Tag: Royal Mail

The Postcomm announcement to bring forward the total liberalisation of the UK mail market, opening the Royal Mail to full competition earlier than previously announced, is brave but it does not necessarily mean that Royal Mail will immediately lose significant volumes of mail. Evidence in other markets, such as New Zealand and Sweden, where similar action has been taken, has led to little effective competition. If anything, the general public (who represent a minority of the market by volume) has ended up paying more and big business less as the incumbent gives discounts to volume senders and compensates for this by charging more for the standard letter. Notwithstanding this, our first class mail service is still one of the cheapest in Europe. Triangle feels that for the market to really open up there will need to be further stimulus to develop real competition, encourage new business models and ensure innovation. It can be done. A good example is the airline industry where deregulation has led to innovation such as the budget airlines and much cheaper and more widespread travel.

The decision to end the Royal Mail’s 350-year-old monopoly on delivering letters from next January has raised the prospect of rival firms installing different coloured post boxes alongside the traditional red ones.

Customers would then have to choose whether to put their card or letter into a red, yellow or possibly blue pillar box, depending how quickly they wanted it delivered and how much they had paid for a stamp.

But despite callers to radio phone-in programmes today being asked if they would be prepared to ditch the UK’s 115,000 Royal Mail boxes and entrust letters to a private firm, the reality is likely to be much different.

Royal Mail threw its support behind the UK regulator’s decision to open the postal service market to competition in January next year, 15 months ahead of schedule. ‘We’re ready,’ said Royal Mail chief executive Adam Crozier. ‘We recognise that the regulator is getting on with his job, and welcome faster competition as long as it comes without unfair restrictions on Royal Mail,’ he added. Postcomm’s decision, which was ahead of the original timetable of April 2007, will end Royal Mail’s over 350-year monopoly of the UK market. The decision means that from 2006, licensed companies other than Royal Mail will be able to collect, transport and deliver letters and charge customers for the service. Crozier said what it now wants to find out is how the transition to full competition will be carried out.

‘Royal Mail wants to be able to compete fully and fairly from the start. We’re determined to earn business in the new market so that we can continue to finance the one-price-goes-anywhere universal service – which remains at the heart of what we do. We can only do this if the handcuffs come off,’ he said.

The postal market is to be fully liberalised from the start of next year, more than a year earlier than planned, in an effort to force Royal Mail to improve its customer service. Postcomm, the postal regulator, said yesterday that any licensed company would be allowed to operate in the mail market from January 1 next year. Royal Mail currently has a market share of 99 per cent. The market was to be opened in April 2007, but last September the regulator indicated this would be brought forward. The country’s parcel delivery market is already fully liberalised. Nigel Stapleton, chairman of Postcomm, said that, unlike other market liberalisations, the process was not about bringing prices down as stamps were already cheaper in the UK than in many other countries. “The major change is going to be the service provided by the incumbent operator,” he said. “Royal Mail is already placing more emphasis on quality of service because of competition.” The Communication Workers’ Union called the move “a grave mistake”. The UK should not open its postal market until other European countries did the same, it said.