Fears for post service as Royal Mail opened to rivals

The postal market will be opened up to increased competition on January 1 amid warnings that the move could damage the universal mail service.

Bulk mail above 4,000 items – which accounts for around half of the typical daily postbag of 82 million letters – will be open to Royal Mail’s competitors.

The Royal Mail said that coupled with a new directive from the European Union, almost 80% of the UK market will be open to competition in the New Year.

The entire postal market will be open to competition from April 2007 when restrictions on entering the market will be totally abolished.

Postcomm, the industry’s regulator, said increased competition would provide more reliable and innovative services.

But the Royal Mail said the UK market was being opened to competition at a much faster rate than elsewhere in Europe.

“We will fight for every single letter, but Postcomm’s fast track approach is opening a large slice of the market at a stroke,” said a spokesman.

“It means that powerful, profitable European postal companies such as the German and Dutch post offices will be able to attack the British market using profits from their own domestic markets – which will be closed to the level of competition coming into the UK.

“Rivals who will target the bulk mail market will be able to choose their customers, an approach that paves the way for cream-skimming of the market.

“If rivals cream off the profit in the universal service market by targeting the profitable mail then Royal Mail’s ability to continue providing the one-price-goes-anywhere universal service will be in jeopardy. Postcomm’s approach raises this danger in a very real way.”

The Royal Mail said around 500 businesses were involved in the bulk mail market, which is the sector rival postal firms wanted to target.