European Competitive Telecommunications Association

London, 17 October 2006 - The cost of doing business for small firms in the UK has reached an all time high as overheads continue to rise, led by utility price hikes. Despite this, research carried out by YouGov[1]surveying over 650 small business managers on behalf of Internet phone company Vonage, indicates small business owner operators are still missing the opportunity to reduce these overheads and free up much needed cash flow.

The average utility costs for UK small businesses have risen by a record 9.8% in the past 12 months[2]leading to a direct and negative impact on the bottom line of small firms in the UK. Gas price increases have led the charge rising 91% on average since June 2003, closely followed by electricity at 81% and fuel costs which hit a record high of just under £1 per litre in April this year.[3]

Despite these rises, Vonage believes small business owner operators are missing the opportunity to reduce overhead costs and free up much needed cash flow by shopping around and making the most of the technology and resources that they already have.

61% of small businesses are paying up to £300 per month on landline bills and over half are paying £400 per month on mobile phone bills. 88% already have an existing broadband connection, but 22% have never considered changing their traditional telephony supplier in favour of much cheaper and more flexible options like Internet telephony (often referred to as VoIP).

Kerry Ritz, managing director of Internet phone company Vonage UK said, As the cost of running a business continues to rise, small businesses need to start thinking more like consumers and shopping around for services, if they are to see money stay within the company.

It is hard doing business as a small firm nowadays as you have little control of costs such as energy bills that just keep ticking up and up. Regular supplier reviews as opposed to the current apparent inertia would help small businesses defuse this ticking time bomb and expose the huge savings on offer if they look to get the most out of what they already have. For example, if they already have a broadband connection, but are only using it to surf the web or manage email, it's like buying a pint of milk just to take one sip.

33% of respondents surveyed did not know what VoIP was. Of the reasons cited by small businesses for not changing their telephony set up, sticking with what seems the most obvious/easiest choice was highest (26%) followed by concern they do not have the appropriate equipment (18%).

Telephony bills can be drastically reduced without the need to invest in additional hardware by making calls over your existing broadband connection, Ritz said. Despite this, UK small businesses continue to fork out hundreds of pounds each month because their traditional provider seems to be the easier choice.

While 47% of small business owner managers admit that they have never changed telecom provider, those that have moved to Internet telephony, such as Vonage customer Geert van Der Elst from revenue generation consultancy Gelst, have seen significant cost savings.

Cost was a definite consideration for us when deciding on our phone system provider, Van der Elst said. Any small business will aim to optimise and reduce overhead costs, especially in today current climate. We thought we had been working to the most optimised landline arrangements with the cheapest international calling arrangements, however, after taking up the Vonage service we still cut our phone bills by a further 20%. This is a fabulous result which we did not anticipate!â

[1] YouGov received 676 responses from SMB managers in North East and East of England, East Midlands, West Midlands, South East and Wales in February 2006
[2] Figures from financial news and information service, ShareCast
[3] Energywatch statistics as at 4 September 2006

--ends --

About Vonage UK

Vonage UK is a subsidiary of Vonage Holdings Corp. traded on the NYSE under the symbol VG. Vonage is a pioneer in the Internet phone industry. In the UK, the award winning Vonage® service is sold on the Vonage UK web site and through national retailers Staples, Comet and PC World, and online retailer broadbandbuyer.co.uk. Vonage UK is a member of Otelo (Office of the Telecommunications Ombudsman) and is based in London, England. For more information about Vonage's products and services, please visit www.vonage.co.uk. Vonage® is a registered trademark of Vonage Marketing, a subsidiary of Vonage Holdings Corp.

For further information please contact:
Inferno Communications
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Tel: +44 (0)208 434 5500 

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