Royal Mail's burden seen as benefit

Michael Harrison BRITAIN’S NEW postal regulator has ruled that the Royal Mail’s
obligation to deliver to every address in the country is a net benefit and
that even deliveries to remote rural areas are profitable. The findings mean that PostComm is likely to sanction much more extensive competition to the Royal Mail’s postal monopoly than previously thought. Consignia, formerly known as the Post Office, has always maintained that its obligation to provide a universal postal service is a net cost and that cherry-picking of lucrative city-to-city letter deliveries by rival operators will undermine its ability to maintain the universal obligation. But Postcomm, aided by the consultants Andersen, concluded that each category of delivery, from letters sent to city centre addresses to ones posted to “deep rural” areas, produces a positive “margin” for the Royal Mail, no matter the distance travelled, size or weight. In a consultative document published yesterday, Postcomm calculated
the theoretical cost of the obligation to Consignia at pounds 81m, but it said
it would cost the Royal Mail more to filter out letters that were unprofitable
to deliver than it would save. This figure also excludes benefits of the
obligation: mainly that people use the post more simply because they know that
they can send a letter anywhere. In a separate document, Postcomm said it preferred to license rival operators rather than allow a free-for-all by lowering Consignia’s monopoly over letters costing less than a pound to deliver. Graham Corbett, chairman of Postcom, said he hoped to issue the first long-term licences a year from now.
Copyright: Independent Newspapers(UK) Limited