Postcomm consults on zonal pricing by Royal Mail
11 September 2006
Postcomm, the independent postal services regulator, has today published a document seeking views on the issues that it should take into account when it assesses proposals by Royal Mail to charge large mailers different rates depending on where in the UK their mail is delivered. (Royal Mail calls this zonal pricing.)
Royal Mail made an application to Postcomm in July which proposes to introduce zonal pricing to certain bulk mail products used by the largest mailers, such as banks, utilities, advertisers, charities and government. At present Royal Mail charges these large mailers the same "one price goes anywhere" rate. Royal Mail says that introducing zonal pricing for some bulk mail products would help bring its prices more closely into line with its costs. Royal Mail wants to be able to charge less than at present for areas where it is cheaper to deliver and charge more for areas where it is more costly to deliver. Such changes cannot be implemented without Postcomm's prior approval.
Royal Mail's application does not affect any other postal products, including the "one-price-goes-anywhere" stamp available to the public - a core part of the universal postal service commitment - or those business mail services that are also included in the universal service (Cleanmail - first and second class - and Mailsort 1400 - first and second class).
Postcomm will evaluate carefully the views of interested parties in response to the document published today. In addition, when it has obtained from Royal Mail all the information necessary to make a full assessment of the application, Postcomm will conduct a further consultation about its assessment of whether or not it is minded to accept it.
Notes for editors
Royal Mail has applied to introduce zonal prices for these bulk mail products:
- Mailsort 120 - first and second class, OCR and CBC
- Mailsort 700 - first, second and third class
- Mailsort 1400 - third class
- Presstream - first and second class
- Walksort - first and second class
Most of Royal Mail's business tariffs are currently the same, regardless of delivery location. Royal Mail already applies zonal pricing to some of its "access" agreements, under which it delivers mail "the final mile" for large customers and other postal operators.
Printed copies of Zonal pricing by Royal Mail (pdf, 150KB) are available from Postcomm at 6 Hercules Road, London, SE1 7DB. Responses, which should go to Tony Spencer (email link), are requested by 11 December 2006.
