AAA All Commercial & Domestic Telephone & Data Cabling THE Sales & installation of new key systems & second hand Commanders TELEPHONE WORKS Music on hold & paging systems Austel Licensed Installer PTY. LTD. Reg. Office: 33 Marcus St. Mt. Evelyn Vic 3796 ABN 42 059 124 284 Ph: 03 9736-3766 Fax: 03 9736-1841 www.telephoneworks.net.au THE ENORMOUS COST OF 'FREE' T ELEPHONE SYSTE MS Over the past several years there has been an increasing trend for PABX manufacturers and PABX re-sellers to sell their hardware products by 'giving them away' if the buyer agreed to use their call services for a period equal to the lease/rental of the hardware. These offers are usually framed as: "If you use us to carry your telephone calls we will give you a brand new telephone system for no or very little cost" No (very few?) commercial organisation decision makers believe in fairies or that the laws of thermodynamics have been repealed and they therefore recognise that there is no such thing as a manufactured product that does not require the factory to be paid for it. So the offerers of these 'almost free' telephony systems explain this amazing value in these terms: We can make this generous offer to you (the potential buyer) because we offset the cost of providing you with a new telephone system with a monthly call rebate on your telephone bill if you agree to switch all of your telephone calls through us for the period of the contract". They go on to say: "In this way you can get a new telephone system at no increase in cost over what you are now paying for your telephone calls". And that is true. What they do not say is that you do not need to be paying the very high telephone bills that you may be currently paying. There are many competitive offers available from Telstra including discounted mobile calls and indeed free calls to your Telstra mobiles, plans for business such as Premium Voice and leasing through a one item line on your existing phone bill. This is of course where the "free", or nearly free new telephony system" story begins to fall apart. Not only is the "free" offer not free it is, almost always, considerably more expensive than buying a new telephony system for real money or lease/rental through Telstra c.p.e. financing package to receive a minimal 8% to 10% off your existing phone bill in addition to any discounts or rebates you may currently enjoy. Typically the monthly cost of acquiring a new telephony system on a 48 month lease will cost you around $31.25 per $1,000.00 of the purchase cost per month. Page 1 of 2 Page 2 of 2 A small telephony system (4 lines/8 extensions and handsets) will be offered at below $4,000.00 purchase (gst inclusive). This would mean that a 48 month lease cost would be around $125.00 (gst inclusive) per month. This same $4,000.00 telephony system will be offered to you as a 'free' deal for a 48 month lease cost of around $450.00 per month with a $400.00 per month rebate meaning that "you only have to pay $50.00 plus GST ($55.00) a month. So. The quantification of this deal can now be seen to be not 'a free telephone system' but a discount of $70.00 a month from LIST PRICE providing that you give the telephony system provider all of your telephone call traffic. Your very generous 'free' telephony system provider is NOT giving you a $400.00 rebate off your calls (your monthly lease cost has been padded by $325.00 per month). It gets worse. To get this 'free' telephony system you have to agree to pay your telephony system provider's telephone call charges for the next 48 months (that is because they have been paid by the finance company an additional 48 x $400 = $19,200 UP FRONT for services not yet delivered!! Now that is a really nice premium of an additional 480% on the purchase price of a $4,000 box!! It gets worse again. You have now committed to pay a set rate for all of your telephone calls the next 48 months no matter what happens to rates in the future. The 'Free' provider may also charge a connection fee on all calls which adds significantly to the cost of calls. Typically an 'average' business STD call is less than 3 minutes and over 50% of calls to mobiles are less than one minute. What all of this means is that your 'free' telephony system is almost certainly going to cost you several hundred dollars more each month than if you simply shopped around for a low cost call provider (who you can change as often as you like over the next 48 months). "Free" (or even nearly "free") is still a myth in this commercial world.
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