Royal Mail's letters market monopoly comes to an end
The Royal Mail's 350-year monopoly of the UK letters market comes to an end today.
New rules now allow rival companies to compete for a share of the multi-million pound market.
Postcomm, the postal services regulator, has so far granted long-term licences to 13 operators, who will compete with the Government-owned Royal Mail.
Businesses may now abandon the Royal Mail for a cheaper or more flexible service, Postcomm said.
The change will also improve the overall standard of service for individual customers – and could lead to the appearance of non-Royal Mail post boxes within a few years, Postcomm said.
The market has been in partial competition since 2003, when Postcomm allowed rival companies to offer mailing services to customers sending 4,000 items or more per mailing.
Despite this, the Government-owned Royal Mail still has 97% of the overall postal market, Postcomm said.
The changes, which come into force today, will give operators the chance to offer rival services regardless of how many items the user sends.
All the new licensees – among them DHL Global Mail and TNT – already operate mail services in the UK, Postcomm said.
The regulator's chief executive Sarah Chambers said: “Changing 350 years of history takes a little time and a lot of thought. But we are convinced that postal customers will benefit from more reliable, innovative and customer-responsive postal services.”
Some rival operators will pay the Royal Mail to sort and deliver their items.
Other new licensees will run their entire “end to end” services themselves without involving the Royal Mail.
The bulk of competition will be in the business mail market, Postcomm said.
Royal Mail enjoys some historical privileges which could pose barriers to the new licensing arrangements.
These include exemption from parking restrictions for Royal Mail vans delivering and collecting mail.
The Royal Mail is exempt from VAT. This could prevent the 50% of business customers who cannot recover the tax from switching operator, Postcomm warned.
The regulator will continue to control the prices charged by Royal Mail.
All companies which deliver letters weighing up to 350g and costing less than £1 to deliver must be licensed by Postcomm.
OPENING UP THE POSTAL MARKET
PA News, p 1 01-01-2006
By PA Consumer Affairs Correspondent By Louise Barnett
The entire UK postal market opens up to competition for the first time from today.
:: More than 350 years of Royal Mail monopoly come to an end today as companies licensed by the regulator Postcomm are able to collect, sort and deliver post;
:: The Royal Mail currently delivers more than 80 million items per day. It has 97% of the market;
:: Partial competition was introduced in 2003, allowing companies sending 4,000 or more items per mailing to switch operator;
:: The changes which come into force today allow customers sending any number of items to leave the Royal Mail for a licensed competitor;
:: Postcomm has already issued 13 long-term licences to operators who may compete with the Royal Mail from today;
:: Many of these operators will pay the Royal Mail to process and deliver items in return for a fee. Others will provide the whole “end to end” service themselves;
:: The majority of mail (85%) is sent business to business. This is the area where Postcomm expects to see most competition under the new regime;
:: Royal Mail will continue to provide the “universal service” where the same stamp takes a piece of mail anywhere in the UK, regardless of distance;
:: Postcomm will continue to control the prices which Royal Mail can charge. The regulator sets a pricing framework every three to five years within which the Royal Mail must operate;
:: A new Royal Mail price arrangement which charges for the size as well as the weight of posted items will come into force in August 2006.
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