Postcomm Intends to Issue a Consultation Document on Royal Mail’s Proposal to Implement Size Based Pricing

In August 2003, Postcomm issued a statement explaining the process it intended to follow to assess the application it had received from Royal Mail to introduce Size Based Pricing (SBP) from April 2005. Last December, Postcomm issued a further statement explaining that it was analysing Royal Mail’s proposal, and in particular, was discussing a number of outstanding issues with Royal Mail.

Royal Mail must demonstrate that its proposal meets the criteria in Paragraph 13 of Condition 19 of its licence (See notes below). Postcomm will assess Royal Mail’s proposal against these criteria, and take account of its statutory duties under the Postal Services Act 2000, and Royal Mail’s other licence requirements.

Following initial analysis of Royal Mail’s application, we intend to issue a consultation document in April to seek views on the proposal. Interested parties will have 3 months to respond. This consultation will focus particularly on the principle of SBP, Postcomm’s approach to assessing Royal Mail’s proposal, and the impact on customers, including particularly practical implementation issues, such as the appropriate notice period for customers before any introduction of SBP. Postcomm is seeking as wide a participation of interested parties as possible.

Postcomm will do further work with Royal Mail alongside the consultation, and its price and service standards control review, to assess the cost justification for SBP. Once this is done, Postcomm expects to hold a further consultation, which will summarise the responses to the first consultation and set out our proposed decision on Royal Mail’s SBP proposal. Postcomm will continue to work with and keep Postwatch updated about progress with its consideration of SBP while it carries out the further work.