New Consignia row looms
Another conflict was brewing last night between Consignia, the renamed Post Office, and its new regulator over the price Royal Mail can charge competitors for delivering mail over the “final mile”.
Sources said Consignia would expect to be paid around 20p a letter for sorting and delivering mail for rival operators – although discounts could be given for bulk mail. But consumer groups warned that access charges paid by competitors to use the Royal Mail network must be realistic. “No access means no competition,” they said last night.
Consignia has already failed to reach an agreement on access charges or tariffs with Business Post, owners of UK Mail, whose plans to deliver business mail under 350 grammes to London, Birmingham and other cities have been delayed for several months as a result.
The potential new conflict emerged as the regulator, Postcomm, bowed to intense political pressure from ministers, cross-party MPs and unions by postponing for a year its original plan to open postal services to full competition from April 2006 – at least three years ahead of the rest of the EU.
Graham Corbett, the Postcomm chairman, made plain that the regulator had accepted Consignia’s heavily-backed case that over-hasty competition would put its finances – and the universal service obligation – at risk.
Industry secretary Patricia Hewitt, who lobbied hard in favour of Consignia, welcomed Postcomm’s clear response to the case made by the former Post Office and the main postal workers’ union, the CWU.
The CWU’s leader, Billy Hayes, hailed the regulator’s “backtracking from reckless and irresponsible” proposals made in January as the result of efforts by “union activists, our friends in parliament and some sections of government.”
Mr Corbett said a whole range of access charges had been “plucked out of the air” but these would have to be realistic to enable new entrants into the market. But, equally, they would have to provide Consignia with an incentive to develop “vibrant and profitable” downstream activities.
Adding that Postcomm hoped to resolve the Consignia/UK Mail dispute “before the end of the summer”, he said: “We have no interest in setting an access price so low there’s no attraction for Consignia to go further downstream.”
Welcoming the delays to full competition until April 2007, Allan Leighton, Consignia chairman, said it was essential the corporation got a “fair price” for access to its network.
Consignia believes Postcomm has “kept the door open” for a further delay to full competition if the universal service – daily delivery to the UK’s 27m addresses six days a week at an affordable price – comes under threat.
Mr Corbett said the universal service was an absolute priority and, if competition proved far more damaging, operators’ licences could be amended to incorporate a later “end-date”. Consignia’s rivals could then ask for this to be referred to the competition commission. The first phase of competition, affecting bulk mail above 4000 items or 30% of the market, has been lengthened to April 2005 to enable Mr Leighton to carry out his plan to return Consignia to profit.
“They have got three years to ready themselves,” said Mr Corbett who said a “robust, healthy Consignia” was in the interests of would-be competitors.
