Decision from postal regulator expected shortly

[TrueBlueTerrier]

http://www.ppa.co.uk/cgi-bin/go.pl/news ... ?uid=12201

Following a meeting of Postcomm’s Commissioners at the end of last week, a decision is expected shortly from the Regulator on both zonal pricing and also on the proposal to grant Royal Mail greater flexibility to increase prices.

In August this year, Postcomm announced that it was ‘minded to’ reject Royal Mail’s application and began a two month consultation with customers. Whilst welcoming Postcomm’s decision, PPA took the opportunity to highlight in its response to the consultation, the magazine industry’s ongoing concerns about the proposed new pricing structure.

In particular, PPA said that the industry did not support Royal Mail’s revised zonal application of 17 July, stating that the late amendment to the proposals, offering a c.5% reduction in the base Presstream price did not begin to offset the loss of profile pricing discounts, which would affect a significant number of publishers.

PPA has also been lobbying against Postcomm’s proposal to give Royal Mail greater flexibility to increase prices under the current Price Control by allowing a increase in the rebalancing ‘sub-cap’ from three per cent to 8.5 per cent.

PPA has pointed out on a number of occasions that should Royal Mail choose to maximise this greater flexibility in terms of Presstream, publishers could be facing increases of as much as 12-13 per cent from April 2008 – significantly above the rate of inflation and on a par with potential increases under zonal pricing. What is worse, publishers would have only 3 months notice before implementation as any price increases would take effect from April 2008. PPA said that this would pose a serious threat to the viability of some magazines.

[andy2007]

If they do succeed in getting zonal pricing introduced, it will be a sad day for the Country. It would cause people in Rural Areas to be penalised for living there. It makes me sick, that they are even considering giving permission for RM to do so!

[dvbuk55]

I must admit I have always been in favour of zonal pricing. There is an argument for a universal delivery but not necessarily a universal price, more particularly now with the size of some of these magazines and catalogues. The letter rate COULD remain the same but I feel that those who enjoy a low price for larger items SHOULD pay more. The drawback of course is how we apply a zonal pricing and although there are some good theories about it would need to be well thought out and knowing RM that's the weakest link. It wouldn't affect rural areas too much but if they wished to send something heavy over a certain distance then they should pay. I am not in favour of subsidies and I think they should be stopped.

[Lounge Lizard]

Some years ago postage on parcels varied according to distance, although that was local parcels being cheaper, so it wouldn't be something entirely new.

[andy2007]

Some years ago postage on parcels varied according to distance, although that was local parcels being cheaper, so it wouldn't be something entirely new.

That would be a good way of solving the problem, without penalising people for living in Rural Areas.

Zonal pricing is another issue entirely, as it would cost more to send to some parts of the Country than others.

My problem with Zonal Pricing, is that in my experience. People don't tend to send many letters (other than bils and adverts) anymore, as Email is much faster, and cheaper. The growth area, seems to be parcels. As the majority of Companies tend to be in Urban Areas, it would increase the cost to those living in Rural Areas.

Admittedly, I am drawing on personal experience. But I would imagine that it is the same everywhere by now. I for one, can't remember the last time I Posted a Letter. But I often send and recieve Parcels.

[dvbuk55]

Some years ago postage on parcels varied according to distance, although that was local parcels being cheaper, so it wouldn't be something entirely new.

That would be a good way of solving the problem, without penalising people for living in Rural Areas.

Zonal pricing is another issue entirely, as it would cost more to send to some parts of the Country than others.

My problem with Zonal Pricing, is that in my experience. People don't tend to send many letters (other than bils and adverts) anymore, as Email is much faster, and cheaper. The growth area, seems to be parcels. As the majority of Companies tend to be in Urban Areas, it would increase the cost to those living in Rural Areas.

Admittedly, I am drawing on personal experience. But I would imagine that it is the same everywhere by now. I for one, can't remember the last time I Posted a Letter. But I often send and recieve Parcels.

Well you haven't got a problem receiving them 'cos someone else is paying and if you live in a rural area - you will pay the going rate for zonal pricing - is that not fair?

[F0zziebear]

To combat potential cherry picking competition from E2E operators.

Simply put if RM can implement xonal pricing then they can offer lower rates for delivery to urban areas, and therefore combat potential E2E competition.

Simple as.

RM is not a stupid organisation. At a strategic level they have some clever people working there. They know what is likely to happen and are cajouling the regulator into essentially creating a pricing barrier to competition.

It will be upto the regulator and competitors to try and resist this.

[BELIAL]

Steady chaps ,you introduce the principal of zonal pricing and RM is not going to append zonal payment. RM will desire a uniform national cost base , and you will be paid on volume regardless of density,unless of course you believe the new business ethos is founded on public service rather than profit and bonus maximisation: pause for reflection!