UK Postcomm removes most bulk mail products from universal service

Postcomm – the independent regulator for postal services – has today proposed removing all but two bulk mail products from Royal Mail’s universal service provision from April 2006.

Identifying the products which remain as universal services provides customers with clarity and gives Royal Mail greater flexibility to compete in the bulk mail sector, since restrictions on most of its bulk mail products would be removed, paving the way for the company to vary its rates for those products, while continuing to provide them on a UK-wide basis.

Bulk mail services are large-scale distributions of letters and catalogues by businesses, and account for about half of Royal Mail’s total business volume.

In order to protect customers, two products will remain within the universal service:

• Mailsort 1400 (first and second class), which covers mail of all formats up to 2kg in weight and pre-sorted according to the locations of the 1,400 delivery offices.

• Cleanmail (first and second class) does not require users to have sorting machines and is the “entry level” bulk mail product most often used by smaller businesses.

Other bulk mail products for large mail users are: Mailsort 120, Mailsort 700, Walksort, Packetpost Flatsort and Presstream. (For further details, see Notes for Editors.)

Commenting on today’s announcement, Postcomm chairman Nigel Stapleton, said:

“Postcomm is responsible for ensuring that Royal Mail meets its universal service obligation of daily collections and deliveries at a ‘one price goes anywhere’ rate, and today’s proposals should help bring greater clarity on this issue for businesses using bulk mail products.

“We believe this decision also goes a long way to reflect Royal Mail’s wish to have the freedom to compete in a liberalised postal market.”

NOTES FOR EDITORS

“The universal service for bulk mailers. A decision document” is available on Postcomm’s website at www.psc.gov.uk. Printed copies will be available shortly from Postcomm at 6 Hercules Road, London, SE1 7DB.

Royal Mail has a public service duty – known as the universal service obligation or USO – to provide postal services to all parts of the UK at affordable and geographically uniform rates. This means that sending a letter will cost the same, regardless of its destination within the UK.

If Royal Mail chose not to agree to amend its licence as Postcomm proposes, the situation could remain as it is currently, with all bulk mail products except Presstream treated as universal services. Any licence change would be likely to take effect from April 2006.

Other bulk mail services for large mail users are:
• Mailsort 120, which applies only to mailings of items weighing less than 100g. These are sorted into 120 categories and must consist of regular-sized letters, correctly addressed with machine readable font, or bar-coded. The minimum posting is 4,000 items.
• Mailsort 700, which requires a minimum posting of 10,000 bar-coded letters weighing less than 100g.
• Walksort. These postings must hit at least one out of every ten addresses in the UK.
• Packetpost, which is designed for customers posting packets regularly. Only packets weighing more than 60g and meeting certain size criteria are eligible, and the minimum posting is 5,000 packets per year.
• Flatsort, which is for customers sending items weighing more than 100g and A4 or B4 in size.
• Presstream, for newspapers and magazines, pre-sorted according to the locations of the 1,400 delivery offices.

This consultation followed Postcomm’s June 2004 decision on which stamped products and products applying to single piece items of mail used by residential customers and small businesses should be required to be provided by Royal Mail to meet its universal service obligation (USO). At that time, Postcomm said that the universal service should also include a bulk mail offering. Today’s decision document follows a three month consultation to decide which of Royal Mail’s bulk mail products should be required.

The document also explains that downstream access – the process by which rival operators to Royal Mail can make use of its delivery network is not itself a universal service.

Postcomm – the Postal Services Commission – is the independent regulator for the postal industry. Postcomm’s main tasks are to:

• Seek to ensure a universal postal service at an affordable uniform tariff
• Further the interests of users wherever appropriate through competition
• License postal operators
• Control Royal Mail’s prices and quality of service
• Give advice to government on the future of the post office network.

Postcomm’s policies are steered by a board of seven commissioners, headed by the chairman, Nigel Stapleton.

More details are on Postcomm’s website, www.psc.gov.uk.