There will be a fully competitive market in postal services in the UK from April
2007 – one year later than originally proposed -- Postcomm, the postal services regulator announced today. Competition will be introduced gradually, beginning on 1 January 2003.
In a decision document, which takes account of almost 2000 responses to its 31January consultation on competition, Postcomm says that competition will be introduced in three phases, as follows:
Phase 1, from 1 January 2003 – 31 March 2005: bulk mail above 4000 items (from a single site in a similar format), around 30% of the UK letter market by value, together with consolidation services and niche services.
Phase 2, from 1 April 2005 – 31 March 2007: the bulk mail threshold will be adjusted to open up a total of 60% of the market by value.
Phase 3, from 1 April 2007: all restrictions on market entry abolished.
Graham Corbett, chairman of Postcomm said:
“Today’s decision is good news for customers. Competition in the postal market will provide more reliable and more innovative customer services.
“At the same time we have been listening carefully to the debate on our proposals. While keeping the essential framework intact we have made a number of detailed changes, which collectively add up to a material shift in the balance of risk in Consignia’s favour.
“We want to see a robust and competitive Consignia at the core of a robust and competitive postal market. That can only strengthen the universal postal service.
“During the transition period to full market opening in 2007 we will actively monitor the market. And if we do need to intervene to preserve the universal service, we have the tools to do so.”
Today’s decision maintains the main elements of Postcomm’ s approach to competition published for consultation on 31 January this year. But after considering all the responses, the end date for competition has been put back by one year and phase one lengthened so that Consignia will face only a modest level of competition while it implements its three-year renewal plan.
Postcomm has also dropped plans in its original proposals to look at speeding up the introduction of full competition. The new fixed end date of 2007 will provide clarity and certainty for the industry. This end date will be incorporated into operators’ licenses so that if, in the unlikely event it were necessary to postpone the end-date to preserve the universal service, this would call into play detailed mechanisms designed to protect licensees’ interests, including reference to the Competition Commission.
Postcomm has also defined bulk mail more clearly to ensure that the phase one opening is restricted to 30% of the letters market as originally announced.
