This month…pub chains toast a bumper Christmas, insurers look to the future with optimism and telecoms firms contemplate the rising profile of VoIP.
This month…pub chains toast a bumper Christmas, insurers look to the future with optimism and telecoms firms contemplate the rising profile of VoIP.
Leisure – Legal wrangles
While the political war of words relating to the introduction of 24-hour licences for drinking UK establishments looms on the horizon, the festive season for Britain’s pubs should have caused cheer.
The British Beer & Pub Association (BBPA) believes that over five million more pints per day were sold during the 12 days of Christmas above the average 18 million pints sold each day by the pub sector, equating to an extra £14 million added revenue per day.
But the sector may sober-up quickly with the Government’s proposals that they should pay for policing the future late openings of pubs. The BBPA points out the Government pays £10 billion in total on all policing, but the drinks industry pays over £21 billion in taxes each year. By BBPA’s communication director Mark Hasting’s reckoning, ‘We are currently paying over £11 billion more than the total police budget as well as CCTV, door staff and security costs. The BBPA questions how much the industry should be charged. But as if often the case when Government is called into question, little notice may be taken.
Insurance – FSA under fire
Morale among insurers has lifted with a ruling from the Financial Services and Markets Tribunal that only part of the pensions misselling case brought by the Financial Services Authority (FSA) against Legal & General was valid. The tribunal criticised the FSA’s enforcement procedures and recommended a reduction in the £1.1 million fine imposed on the life assurance group, which in turn said it was ‘actively pursuing’ this option.
Meanwhile, leading Lloyd’s market insurer Kiln says the outlook for 2005 remains ‘attractive’, despite recent falls in premium rates. These had risen from 2001 to 2004 when a cyclical downturn brought a 2.3 per cent easing overall, but more recently the impact of an unusually severe hurricane season has helped to strengthen prices.
Kiln chief executive Edward Creasey explained that; ‘last year’s pattern of very modest premium reductions seems set to repeat itself, confirming prospects for 2005 remaining an attractive underwriting year.’
Telecommunications – VoIP dilemma
Broadband was the undisputed technology success of 2004, with customer connection rates easily outstripping analyst expectations. Yet it is the supplementary technologies that broadband facilitates that possess the potential to truly revolutionise the communications industry.
Chief among these additional technologies is Voice over Internet Protocol (or VoIP), a system that enables voice calls to be conducted over an internet connection.
As a concept, VoIP is nothing new; indeed it has been around in one guise or another since the late 1990s. Yet it has only been with the mass migration to broadband connections that VoIP has become truly viable. And this poses some intriguing questions for the telecoms sector.
As Simon Cleaver, chief executive of AIM-listed communications services group Business Serve explains, the ‘costs of VoIP are extremely cheap. It will cost you around 1.2p per minute to phone China. Through a traditional landline the same call would cost around 80p.’ Moreover, local calls can often be made free, with users simply signing up for a certain amount of bandwidth each month, just as they currently do with internet access.
Such a model has profound implications. After all, as Lee Strafford, chief executive of fellow AIM-listed ISP PlusNet notes ‘telecoms firms [are likely to] try and hold back VoIP because, quite frankly, it blows their business apart.’
The challenge for the likes of BT is to therefore work out exactly how they will be able to turn a profit, if at all, from this system.
