If you’ve ever signed a business phone system contract, bought internet service for an office, or set up a contact center, there’s roughly a 50/50 chance you never dealt with the carrier directly. Somebody else sold it to you. Maybe they called themselves a consultant, an agent, or a managed services provider.

That somebody is part of what the telecom industry calls “the channel.”

The channel is an indirect sales ecosystem worth well over $100 billion a year. It’s the reason AT&T doesn’t need a sales rep in every strip mall in America. It’s why a 12-person consulting firm in Phoenix can sell Comcast, Lumen, T-Mobile, RingCentral, and thirty other providers without working for any of them. And it’s why a surprising number of the biggest telecom deals in the country are closed by people most end-users have never heard of.

Here’s how the whole thing actually works.

Why carriers don’t just sell everything themselves

Start with the economics. A carrier like AT&T has millions of business customers. Serving them directly means hiring thousands of account executives, paying their salaries and benefits, giving them territories, managing them, and eating the cost when they churn out after 18 months (which, in telecom sales, happens a lot).

Indirect sales fixes this. Instead of hiring reps, carriers recruit independent partners (agents, MSPs, VARs) and pay them commissions only when they actually close deals. No base salary. No benefits. No desk. The carrier only pays when revenue shows up.

It’s way cheaper. Industry estimates put direct sales cost at 15-25% of revenue. Indirect? More like 8-12%. And indirect scales faster because you’re not recruiting, hiring, and training. You’re just enabling people who already have customer relationships.

That’s the pitch, and it works. Roughly 35-40% of business telecom revenue in the U.S. flows through the channel. For some providers, especially cloud-first ones like RingCentral, Vonage, or Dialpad, indirect is the majority of new business. RingCentral has said publicly that channel partners drive about a third of their total revenue, and that share keeps growing.

The players: who actually does what

The channel has a few distinct roles. They overlap sometimes, but here’s the clean version.

Carriers (also called suppliers or providers) are the companies that own or operate the actual services. On the connectivity side: AT&T, Comcast Business, Lumen, T-Mobile for Business, Verizon, Spectrum Enterprise. UCaaS: RingCentral, Zoom, Microsoft Teams Phone, 8x8, Vonage, Dialpad. Contact center: Five9, Genesys, NICE. They build the products, run the networks, handle provisioning and support. A big carrier might have hundreds or thousands of active channel partners plugged into its program, each with defined commission structures, training tracks, and marketing support.

Agents (or technology advisors, or consultants, depending on who’s printing the business cards) are the independent salespeople. They don’t resell the service under their own brand. They don’t handle billing or support. They recommend providers to business customers, help them evaluate options, assist with the contract, and earn a commission from the carrier for the life of that account.

Think of them like insurance brokers. An independent insurance agent doesn’t work for State Farm. They work for their client, and they can quote you policies from a dozen carriers. Telecom agents do the same thing. A good agent might have contracts with 50+ providers and will match customers to the right one based on location, needs, and budget.

Day-to-day, an agent is prospecting for new business, taking meetings with IT directors and CFOs, running RFPs, comparing quotes from multiple carriers, and shepherding deals through contracting and installation. The best ones build practices around specific verticals like healthcare, financial services, or hospitality, where they know the compliance requirements and typical tech stacks cold.

A solo agent doing $30,000-$50,000/month in recurring commissions is doing very well. A top-producing agent or small agency might push $100,000-$200,000/month in residuals. There are agents pulling seven figures a year, but they’re the exception.

MSPs (managed service providers) do everything agents do, plus they operate and manage technology on behalf of their customers. An MSP might sell a client a UCaaS phone system, set it up, handle moves/adds/changes, monitor it, and be the first call when something breaks. They often bill the customer directly and layer their own management fee on top of the underlying service cost. MSPs tend to have deeper, stickier customer relationships. They’re harder to displace because they’re embedded in the customer’s operations. The trade-off is they need more staff, more tooling, and more operational infrastructure than a pure agent.

VARs (value-added resellers) buy products at wholesale and resell them with added services: configuration, installation, custom integrations, training. VARs are more common on the hardware side (selling and installing on-premise phone systems, network equipment, cabling) but many have shifted into cloud services as the market moved. Honestly, the pure-play telecom VAR is a dying breed. Most are becoming MSPs or adding agency practices, because you can’t mark up a SaaS subscription the way you could mark up a pallet of Cisco phones.

TSDs (technology services distributors) are the middlemen between carriers and agents, and they’re one of the most misunderstood pieces of the whole ecosystem. More on them in a moment.

