Royal Mail’s Reign Comes to End

Worth A Look, Crown Corporations, Frontier Centre

LONDON — Royal Mail Group PLC's virtual 350-year monopoly of the British letter-delivery market ended yesterday as new rules took effect to enable rivals to compete for a share of the potentially lucrative business. .

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

Businesses are expected to be the main beneficiaries of the deregulation of Britain's postal industry, as they now are 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 (about $13-billion). .

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

There has been limited competition in the British postal market since 2003, when Postcomm allowed rival companies to offer mailing services to customers sending 4,000 items or more per mailing. .

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

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

"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 while delivering and collecting mail. .

Royal Mail is also exempt from value-added tax, as sales tax is called in Europe. .

This could prevent the 50 per cent of business customers who cannot recover the tax from switching their mail operator, Postcomm said. .

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 that deliver letters weighing up to 350 grams and costing less than £1 to deliver must be licensed by Postcomm.