Businesses to suffer first from Royal Mail changes
The decision to end the Royal Mail's 350-year-old monopoly on delivering letters from next January has raised the prospect of rival firms installing different coloured post boxes alongside the traditional red ones.
Customers would then have to choose whether to put their card or letter into a red, yellow or possibly blue pillar box, depending how quickly they wanted it delivered and how much they had paid for a stamp.
But despite callers to radio phone-in programmes today being asked if they would be prepared to ditch the UK's 115,000 Royal Mail boxes and entrust letters to a private firm, the reality is likely to be much different.
For the decision by the industry's regulator Postcomm to fully liberalise the market 15 months earlier than planned is expected to hit business deliveries first.
Around 80% of the daily postbag of 83 million letters and packets are sent by companies and it is this lucrative end of the market which will become the battleground.
Private firms including Business Post, Express Dairies and Deutsche Post of Germany already deliver post in the UK, but their activities are limited to bulk business mail in batches of at least 4,000 letters.
Competition was first introduced in January 2003 but was restricted to 30% by value of the letters market.
Full competition was originally planned for April 2007, the same year as the European Union was due to consider opening up the postal market across Europe.
When Postcomm proposed this in 2002 the Royal Mail was known as Consignia and was losing £1 million a day as it launched a three-year renewal plan which would involve thousands of job losses and post office closures.
Since then the organisation has returned to profit, has improved reliability and continues to dominate the £4.5 billion a year letters business.
The group employs 190,000 people, has a transport fleet of 30,000 vehicles and 33,000 bicycles, a nationwide network of over 16,500 Post Offices, 1,400 delivery offices and 78 mail centres.
Its network has been likened to the nation's gas pipeline in that it is already in place and used every day to provide a valuable service.
Any rival wanting to mount a challenge to the Royal Mail's domination in the letters market would have to spend huge amounts of money on delivery and sorting centres as well as on hiring staff.
Non-business customers have little choice over letter delivery even in countries where competition has been in place for some time, such as Sweden.
Politicians and business leaders in other countries such as Holland and Germany are said to be watching what happens in the UK with interest now that full blown liberalisation is less than a year away.
Royal Mail workers, union officials and some customers have today been voicing fears about the future of the universal service – the obligation on the Royal Mail to deliver a letter for a set price anywhere in the UK.
The Communication Workers Union accused Postcomm of taking a decision after receiving just 15 responses to its consultation and said the UK would now be completely out of step with the “carefully managed” approach set out in European legislation.
But the Royal Mail said it was ready for full competition and would aim to win new business to help finance the universal service.
Consumer group Postwatch believes the prospect of full competition will force Royal Mail to raise its game and deliver more letters on time after admitting recently that it was still just short of its target of making sure 92.5% of first class letters arrived the next day.