How TSDs sit in the middle of everything

If you’re new to this industry, TSDs are probably the piece that seems weirdest. Why do you need a middleman between the carrier and the agent? Can’t the agent just contract directly with AT&T?

They can. But most don’t, and here’s why.

A TSD (sometimes called a master agent, though the industry is moving away from that term) aggregates carrier relationships. The big ones, like Telarus, Avant (now part of Quisitive), Intelisys (a ScanSource company), Sandler Partners, and AppStar, have contracts with 200-300+ suppliers. An agent who partners through a TSD gets instant access to all of those contracts without doing 200 separate applications and background checks.

TSDs also handle the back office. They process commissions (so the agent gets one check instead of fifty), provide quoting tools, run training programs, and offer engineering support to help agents design complex solutions. Some TSDs have pre-sales engineers who will jump on a call with an agent’s customer and do the technical deep dive.

In exchange, the TSD takes a cut of the commission. If a carrier pays 10% residual on a deal, the TSD might keep 2-3% and pass 7-8% to the agent. The exact split varies by TSD, by agent production level, and by carrier.

For agents, this math usually works. The TSD’s tools, support, and aggregated contracts make it easier to close more deals, which more than offsets the commission share. A solo agent trying to manage direct contracts with 50 carriers would spend half their time on paperwork.

Telarus is the largest TSD by partner count and has been growing aggressively, adding cybersecurity and cloud infrastructure to its portfolio beyond traditional telecom. Avant has built a strong brand around its Pathfinder quoting platform. Intelisys leans on ScanSource’s distribution muscle. Each has a slightly different flavor, but the core model is the same.

How the money flows

Let’s trace a deal from start to finish.

A business customer in Dallas needs to upgrade their phone system. They have 200 employees and they’re moving from an old on-premise PBX to a cloud UCaaS platform. Monthly cost will be about $5,000.

Their IT director talks to a telecom agent, let’s call her Sarah. Sarah is contracted through Telarus. She evaluates the customer’s needs, pulls quotes from RingCentral, Zoom Phone, and Microsoft Teams Phone, and recommends RingCentral based on their integration requirements.

The customer signs a 36-month contract directly with RingCentral for $5,000/month. Sarah doesn’t touch the billing. RingCentral bills the customer directly.

RingCentral’s channel program pays a 10% monthly residual commission. On $5,000/month, that’s $500/month in total commission.

That $500 goes to Telarus first. Telarus takes its share (say 25%, or $125) and passes the remaining $375/month to Sarah.

Sarah will collect that $375 every month for the life of the account. If the customer stays for three years, that one deal pays Sarah $13,500. If the customer grows and adds more seats, her commission grows proportionally.

Now multiply that by 20, 50, or 100 active accounts. This is how agents build real income. The residual model means every deal you close keeps paying you. Year three of an agent’s career looks radically different from year one, because the recurring revenue base keeps stacking.

Some carriers offer upfront commissions instead of (or in addition to) residuals. On that same $5,000/month deal, an upfront model might pay 3-4x the monthly commission as a lump sum, so $15,000-$20,000 at signing. Agents who need cash flow often prefer upfront. Agents building for the long term tend to prefer residuals because the total payout is higher over time.

Why this matters if you’re new here

The telecom channel is one of the few corners of tech where a single person with no venture capital, no office, and no employees can build a genuine six-figure or seven-figure business by being good at matching customers with the right technology.

It’s also an industry going through massive change. The shift from old-school telecom (circuits, PRI lines, on-premise PBX) to cloud everything (UCaaS, CCaaS, SD-WAN, SASE) has reshuffled the deck. Agents who sold T1 lines for twenty years are now selling AI-powered contact centers. MSPs who managed on-premise Avaya systems are migrating customers to RingCentral or Zoom.

And the product set keeps expanding. The channel started as telecom, but today’s agents sell cybersecurity, cloud infrastructure, managed IT, and business continuity. The “telecom channel” label is almost a misnomer at this point. It’s really a technology advisory and distribution channel that happens to have telecom roots.

If you’re thinking about getting into this industry, or you’re already in it and trying to figure out where it’s heading, the single most useful thing you can do is understand the money. How commissions flow, who controls the customer relationship, where the leverage sits. That’s what separates people who build lasting businesses here from people who wash out in year one. The rest of this series goes deeper: how the money actually works in detail, what TSDs do and how to choose one, and how AI, consolidation, and cybersecurity are reshaping the channel right now.

How Channel Partners Make Money — Commission models, residuals, SPIFs, MDF, and real math showing exactly how agents, MSPs, and VARs get paid in the telecom channel.