Ofcom launches review into Royal Mail’s downstream access pricing

Ofcom launches review into Royal Mail’s downstream access pricing

UK postal regulator Ofcom has launched an investigation into Royal Mail’s downstream access pricing. Downstream access — where other companies collect and sort business mail before using Royal Mail’s delivery network for the final state of distribution — accounts for about 47% of all mail volume in the UK.

Ofcom said yesterday that stakeholders have raised concern about new downstream access prices proposed in 2013 and 2014 by Royal Mail, and a new contract for downstream access services introduced in 2013. Royal Mail suspended part of its downstream access price increase planned for 2014 in anticipation of this Ofcom review.

The regulator said these stakeholders have suggested uncertainty concerning the interpretation of Ofcom’s 2012 regulatory framework, which removed Royal Mail’s price control on access services, but required the universal service provider to offer access services on “fair, reasonable and not unduly discriminatory terms”.

Ofcom said there had been an impact on negotiations with mail customers, and on medium and long-term strategic planning and investment, according to these stakeholders.

“We consider it timely to review these requirements to ensure that they remain fit for purpose and that all stakeholders have clarity and certainty with regard to their interpretation,” Ofcom said.

The regulator is planning to complete its review this year, but will issue initial findings this summer within a consultation paper seeking the views from stakeholders.

Postcode Address File

Separately, Royal Mail published its new simplified licence system for the Postcode Address File (PAF), the UK’s national database of addresses.

The company said the new licence was designed to encourage greater use of the PAF.

Royal Mail said this includes a simpler set of licensing terms and a pricing structure with fewer pricing points in order to help users decide which pricing options suit their needs.

The company is also promising fewer restrictions on the use of PAF and a reduction in some prices. A new Public Sector Licence has been devised that will allow eligible public sector organisations to use a licence paid centrally by the UK government.

The UK government was criticised by MPs last month for privatising the PAF along with the Royal Mail Group back in October.

Royal Mail said yesterday that PAF is now at the heart of many systems and solutions offered by businesses and industries, in use by tens of thousands of firms each day for address look-up, identity verification, combating fraud and in navigation aids.

Stephen Agar, Managing Director Consumer and Network Access said: “We’re very pleased to be publishing our new simplified Postcode Address File Licence. Over the last few months, we have consulted extensively with the market and its representatives to develop a framework that offers users a shorter, clearer, simpler license with a wider scope for innovation and fewer restrictions on the use of PAF. We’re confident that the new licence offers the continuity and flexibility that we know the market as a whole wants.”

The UK’s Direct Marketing Association welcomed the simplified PAF licensing terms and user fees.

Chris Combemale, executive director of the DMA, said PAF is an essential business service for many of the trade association’s members.

“The feedback that we gave to the consultation on behalf of our members has been reflected throughout the changes to PAF, showing Royal Mail’s commitment to working with the industry. Making PAF easily available will help drive innovation in one-to-one communications between brands and their customers,” said Combemale.

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