Year: 2005

Postcomm’s proposals would – if implemented – lead to the inexorable decline of Royal Mail by ensuring it cannot compete in the open market, the company warned today.

Royal Mail also said that Postcomm’s proposed massive extension of regulation into all aspects of its pricing would threaten the Universal Service and encourage widespread cherry-picking by rivals from April next year. The company added that, unless the proposals are substantially changed to give Royal Mail a level playing field, it will have no alternative but to go to the Competition Commission.

Royal Mail chairman Allan Leighton said: “These proposals will literally starve Royal Mail of vital investment and so wreck the quality of service we have fought so hard to improve. We cannot accept them. It’s as simple as that.”

Postcomm today published initial proposals for regulating Royal Mail’s prices and quality of service that will enable customers to benefit from a more efficient Royal Mail as a fully competitive mail market develops. The proposals include a freeze Royal Mail’s average domestic prices from 2006-2010 the introduction of service quality targets more suited to customers’ needs, and creating the conditions that will enable new operators to establish themselves successfully in the mail market. Nigel Stapleton, chairman of Postcomm said: “These proposals offer customers a better deal and secure the universal service. The revised price caps are challenging but achievable as Royal Mail’s prepares for the full opening of the market in 2006. Royal Mail still has over 99% of the letters market, but even limited competition so far in the marketplace has made the company more efficient and more customer-focused. The UK mail market is dynamic and growing. These proposals build on the momentum already generated by competition.”