Competition is helping the mail industry adapt to a fast-changing communications market

23 August 2007

Postcomm, the independent regulator for postal services, has called on Royal Mail to continue to raise its game and urged all operators to promote the strengths of mail versus other communications media, as it published the emerging themes from a far-reaching review of its regulatory strategy.

During the past year, Postcomm has asked for views on the future of postal services in the UK. The regulator will use these to help frame its regulatory strategy in the lead up to 2010 and beyond.

The principal theme of the review, on which Postcomm is now seeking feedback, is that mail operators must make the most of the opportunities presented by the changing mail market.

  • Customers are benefiting from competition: However, Royal Mail is finding the impact of competition and of new media very difficult to cope with, in part because of its slow progress in improving efficiency and in developing new services. The universal service remains profitable and is being provided to a very high quality of service.
  • More innovation is needed in order to exploit the changing mail market: Mail operators in the UK are not fully grasping the opportunities - or facing up to the challenges - of new communications media to the extent that some of their European and North American counterparts are. Mail has some important characteristics, such as personalisation and hand delivery, which valuably differentiate it in a digital world. If operators focus on how their mail products can add value for users, there is no reason to accept the prospect of a contracting mail market.
  • Postcomm reaffirms its aim to move to less detailed regulation: If Royal Mail can improve its cost transparency and respond better to the changing market, Postcomm should be able to scale back the regulatory regime from 2010 onwards.
  • The universal service will be secured in a changing mail market : Postcomm is responding to Royal Mail’s request to remove business products from the Universal service and, in doing so, it wants to promote a wider debate as to how  the scope and specification of the USO should  adapt to changing social, economic and technological conditions.  However, the basic right to post a stamped letter anywhere in the UK for the same price will remain at the centre of the universal service.

Notes

The document - Postcomm’s Strategy Review. The Postal Market 2010 and Beyond: Emerging Themes (pdf, 429KB) - is published today. Responses are invited by 26 November 2007.

The Strategy Review has been looking at whether Postcomm needs to reshape its regulatory policies so that it can continue to protect postal users in the future – from 2010 and beyond – and also allow all mail operators the flexibility to adapt to changes in the market.

A consultation document published in August 2006 sought views from all interested parties – domestic customers, Royal Mail, other postal operators, major business users, suppliers, small businesses and customer groups. Their responses, together with targeted research, form the basis of today’s document.

The Strategy Review is not about making immediate changes to Postcomm’s regulatory policies. It is designed to stimulate further debate about the evolving needs of postal users in the UK, and how Postcomm and mail operators can best adapt to meet those changing demands. The next stage of the review will come in early 2008, when Postcomm will publish detailed policy proposals, which will reflect feedback on today’s document.