PostCon consults on access arrangements to RM's network

[POSTMAN]

3 March 2011

Postcomm consults on access arrangements to Royal Mail’s network

Postcomm has today published the third in a series of documents which set out initial views on the building blocks for a new and sustainable regulatory framework for 2012 and beyond. Today we are launching a consultation on the future of the access regime, whereby Royal Mail is obliged to provide access to its network and deliver mail over the final mile on behalf of other operators and also for some of its customers.

The first access agreement was entered into in the UK between Royal Mail and UK Mail in 2004. Since then, a number of other operators and postal users have entered into agreements with Royal Mail, almost all of which have involved access to Royal Mail’s downstream network at the Inward Mail Centre based on this 2004 contract. In 2009-10, around 6.4 billion items were sent via downstream access agreements (around a third of Royal Mail Letters total volumes) [1]. While there have been many positive impacts, it is recognised that the current regime has a number of drawbacks.

In the context of the 2012 regulatory review, we always intended to consider how the current system was working and indeed began to do so in 2008, intending to implement changes as part of a 2010 price control. While we have made some changes to the regulation of access for 2011-12 as a stepping stone to a more fundamental review, we did not consider some of the basic operational aspects of the access regime in that context, and we acknowledged in our February decision document [2] that further work was required on related price control issues.

The Postal Services Bill 2010, which was laid before Parliament in October 2010, provides an additional impetus to our review of access. The Bill sets out a specific and different approach to the regulation of access and, given the timing of anticipated changes in legislation, we believe it is appropriate to have close regard to the framework of the Bill in setting out proposals for the way forward.

More generally, we have drawn on our experience of how access has evolved to date to put forward proposals that should enhance the future regulation of access, including in the context of the regime anticipated by the Bill, while continuing to safeguard the universal service. In the consultation document published today, we consider the following issues:

· How the regulator should determine whether Royal Mail should be obliged to offer access to its postal network, a particular issue impacted by the Postal Services Bill 2010

· The regulator’s role generally in setting the terms of access

· Principles for addressing issues of non-equivalence

· The process for addressing disputes in relation to access

We intend to consult on issues and principles relating to the pricing of access as part of the Price Control 2012 consultation document that we intend to publish in late March 2011. Separately, we consider how the regulator should determine whether postal operators should be obliged to give access to elements of postal infrastructure or services within the scope of the universal service.

Our key aim is to develop a regime that provides as much flexibility to the market place as possible but taking account of Royal Mail’s market power in the downstream markets: the regulatory regime should provide the direction and a degree of certainty, but we would hope that the market can have as much freedom as possible to determine how access works in the future.