Business mail reform needs to top Ofcom’s priority list

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The regulation of postal services has passed from Postcomm to Ofcom. The change has prompted all concerned parties to produce a shopping list of demands. And so they should. A change in regulator offers the perfect opportunity to transform mail services forever.

Ofcom is currently busy transposing the current regulatory framework in to its own image. Once the cosmetic changes have been completed, it will then consider the responses and scope of Postcomm’s spring consultation before launching its own later this year.

The watchdog, which currently oversees the telecoms and broadcasting industries, will look into pricing and the economy of mail.
It is with this that those wishing to see change spot the biggest opportunity for transforming the existing landscape. The regulator is likely to look at price controls, VAT, and whether a universal service is financially viable.

All interested players – Royal Mail, the Direct Marketing Association and challengers such as TNT Post want to see a new approach.
TNT Post has argued for a long time for an end to the “uncompetitive” exemption Royal Mail enjoys from charging customers VAT on business mail. It will take the opportunity that a new regulator provides to step up its bid in this area.

The Direct Marketing Association wants to make sure that Royal Mail’s “monopoly” does not allow it to charge direct mailers what it wants, when it wants, however much it wants.

Royal Mail wants to see “a major new approach” that will end the regulatory “stranglehold”, as chief executive Moya Greene has previously described, that it claims sees it lose 2.5p on every letter it delivers on behalf of its competitors.

As you can see, Ofcom has a job on to keep everyone happy. Unlikely they will, but it does have an opportunity, heightened by the likely sell-off of Royal Mail, to help usher in a period of sustainable change.

Royal Mail needs to learn to stand on its own feet, and that means losing privileges and shackles. Rivals need to be offered the opportunity to offer an end to end service, while direct mailers need to have certainty that prices will not get so high to add to the burden that the rise of digital already puts on them.

None of this is easy. But there is a willingness to see change from all parties. Nobody is going to get everything on its shopping list. But those interested are not so far apart in intention that it can’t happen in large part.

Postcomm presided over a system that it had little appetite to change. There has been no public uttering of wholesale change from Ofcom but there is clear desire from the industry and parliament (in passing the postal services bill) for a new setup. All eyes on Ofcom.

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