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| p2p Magaz i ne | Spr i ng 2012
01474 823711
OPINION
Price of posting
set to rise?
Ofcom the communications regulator, published proposals
designed to safeguard the UK’s postal service, ensuring
it is sustainable, affordable and high quality, to the end
of the decade and beyond. The public consultation closed
on January 5 and Ofcom expects to publish a decision on
these proposals in the Spring.
In theory, prices could go up or down
if the proposals are approved, though
Ofcom says they are likely to rise to
safeguard Royal Mail’s USO.With no cap,
the plans could see the price of first class
stamps soar. The price of second class
stamps for standard letters could also
rise, although Ofcom is proposing to set a
price cap of between 45p and 55p, which
would be indexed in line with inflation.
Ofcom’s Group Director of
Competition Stuart McIntosh said, “The
universal postal service which ensures
that letters are delivered to every address
in the UK six days a week is significant
and highly valued by the public. However,
unless changes are made to the regulation
of post, this service is under threat.”
Totalpost Services Plc (www.totalpost.
com) supplies products to the mailroom
and office including franking machines,
postal scales, shredders, letter openers and
inserters. Commenting on the proposals,
Managing Director David Hymers said,
“Approximately 28 million homes and
businesses across the country receive mail
six days a week under the Royal Mail’s
one-price-goes-anywhere service. The
Royal Mail’s ability to deliver the universal
service to its current standard – among
Ofcom took over regulation of
postal services from Postcomm
on October 1 2011. This followed
the recommendations of the 2010
Hooper Report into the postal services
sector which were accepted by the
Government.
Ofcom says that the current regulatory
model for post has failed to ensure the
ongoing viability of the universal service
[Royal Mail's Universal Service Obligation
(USO) requires it to collect and deliver
letters six days a week] and that the huge
changes affecting the industry, particularly
the decline in postal volumes, call for a
new approach to regulation.
The proposals would give Royal Mail
greater freedom in the way it sets some
of its prices including:
• First class deliveries
– letters, large letters (A4 in size and
up to 750g in weight) and parcels;
• Second class deliveries
– for large letters and parcels up to
1Kg in weight;
• Standard parcels;
• Business mail – metered or franked
mail and pre-printed envelopes; and
• Bulk mail – mainly large businesses
sending a large volume of post in
a single mailing for example, bank
statements.
the highest in Europe – is under threat
and we recognise that changes need to
be made.
“In countries which are geographically
larger than the UK, zonal pricing exists,
with higher charges levied to mail a letter,
dependent on the distance between
sender and recipient.Whilst this strategy
could potentially be adopted here in
the UK and could even open up an
opportunity for DSAs to tender to do the
‘last mile’ delivery themselves; we don’t
believe it will happen for a number of
reasons.
“Switching to this pricing model would
pose problems for many users, especially
for businesses. Currently costs can be
budgeted for based on volume, but under
a zonal pricing structure without knowing
where the post is going to, it would be
impossible to allocate sums to cover
this area of expense. And secondly, from
an industry perspective it would require
new software being developed (which
would incur a further cost to the end
user) for postal scales, which currently
include standard software that weighs the
mailpiece to accurately predict the correct
postage cost.
“The volume of mail being sent is
falling as people and businesses switch to
digital communication but still the mail is
an essential part of everyday life. I suspect
that it is likely that Royal Mail will relax
their delivery guarantees, for example, by
extending the time within which it will
deliver first class post to rural and remote
areas, to save money.Whatever the
outcome, I believe that we will accept it,
both as individuals and as an industry.”
Despite a
26%
decline in postal
volumes since 2006, Royal Mail still
processes 62 million pieces of post a
day,
88%
of which are sent by UK
businesses.
Royal Mail delivered
16
billion
letters to around
28
million
addresses last year.
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