UK postal market opens to competition

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The 350-year monopoly that Royal Mail has held over the UK postal market has come to an end. New rules introduced as of 1st January 2006, allow rival companies to compete for a share of the multi-million pound market.

Postcomm, the postal services regulator has so far granted thirteen long-term licenses to companies who will compete with the government-owned Royal Mail. Commenting on the the new choices available to mail users, Postcomm chairman Nigel Stapleton said: “Limited competition has already delivered significant benefits, with Royal Mail’s quality of service at an all time high and business customers enjoying more innovative products and later mail collection times. With full competition from January 2006, all of us will begin to see new choices across the full range of postal services, and licensed operators will be free to offer mail users the services they demand.”
Most of the competition is expected to be in business mail, which accounts for 80 per cent of the market and helped boost Royal Mail profits by 20 per cent to £159m in the first half of 2005. Despite competition from European rivals in the UK, Royal Mail will not be allowed to compete in their countries because the markets on the Continent have not yet been liberalised. Watchdog Postwatch backed the move but unions have warned an erosion of Royal Mail’s business mail operations could jeopardise the cherished but loss-making universal postal service, which guarantees daily deliveries across the UK.

Royal Mail currently loses 5p for every first-class letter delivered and 8p for every second-class letter, though said that it was ready to take on new rivals. It warned however, that its ability to compete would be hampered by years of under-investment which meant only 50 per cent of its letters were sorted mechanically compared with 90 per cent among competitors. Spokesman David Simpson said: “Royal Mail will fight hard for every single letter. “Royal Mail is determined to compete successfully in the open market – but in order to do so we need a fair regulatory regime and the ability to invest £2 billion in the modernisation of the business.”

Some of the companies who have already secured a license include; Business Post, Lynx, TNT, UK Mail, Speedmail International, Mail Plus, Special Mail Services (SMS), DX Network Services, Alternative Mail and Parcels (AMP), Intercity Communications, Royale Research, Target Express and Racer Consultancy Management Services.

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