New Postal Regulator Freezes Mail Rates

22 January 2001

Prices at Britain's Post Office, now rebranded Consignia [WAMN: 10-Jan-01], are to be frozen for two years by the government’s recently appointed industry regulator, the Postal Services Commission.

Price restrictions will apply from March 26 to all Consignia services that enjoy a monopoly (or near-monopoly), including first and second class Royal Mail postings, direct mail contracts, and packages sent via Parcelforce. The curbs will apply not only to Consignia but to any other firm operating postal services within the UK.

The freeze affects some 80% of all Consignia activity, although the distribution of unaddressed items such as leaflets, free newspapers and samples are exempt. Consignia will be free to apply for the lifting of ceilings on specified prices, although it would have to make "a very good case", officials say. The company last raised letter prices in April 2000, when the first-class base rate rose by one penny to 27p.

According to PSC chairman Graham Corbett, the moratorium will allow breathing space for the creation of a long term price control formula, probably similar to the RPI-X mechanism used by other utility regulators.

The draft licence will enforce strict quality of service requirements, enshrining in law Consignia’s present (but frequently missed) target to deliver 92.5% of all first class mail by the following morning. The company will also be required to open its infrastructure at reasonable prices to competitors.

However, the PSC has yet to be trampled by a stampede to compete with Consignia. Despite informal overtures from most of the major European postal operators and private sector express mail companies, the watchdog has yet to receive a single formal application.

News source: Financial Times [19-Jan-01]