Mailers may axe Universal Service

Postcomm is considering removing bulk mail from the Universal Service – which could potentially see lower rates – after revealing that direct mailers value low prices over uniform costs.
The move follows last week’s decision to allow Royal Mail to hike bulk mail prices by up to 19 per cent, which was greeted with widespread industry condemnation.
The UK postal regulator has launched a consultation document on the proposals, which also cover the next phase of its analysis of the market.
The consultation claims that while postal services are losing market share to digital alternatives – because of speed, ease of use and functionality – price is not the deciding factor. It noted that digital appeared to exert only a limited competitive constraint on the price of retail mail services.
A statement said: “The Universal Service remains important to customers today, but their needs are changing. The bulk mail market particularly has seen a lot of change and we are today publishing evidence that suggests that bulk mail products should be removed from the universal service.
“Our 2010 review of the needs of bulk mail users shows that they prioritise the importance of low price bulk products, but appear less attached to the key features of the Universal Service, in particular uniform pricing. The findings of our recent market study also show that the bulk mail market is increasingly competitive. Consequently consumers have greater choice than in 2005, when Postcomm took the decision to retain a bulk mail product in the Universal Service.”
Final proposals about the new regulatory framework are expected to be published in late summer 2011, with a new regulatory framework to take effect in spring 2012.

Related stories:
‘Outrageous’ post hikes approved
MPs told to slash Universal Service
Rival post costs Royal Mail millions

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