02 Apr 2007, 12:38
Proposals by the Royal Mail to make some of its business mail prices more competitive could face a delay of up to two years after the postal operator abandoned its original timetable to cut some key delivery rates of bulk mail to "dense drop zones" - often city centres - while increasing them for London and other areas. Royal Mail originally applied in July last year to make the changes and envisaged introducing the zonal pricing from April this year. However in February it made a fresh zonal pricing application to Postcomm, the postal regulator. Given the time it usually takes the regulator to approve any pricing changes, this would mean that zonal pricing will now be introduced at the earliest in April 2008.
Postconn have just released this.
Royal Mail applies to charge higher prices for delivery to London and rural destinations; lower prices elsewhere
Postcomm, the independent regulator for postal services, has today written to customers and operators about an application by Royal Mail to charge large mailers - using products which are not part of the Universal Service - different prices depending on where in the UK their mail is delivered. Royal Mail calls this â€˜zonal pricingâ€™. Postcomm has up to nine months to assess whether, and if so when, this new pricing structure can be implemented.
Royal Mailâ€™s â€˜zonal pricingâ€™ application does not affect stamp prices or those bulk mail products that are included within the definition of the universal service. It covers products that generated about 25 per cent or Â£1.4 billion of Royal Mailâ€™s total regulated revenue in the last financial year.
Nigel Stapleton, Postcomm chairman, said:
â€œPostcomm will study with great care Royal Mailâ€™s request to charge large customers different prices depending on where mail is delivered in the UK. Although these business tariffs are outside the â€˜one price goes anywhereâ€™ guarantee of the Universal Service, customers are entitled to understand Royal Mailâ€™s justification and have their say on its plans to charge more for delivery in Greater London and rural areas. In highly populated areas outside London, Royal Mail proposes to reduce prices.
â€œCustomers may be surprised that it costs Royal Mail slightly more to deliver in Greater London than it does to deliver in most rural and other less populated areas, despite the obvious economies of scale of providing services in the UKâ€™s largest city. However, Royal Mail proposes a smaller price increase initially for Greater London than for rural and less populated areas.
â€œPostcommâ€™s recent consultation on the concept of varying business tariffs by destination identified that most major mailers did not want it and some might consider reducing their usage of mail as a result. Despite this, Royal Mail is keen to pursue â€˜zonal pricingâ€™, so we hope all mail users will give us their feedback during our consultation in order to inform decisions required from both Royal Mail and us.â€