Stamp Prices

Despite what it says in the Sunday Times, Royal Mail cannot introduce 'zonal pricing' - nor can Postcomm let them - as most of Royal Mail's services are 'universal' - and an Act of Parliament requires that universal services must be provided at a national uniform tariff.

There are three minor exceptions to this general rule. First, Royal Mail's Presstream (magazine) service is non-universal and has always been zonally priced. Second, their slowest bulk mail service (Mailsort 3) is non-universal, and could in principle be zonally priced. Third, the same applies to access services, where Royal Mail delivers post on behalf of other operators. But it cannot be stressed too strongly that neither Royal Mail nor Postcomm has the power to introduce zonal pricing for public mail services.

There were other stories on Saturday suggesting that there might be rapid rises in stamp prices. However, such prices cannot rise quickly because they are subject to a price control, which does not end until March 2006. Under that control, the price of a second class stamp cannot rise above the current 21p, and the price of a first class stamp cannot increase to more than 29p this year and 30p next year (from 27p in 2000 and 28p currently). Royal Mail may seek further price rises beyond 2006 but their current profitability (£348m on price controlled products in the year to March 2004) suggests that it may not be easy to persuade Postcomm to agree.