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The shake-up to postal services proposed by independent regulator Postcomm this week could jeopardise the quality of mail services across the country, believes the Federation of Small Businesses (FSB).

The reforms will open up business mail and other services to competition, through a three-stage plan, with Consignia, the new name for the Post Office, losing its monopoly over basic postal services within four years.

The Federation has said to both the regulator and Consignia, that “nothing should undermine the universal service at a uniform price.”

The FSB’s David Bishop fears other operators could cream off the more profitable services from Consignia, which might mean the company “couldn’t provide the same level of service, for example, in rural areas.”

Postcomm proposes that from 1 April new operators could apply for licences to handle bulk mail of over 4,000 items from large users. Either they or the Royal Mail could deliver this, thus opening up around 30% of Consignia’s current market.

Under this first stage operators can also apply for licences to carry out mail collection and sorting. The Royal Mail would still organise final delivery in this instance.

The regulator says operators would then be able to combine mail from smaller businesses and so “benefit from Consignia’s ‘Workshare’ discounts.”

In the first phase, Postcomm would also consider further licences for niche services, such as specialised business mail services or small-scale local deliveries.

The second stage would extend the bulk mail threshold down to as low as 500 items, thus opening the market up by a planned further 30%. This would kick in on 1 April 2004.

The final phase would see “all restrictions on market entry abolished.” Postcomm aims to open the market to full competition by the end of March 2006.

The Direct Marketing Association (DMA) welcomed Postcomm’s proposals, saying that the reforms outlined in the first stage will give smaller businesses “access to lower prices through consolidation”.

The trade association commented that reducing the bulk mail threshold in phase two, would offer “smaller mailers the opportunity of greater choice.”

David Rowbottom, DMA director of development and postal affairs, said that the proposals should provide the direct marketing industry with “greater choice, improved quality of service and reduced prices.”

Unlike the FSB, Rowbottom believes Postcomm’s proposed structure also “ensures the protection of the universal service, which is fundamental to the direct marketing industry.”

The FSB’s Bishop said that competition in general is useful, but “it has to be across the country rather than just London, Manchester and Birmingham.” He asks Postcomm to reconsider its proposals.

Responses to PostComm’s proposals must be lodged by 15 March. For more details visit www.psc.gov.uk .

With thanks to Lloyds TSB Success4Business. For more news and information visit www.success4business.com.

(1/2/02)

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