The SH2 is good.
What's wrong the usual option of sticking their router into modem mode and adding your own router?
If it doesn't work in modem mode then it's presumably faulty, and they should replace it without needing to invent imaginary faults.
Are they refusing to replace it, or are they just refusing to provide a FOC upgrade to the SH2?
Weird, we just phoned up and asked for it and are on 60mbit package.