Review of the pricing requirements of the universal service

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http://stakeholders.ofcom.org.uk/post/u ... ment-apr14" onclick="window.open(this.href);return false;



09|04|14

Access competition is where the operator collects mail from the customer, sorts it and then transports it to Royal Mail’s Inward Mail Centres, where it is handed over to Royal Mail for delivery. This enables other operators to offer letter postal services to larger business customers without setting up a delivery network. In 2012/13, there were 7.2bn items of access mail, representing 47% of total market volumes.1

In March 2012 Ofcom published Securing the Universal Postal Service - Decision on the new regulatory framework (the March 2012 Statement).2 That decision gave Royal Mail greater pricing freedom so it could return the universal service to financial sustainability, subject to certain safeguards. One such safeguard was the existence of competition.

In the March 2012 statement, Ofcom imposed a universal postal service access (USPA) condition requiring Royal Mail to provide access to its network at inward mail centres for the delivery of D+2 or later letters and large letters, but removing the price control on access services that had previously been in place. Ofcom required Royal Mail to provide this access on fair, reasonable and not unduly discriminatory terms (including prices).3 At the same time we provided some initial guidance as to how we would interpret these requirements, though we noted that we would need to update this as stakeholders identified new issues.4

Since the introduction of the new regulatory framework in March 2012, new access prices have been proposed in 2013 and 2014, and a new contract for access services was introduced in 2013. In both 2013 and 2014 stakeholders have raised concerns about the interpretation of the conditions and the guidance. Stakeholders have suggested that this uncertainty has had an impact on both day to day commercial negotiations with end-users and, importantly, on medium and long term strategic planning and investment. Therefore, we consider it timely to review these requirements to ensure that they remain fit for purpose and that all stakeholders have clarity and certainty with regard to their interpretation.

We plan to issue a consultation document this summer setting out our initial views on whether the existing regulation and guidance are sufficiently clear and effective and any proposals for change. We aim to complete the review this year.

1 http://stakeholders.ofcom.org.uk/binari ... 012-13.pdf" onclick="window.open(this.href);return false;

2 http://stakeholders.ofcom.org.uk/consul ... statement/" onclick="window.open(this.href);return false;

3 http://stakeholders.ofcom.org.uk/binari ... Access.pdf" onclick="window.open(this.href);return false;

4 http://stakeholders.ofcom.org.uk/consul ... statement/" onclick="window.open(this.href);return false;