a more advanced version of the 2000 and also has a much bigger screen display. http://www.voipsupply.com/grandstream-gx…
There is also a 2010 version that falls in the middle for $130.
I'm also pretty sure (although not positive) the phones support Intercom tagging. Asterisk has a built-in paging/intercom feature which can send a special tag a long with a call to compatible IP phones that signals to the phone it should auto-answer the call in intercom mode.
So now you have a complete business phone system with individual phone extensions.
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Total cost:
$170 + $90 per phone
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You will have to spend time programming the Asterisk server yourself though. It used to be difficult, but now many distributions/flavors of Asterisk have FreePBX built in which provides an easy to use graphical user interface to set things up. Having said that, I would be lying if I said it was simple or easy.. it still requires some expertise or at least a good understanding of the phone system.
AsteriskNow, PBX in a Flash (PIAF), Elastix, and Trixbox are all examples of ready-to-go Asterisk distributions that have built-in drivers and graphical interfaces to make it a complete working solution. All you have to do is download and burn the .iso onto a CD, and boot the computer from the disc to install.
http://www.asterisk.org/asterisknow
http://pbxinaflash.net/
http://www.elastix.org/
http://www.trixbox.org/
There are tons of resources online to learn about Asterisk online, but since it is a community powered platform, there are few professional help and support services available (and certainly not free ones), and this is one downside to Asterisk for some people.. it really assumes you will have someone who is on staff and somewhat experienced with the platform to keep the system maintained.
By the way, I thought I would just cover a couple of things in regards to what Asterisk can do for you. Asterisk can be set-up to handle and route calls however you want. Literally, there are unlimited possibilities for controlling the call flow. You can built interactive voice menus, you can have callers put on a Queue with on hold-music, you can choose which phone extensions ring on incoming calls, etc. You can build everything from a simple receptionist system to a complex corporate switchboard operation. So it truly is a customizable platform that can handle whatever it is you want to accomplish and Asterisk comes with a variety of built-in applications to handle things like Voice Mail, Call Conferencing, Call Recording, Music on Hold, Time Conditional call routing etc. There are also FAX modules for Asterisk which can automatically detect incoming faxes and e-mail them to you.
On a side note, you can request feature from your phone company called 'Busy on No Answer' (or the equivalent name). It will allow you to send incoming calls on your primary number to the next available line when the first line is busy. So if you have 4 lines for example and a couple of them are busy, a new incoming call will keep forwarding on to the next line until it finds one that is available so Asterisk can answer it. That way you can have just 1 phone number for the business that can accept up to 4 calls at once. Asterisk can detect which lines are in use when you dial out and automatically select one which is free, so you don't have to worry about complications with incoming calls nor do you have to select a phone line before dialing.