Monopoly ends for UK's Royal Mail

Royal Mail's virtual 350-year monopoly of the British letter-delivery market has ended as new rules take effect to enable rivals to compete for a share of the potentially lucrative business.

    Royal Mail is still obliged to deliver mail anywhere in Britain

    Postcomm, the national postal services regulator, has so far granted long-term licences to 13 operators, including DHL Global Mail and TNT, clearing the way for them to compete with the state-owned Royal Mail.


    Businesses are expected to be the main beneficiaries of the deregulation of Britain's postal industry, as they are now free to drop Royal Mail for a cheaper or more flexible provider.


    Eighty-five per cent of mail in Britain is between businesses, in a market valued annually at £6.5 billion ($11.2 billion).


    But Postcomm said the switch could also mean an improved overall standard of service for individual customers, and even the appearance of non-Royal Mail post boxes on street corners within a few years.


    Limited competition


    There has been limited competition in the British postal market since 2003 when Postcomm allowed rival companies to offer mailing services to customers sending 4000 items or more per mailing.


    Royal Mail vans are exempt from
    parking restrictions

    Royal Mail nevertheless hung on to 97% of the overall market, handling 80 million pieces of mail each day.


    Sarah Chambers, Postcomm's chief executive, said: "Changing 350 years of history takes a little time and a lot of thought.


    "But we are convinced that postal customers will benefit from more reliable, innovative and customer-responsive postal services."


    Some rival operators will pay the Royal Mail to sort and deliver their items. Others intend to run their entire "end to end" services themselves without involving the Royal Mail.




    Royal Mail enjoys some historical privileges which could pose barriers to the new licensing arrangements, including exemption from parking restrictions for Royal Mail vans delivering and collecting mail.


    Postcomm said Royal Mail was also exempt from value-added or sales tax. This could prevent about half the business customers from switching operator.


    The regulator will continue to control prices charged by Royal Mail, which will still be obliged to provide a "universal service" and deliver a piece of mail anywhere in Britain, regardless of distance.


    All companies which deliver letters weighing up to 350g and costing less than £1 to deliver must be licensed by Postcomm.



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