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It’s like 1998 all over again

Technology Reseller talks to Clifford Norton, managing director of Channel Telecom, about developments at the channel-only provider of wholesale and retail telecommunication solutions

Clifford Norton, Managing Director, Channel Telecom
Clifford Norton, managing director, Channel Telecom

Business has been booming at Channel Telecom, so much so that for the last two years it has appeared on The Sunday Times Tech Track 100 ranking of Britain’s fastest growing private technology companies.

The company was founded in 2008 and in the last three years turnover has increased rapidly, from circa £6.5 million in 2014 to £10.2 million in 2015 and £14.5 million in 2016. Over the same period, its partner base has almost quadrupled in size, from about 100 in 2014 to 200 in 2015 and 360 in 2016.

Managing director Clifford Norton expects similar growth levels again this year, taking turnover close to £20 million.

He attributes Channel Telecom’s success to a number of factors, foremost amongst them its strict channel-only strategy and multi-carrier approach.

“The main thing about us is that we’re channel-only, so we’re never going to be going after the same customer as a partner. There may be another partner against you but it will never be us. The other thing is we’re not tied to any particular carrier. When you come to us, we’ll normally give you prices for five or six different suppliers and let you choose the one you prefer,” he said.

Wholesale or commission

Partners work with Channel Telecom on either a wholesale or a dealer basis.

Wholesalers buy services from Channel Telecom and then do everything themselves, including billing customers and collecting the money (though Channel Telecom can do the billing if required). According to Norton, the wholesale route is becoming increasingly popular.

“We’ve got more partners going wholesale than want to work on a dealer basis. The reason they come to us is that we’ve got order relationships with the likes of BT Openreach, Virgin, Colt and we’ve developed all of our systems to talk to their systems. A wholesaler start-up or small business would never get the prices and rates they get through us, or the service, simply because they don’t have the account managers on the ground anymore. We’re very much an intermediary between the carriers and the smaller wholesalers,” he explained.

The dealer route is favoured by companies that don’t want to get involved in service, support and billing – the ‘mucky minutes, as Norton calls them.

“Most of our dealers are businesses that want to offer lines and calls to their customers, but don’t really want to get involved with the day to day management of it. We bill the customer, we deal with all of their support, we collect the money, we do everything; the dealer basically just recommends us and earns a commission on the profit every month.”

Because everything is handled by Channel Telecom, its dealer base includes a diverse mix of partners, from office removals firms and estate agents to IT companies that provide the servers and infrastructure but don’t want to get involved with lines and calls. All the dealer needs to succeed is a good customer base.

The shift to IP

Whether operating as wholesalers or dealers, Channel Telecom partners are benefitting from a massive market shift to IP telephony.

“At the moment, the industry reminds me of that period from the late ‘90s, when BT was deregulated, to the middle of 2000 when everybody moved to Least Cost Routing. Now, everybody is moving away from traditional telephony, putting their network in the same place and moving to hosted or SIP,” explained Norton.

“The problem with IP telephony used to be that connectivity was never particularly great; a lot of companies didn’t want to put all of their systems onto an internet connection that was neither particularly fast nor reliable. But the cost of connectivity has dropped so much and speeds have improved so much in the last 18 months that the number of companies moving to IP has grown massively. They’re all getting rid of traditional lines and calls and moving onto IP telephony.”

Norton expects this trend to accelerate following BT’s announcement of its intention to close down its ISDN network by 2025.

Additional software

Another trend from which Channel Telecom partners are benefitting is the expansion of the company’s product portfolio and the transition to solutions sales.

“Now, when we sell a customer a data connection we don’t just sell the data connection but also the SIP trunks, the IP hosted, Microsoft 365 and additional software. We’re not just selling a simple telephony solution anymore; we’re selling a complete solution,” explained Norton.

He added: “One thing I’m working on now is a channel solution with Microsoft 365. We’re looking to get Microsoft accredited ourselves so that we can start delivering these products through our partners. It’s quite a long process, probably 6-8 months before you’re even accredited and then another six months before you can sell it through the channel. We’re about half way through that process.”

In the meantime, Channel Telecom continues to add new solutions to its portfolio, like Nimbus UC, introduced in August last year and already boasting 50 active Nimbus EC resellers and more than 1,000 user licences.

It is also continuing to invest in service and support to make sure that it carries on meeting the needs of its partners.

“The more services we can offer to our partners, the more they can sell into their customers,” explained Norton. “But we also want to service those partners, so we need to make sure that we have the best pricing, the best service, the best portals, and then constantly account manage them and look after them to make sure that we deliver everything they want.”

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