PostCon agrees measures to help secure USO......

[POSTMAN]

Postcomm agrees measures to help secure the universal service and begins to remove regulation in more competitive postal markets

Postcomm has today confirmed its ‘minded to’ decision to accept Royal Mail’s request for additional allowed revenues, which would allow it to increase prices on bulk mail, to help maintain the pace of the modernisation programme required to safeguard the provision of the universal postal service.



We have also decided upon a range of deregulatory measures which will give Royal Mail greater commercial freedom in markets where competition is growing. These measures take account of representations received from third parties, including Royal Mail, on our package of regulatory safeguards and do not include all the options outlined in November 2010. In particular, in reaching our final decision, we have taken account of Royal Mail’s position on our proposed pilot for accounting separation.



Overall, while market conditions continue to be challenging for Royal Mail and other operators, we consider that the measures we have put in place for 2011-12 should provide a secure basis for a final transitional year, until a new price control is implemented in April 2012, anticipated to be under a new regulatory and legislative framework. We are working (with Ofcom) to develop initial proposals for consultation in the coming months.



We received a large number of responses to our consultation on Royal Mail’s application to be able to raise additional revenues during 2011-12. Postcomm’s Commissioners have carefully considered all these submissions and the information provided by Royal Mail. We acknowledge the impact that such price rises are likely to have on customers and the risk that this may result in a further decline in mail volumes. However the Hooper Report, published in December 2008 and updated in September 2010, clearly identified that the universal service will remain under serious threat if Royal Mail fails to modernise and tackle its long standing inefficiency. We agree with this assessment. We have therefore concluded on the basis of the information presently available that agreeing to Royal Mail’s request will provide a much needed contribution to funding the company’s ongoing modernisation programme, and is appropriate taking account of all our statutory duties, in particular our primary duty in relation to the universal service. This decision will have no impact on the price changes already announced by Royal Mail for first and second class stamps.



In our May consultation, Laying the foundations for a sustainable postal service, we proposed two key safeguards to underpin a more rapid removal of regulation, particularly in markets where competition is developing or already effective. In November we confirmed our views, in particular our position on the need for improved cost transparency and accounting separation, and proposing for final consultation a package of measures based upon these safeguards. We are pleased to confirm that, as expected, significant progress has been made on cost transparency. However, in light of representations received since November, it became clear that it would not be possible in this transitional year to take forward the full extent of what we decided upon regarding the pilot for accounting separation. Therefore, while we are still able to take forward many of the measures outlined in November, we do not consider that the scope of deregulation for this interim year can be as comprehensive. Postcomm therefore intends to implement the following measures, essentially:



· Deregulation of packets and parcels weighing more than 2 kilograms, as anticipated

· Removal of retail price controls from all packets and parcels weighing more than 1 kilogram and from second class pre-sorted bulk mail services

· Reduction in access headroom for letters to 3p, but still working on a price point basis as currently

· Removal of headroom controls from all packets and parcels weighing more than 1kg

· Move to a ‘wholesale-led’ form of price control for second class pre-sorted bulk products



We will not implement other parts of our proposed deregulatory package, including the proposed ‘headroom basket’ control for services coming out of the retail price control and, in most respects, the proposed changes to Condition 7 of Royal Mail’s Licence (provision of information to users).



Royal Mail will have greater freedom to compete in the pre-sorted bulk mail market, where the company has lost significant volumes to competitors. Further, in agreeing to Royal Mail’s request for additional allowed revenue and reducing headroom, we are substantially addressing Royal Mail’s concern that it makes a loss on each item of mail delivered on behalf of its competitors and helping to ensure that access will no longer be loss making.



A decision document setting out Postcomm’s final position on all these measures will be published early next week. It will be accompanied by a formal notice under section 14 of the Postal Services Act, to begin a 28 day consultation on the changes required to Royal Mail’s licence to implement these decisions. It is hoped that revised licence conditions can be settled by the end of March 2011, in time for the beginning of Royal Mail’s financial year, although any price increases consequent upon its application for additional allowed revenue are expected to be implemented in early May.



We will continue to engage with interested parties on the development of a new regulatory framework for implementation in April 2012. It is hoped that further progress can be made implementing necessary safeguards, which would support further deregulation in any given legislative context.



ENDS



For any enquiries please contact:



Tim Crowley, Principal communications

Tel: 07545 422293

tim.crowley@psc.gov.uk

[pinstripe]

"we are substantially addressing Royal Mail’s concern that it makes a loss on each item of mail delivered on behalf of its competitors and helping to ensure that access will no longer be loss making."

Well TNT won't really need DSA any more. :vcfo :dcfo :ncfo

[Broxi51]

"we are substantially addressing Royal Mail’s concern that it makes a loss on each item of mail delivered on behalf of its competitors and helping to ensure that access will no longer be loss making."

Well TNT won't really need DSA any more. :vcfo :dcfo :ncfo

Yeah.......but the price for RM has just gone up

[walksyo]

"we are substantially addressing Royal Mail’s concern that it makes a loss on each item of mail delivered on behalf of its competitors and helping to ensure that access will no longer be loss making."

Well TNT won't really need DSA any more. :vcfo :dcfo :ncfo

From wot i can gather TNT are selling there mail section off anyway.....

[Stormproof]

We will continue to engage with interested parties on the development of a new regulatory framework for implementation in April 2012. It is hoped that further progress can be made implementing necessary safeguards, which would support further deregulation in any given legislative context.

Privatisation by April 2012 then?