Post Office 'must open up infrastructure to its rivals' POSTAL SERVICES WATCHDOG AIMING FOR FAIRNESS OVER MARKET LIBERALISATION: Post Office facing tough competition from Europe
Post Office ‘must open up infrastructure to its rivals’ POSTAL SERVICES WATCHDOG AIMING FOR FAIRNESS OVER MARKET LIBERALISATION:
Financial Times; Dec 12, 2000
By KEVIN BROWN
The Post Office will be forced to open its infrastructure to competitors at reasonable prices when the letters market is opened to competition next year, the industry’s newly appointed watchdog said yesterday.
Graham Corbett, chairman of the Postal Services Commission, said making sure that competitors were given access to core Post Office services at fair prices would be crucial if new entrants were to compete effectively.
“The question of access rights will inevitably be one of the most important, and potentially one of the most difficult to ensure that we get right,” Mr Corbett said in his first interview since PostComm acquired legal powers last month.
He said the commission was determined to ensure that entrants were able “to get the service they are entitled to at a non-discriminatory price”.
PostComm’s tough approach reflects its determination not to leave itself open to the charge of “regulatory capture” being levelled against David Edmonds, the telecommunications regulator.
Mr Edmonds has been accused by some new entrants of allowing British Telecommunications to slow the pace of competition by refusing to allow access to local telephone exchanges.
PostComm said a licence to be issued to the Post Office in March would oblige it to negotiate with any competitor seeking access to services such as its national distribution network or local collection and delivery.
If necessary, the commission will issue a directive setting prices and forcing the Post Office to allow access. “The commissioners will not tolerate any attempt to keep new entrants out,” an official said.
Mr Corbett said “most” of Europe’s postal services and privately owned express mail companies were interested in competing with the Post Office, although he would not say whether any had formally applied for a licence.
PostComm is expected to license at least one competitor to the Post Office next year, providing either a full letters service in a city or region, or a national service for cheap express or business mail.
Mr Corbett said the commission was still deciding how far to reduce the Post Office’s existing monopoly, which covers letters priced at less than Pounds 1 and weighing less than 350 grammes.
The monopoly threshold is likely to be reduced by the European Union shortly, probably to 150 grammes, but Mr Corbett said PostComm had not ruled out cutting the UK threshold to 50 or even 20 grammes.
He said a 20-gramme threshold would leave the Post Office with 75 per cent of its monopoly, and questioned Post Office claims that a significant cut in the monopoly would threaten its ability to deliver a universal service.
Mr Corbett said no decisions have yet been made. But it was “not clear” that the Post Office needed a large amount of protected business to finance the universal service obligation – the delivery of letters at a uniform price nationwide.
“Is the universal service provider saddled with a burden, or is he in fact provided with an opportunity? There is an argument which says that the network the Post Office has is the sort of delivery network that many retailers would give their eye teeth for,” he said.
Mr Corbett said the commission was determined to introduce “significant” competition, and warned that the Post Office could face fines of up to 10 per cent of turnover for up to three years for failing to meet tough new service standards.
“There are some activities which lend themselves more readily to the introduction of competition than others, and I think postal services is one . . . provided you have got sensible arrangements for access rights and preserving the universal service,” he said.
Copyright: The Financial Times Limited
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