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All profit up front

Channel Telecom’s ISDN scrappage scheme offers big benefits for resellers and their customers

Taking a leaf from the car industry, Channel Telecom has launched an ISDN scrappage scheme to encourage customers to make the transition from ISDN to IP over Ethernet.

Clifford Norton
Clifford Norton

The scheme incentivises businesses to move from ISDN to Ethernet before BT’s 2025 deadline by giving them £1,000 cash-back when they upgrade to Ethernet, paid for on a lease contract.

Channel Telecom Managing Director Clifford Norton says the beauty of this scheme is that the £1,000 cash-back is not loaded onto the lease, which would add to the customer’s costs, but comes directly from the discount carriers give to Channel Telecom for paying for a three-year Ethernet connection upfront.

“It works like this,” explained Norton. “If I go to Openreach and they install a circuit, there is a standard charge of around £3,500 for the installation. If you pay Openreach for the installation upfront, they will give you a discount of about £1,000. All I am doing is taking the lease money, which I would be charging the customer anyway, and paying the carrier upfront to get the discount, which I then give to the customer.”

Norton says it is up to the reseller whether they pass this on to the customer. Some might keep it for themselves, but he believes that most will use the cash-back to incentivise their customers, especially those that decide to run Ethernet alongside ISDN.

“The reason we have offered the £1,000 cashback option is that there are customers that have both ISDN 30 and Ethernet and want to keep their old phone system. There’s a bit of cost involved in having a SIP bridge or upgrading current licences on your phone system – it is not cheap; it will cost at least £1,000. If I give you the £1,000, there is no reason not to do it and then you can scrap your ISDN and save yourself £100-£200 a month,” he said.

Norton is quick to point out that, being based on a lease, the scheme has other benefts for channel partners.

“If the reseller signs up a customer and the customer goes bust, they have to carry on paying the carrier for the next three years. But with the lease option, they no longer carry that risk, the leasing company does. That’s a massive beneft,” he said.

“The other great thing about this scheme is that if the reseller has included their proft in the lease price, they get three years’ proft up-front. As soon as the Ethernet is installed, the leasing company pays us the full value of the Ethernet upfront. We pay the carrier what we owe for the circuit for three years, we take a little bit of proft for ourselves and we pay the partner all their proft. The customer pays the same price they would anyway, just on a three-year lease.”

Importantly, that price is generally a lot less than the customer would pay for ISDN. Norton cites the example of one customer that has used the ISDN scrappage scheme to replace all their analogue and ISDN lines and maintenance contracts with a hosted system on a 50/100 Ethernet connection. By doing so they have been able to reduce their monthly telephony costs from £960 to £500, which includes the cost of the Ethernet connection, a whole new hosted solution, associated equipment and call costs.

“The customer is saving £465 a month and they have a brand new system, which allows them to move to 365 and a new CRM integrated with their hosted system. They’ve got a 50/100 Ethernet, which will last them the next fve years. The partner has earned £11,000 and has paid for all of the equipment upfront. We’ve paid the carrier upfront. Everybody’s happy.”

Norton says the scrappage scheme has struck a chord with Channel Telecom partners and generated a huge amount of interest in the industry.

“The volume of enquiries we are getting from people in the industry is fantastic. It is almost like the old days when the guys were selling phone systems: they go out; they sell a phone system; they put it on a lease that the customer pays off over 5 years; they install an ISDN 30; and they bill the calls. The thing is, the calls are now part of the package and ISDN is going in eight years. If a customer can get everything now, on an Ethernet with all the equipment paid for up front and it’s cheaper, there’s not much of an argument. Best of all, there’s no risk and the partner gets all their proft for three years up front.”

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