Royal Mail’s monopoly ends Tuesday

LONDON: Britain’s state-owned Royal Mail will lose its 350-year-old monopoly status in the country Tuesday when the country’s 6.5 billion-pound mail industry opens up for private participation.

A spokesperson for the department said the department is resolved to fight hard for every single letter. “Royal Mail is determined to compete successfully in the open market, but in order to do so we need a fair regulatory regime and the ability to invest 2 billion pounds in the modernisation of the business,” he said.

The system is partially privatised since April 2003 as private companies are allowed to handle bulk mailings of 4,000 items or more. From Tuesday, 14 private operators licensed by industry regulator Postcomm will be able to operate in all the fields. These companies include Deutsche Post unit DHL, UK Mail of Business Post Group and the U.K. arm of TNT NV, TNT Mail.

Postcomm chairman Nigel Stapleton said in a statement that one highly valued aspect of the U.K. mail system will remain unchanged by these new developments, and that is the universal serviced provided by Royal Mail — “the one-price goes-anywhere stamp, plus collections and deliveries every working day for every U.K. address”. The regulator is hopeful Royal Mail, which at present controls 95 per cent of the market, delivering 80 million items six days a week, will continue to have a 90 per cent market till 2010.

The company said there has been a huge rise in the volume of access mail — letters collected and handled by rival firms or customers before being presented to Royal Mail at a lower price — which has risen to 90 million letters a month. It now expects that by the end of the financial year, it would handle more than 1 billion letters compared with only 13 million a year ago.

The company, now struggling with a 4 billion-pound deficit in its pension fund, said it needs a 2 billion-pound investment in order to complete a process of modernisation in sorting operations in order for it to compete on a level playing field.

Analysts see competition to intensify in “end-to-end” services spanning collection to delivery as well as niche postal services, particularly within the business sector.

However, there could not be a scenario immediately of multi-coloured post boxes alongside Royal Mail’s red ones or of multi-uniformed delivery people alongside the local postmen. The private operators will largely rely on agreements over access to Royal Mail’s delivery network, with existing postmen and women handling the final delivery.