Consignia response to Postcomm consultation paper on competition

CONSIGNIA URGES MORE CHOICE FOR ALL CUSTOMERS BUT WARNS POSTCOMM'S PROPOSALS
MAY MEAN DEARER POSTAGE FOR MOST CONSUMERS :: PR Newswire, London, September 5. This press release is transmitted on
behalf of Consignia. Consignia today responded to the consultation paper on competition by the
postal regulator, Postcomm, by stressing that it wanted all customers to have
greater choice. Stuart Sweetman, Consignia's Group Managing Director for Strategy and
Business Development, said: “The question is not should there be greater
competition but how best it is introduced. “Consignia firmly believes its products and services will compete
strongly if competition is introduced in a fair way.'' But Mr Sweetman warned: “The Regulator risks falling into the trap of
assuming any increase in competition will automatically be good for all
customers. “It will be very easy to attract operators into the postal market if
Postcomm allows them to undercut the basic 27p First Class postage and
cherry-pick mail with low delivery costs. “Postcomm, in its consultation document, appears to be encouraging this
sort of competition. But if this is the approach taken, the only customers to
benefit potentially will be large business mailers. Most customers will face
dearer postage prices.'' Mr Sweetman added: “The Regulator seems intent on pursuing a course which
risks undermining the universal service to the UK's 27 million addresses at a
uniform price. “The whole thrust of Postcomm's paper will restrict the benefits to a
relatively small number of business customers. “Consignia's licence – issued by Postcomm – requires the company to
provide a nationwide mail service at a uniform price. Consignia, therefore,
would not be allowed to compete on price if rival operators are allowed to set
up cut-price services in selected areas. “Rivals will not be providing the innovative and high quality service
which Postcomm says it wants to encourage. Instead, there will be classic
cream-skimming. “And even if Consignia was allowed to lower its prices in selected areas,
the result is bound to be the end of the universal service at a uniform price.
Instead, customers would get a two-tier pricing regime. “Some business customers – the most attractive to rival operators – would
see lower prices. But almost everyone else would inevitably pay higher postage
prices.'' In Sweden, where postal services were completely liberalised in 1993, the
price of the basic postage stamp has since risen by 72%, added Mr Sweetman. In
the UK, the price of a basic First Class stamp has fallen in real terms by
around 10% over the same period. :: Innovation Mr Sweetman said: “Consignia's drive to develop its services is already
evident in such areas as home shopping, where customers can now chose evening
deliveries or the option of deliveries to their nearest Post Office branch. “This autumn, Consignia is launching a new web portal giving the up to 20
million online users of Royal Mail, Parcelforce Worldwide and the Post Office
Network a single point of contact for a wide range of services across the
organisation.'' Mr Sweetman said: “Consignia is convinced that the best and the only
sensible way to introduce more competition is by a gradual and controlled
lowering of the price and weight limits.'' In the UK, anyone providing a postal service costing less than GBP#1 is
required to obtain a licence from Postcomm. Reducing the GBP#1 limit provides
a simple and effective way of allowing other operators to enter the market,
says Consignia's formal response to Postcomm's consultation paper. “This is the approach we are recommending to Postcomm,'' said Mr
Sweetman. The European Union is committed to using this approach to introduce more
competition in all EU member states from January 2003. In Europe, the upper
limit is currently expressed in weight terms – 350g is the current upper
limit, equivalent to around GBP#1 in postage in the UK. But Mr Sweetman added: “If Postcomm press ahead with a different way of
introducing competition in the UK, then the threat to the continued provision
of the universal service at a uniform price will intensify.'' http://www.consignia.com UNS Contact: Consignia plc Group Communications, Tel: 0
20 7250 2468 (24 Hours) Ends SMPA NEWS, 05th September 2001