Royal Mail to lose postal delivery monopoly in 2006

The Royal Mail is set to lose its monopoly on the UK postal market, as regulator Postcomm have announced plans to bring full liberalisation of the market forward.

Postcomm announced plans to bring the date for full market opening forward from April 1, 2007 to January 1, 2006, following extensive stakeholder consultations.

The regulator believes that a competitive market would encourage innovation and benefit postal users. Postcomm said that it expected niche operators to enter the market, serving smaller local or sector-specific markets. The regulator also stressed that, although the results of liberalisation had been "mixed" in other countries, there was evidence to suggest that customers had benefited from innovation, improved service standards, falling real prices and greater efficiency.

Royal Mail, which currently controls 99% of the market, said that it welcomed the competition.

Consumer watchdog, Postwatch, also welcomed Postcomm's decision, saying that competition was the best way to ensure customers receive service and choice at the best possible price. Peter Carr, Chairman of Postwatch, said: "This is welcome confirmation of a policy, which will ultimately benefit all users of mail services."

Postwatch believes full competition will re-enforce, not undermine, the delivery of the universal service and also will be good for the Royal Mail, because it will "maintain the pressure to deliver quality of service to customers, improve efficiency and drive innovation."

However, the Communication Workers Union (CWU) criticised the decision, calling it a "competition at all costs" ethos that would put the Post Office at "a serious competitive disadvantage to its European rivals." CWU General Secretary, Billy Hayes, said: " The Dutch and German post offices in particular must be rubbing their hands in glee at this ill-advised and regrettable decision. At a stroke they are being allowed the opportunity to compete head on with Royal Mail while still enjoying the benefit of strong protection in their home markets.

Mr Hayes added: "The sad thing is that British consumers are the ones who could easily end up suffering as a result of this macho posturing by Postcomm."

(KMcA/SP)