Postcomm proposes a licensing framework for the fully open market

Postcomm on 30 November began consulting on the licensing framework which needs to be in place when the market is fully open to competition – Postcomm has proposed from 1 January 2006. The aim is to encourage entry to the market while providing sufficient safeguards to protect the interests of customers.

Nigel Stapleton, chairman of Postcomm commented: “These licence proposals are deliberately ‘light touch’ and tread the difficult path between protecting customers while not making it too difficult for companies to enter the competitive market. We want the widest possible variety of companies to feel they can enter the market if they think they can meet the standards and deliver the services customers want.”

Among the proposals are two codes of practice, which should be adopted by licensed operators. One would safeguard mail integrity and the other deal with common operational issues.

The suggested code on mail integrity includes rules on security of the mail, lays down procedures to be followed if mail is interfered with, provides rules on staff selection and training, and requires the collection of statistics to enable others to measure the licensee’s performance.

The other code would require all mail companies to co-operate on common operational issues such as the forwarding of mail and handling mail that is returned to sender. This is necessary to ensure that customers are not disadvantaged in a multi-operator market.

The proposals require all but small licensed operators to set up systems to measure their performance and handle complaints, and to make information on their performance available to Postcomm and Postwatch, the consumer body, and anyone else who asks. The information must be presented in a way that enables customers to make comparisons and an informed decision.

Unlike Royal Mail, which must publish its performance against set service targets, competitors will be able to set their own targets, and the market will decide how successful they are: poor performing firms will see their failures reflected in their balance sheet.

As well as signing up to the codes of practice, new entrants will also be required to provide a financial guarantee so that in the event of service failure, any existing mail can be delivered.

Because Postcomm believes small firms, perhaps providing local delivery services, will have a place in the market, the proposals suggest lower annual licence fees for companies with a turnover of less than £100,000.

Responses to the document are requested by 28 February 2005.

Notes
The proposals suggest that the licence application fee remains at £1,000 as it is now. In addition, proposed annual fees – which pay for running the regulatory regime and include the costs of Postcomm, Postwatch and Competition Commission costs relating to postal services — have been set at £1,000 for all licensees with an annual turnover up to £10million, but £250 for small firms with a turnover less than £100,000. Above £10m fees increase on a sliding scale. Royal Mail, with a turnover of around £6bn for its regulated business, is the major contributor.

Postcomm is consulting on bringing forward the introduction of full competition in postal services to 1 January 2006