Ofcom unshackles PAF profits - DecisionMarketing

Postal regulator Ofcom has told Royal Mail it can to make as much profit as it likes from its Postcode Address File (PAF), although refutes claims this could lead to soaring prices.
At the moment, there is a cap on the service, limiting the amount of profit Royal Mail can make; anything over 10% above operating costs has to be ploughed back into PAF.
But Ofcom now believes the cap gives Royal Mail less of an incentive to grow the use of the PAF database, and improve the efficiency of its operation.
Some respondents to the PAF consultation expressed concerns that removing the profit cap would mean a significant increase in PAF licence fees.
But Ofcom promised today that if it sees “significant” price, it would be likely to investigate. If price increases did not stem from an improvement in the service, the regulator said it would review whether price terms remained reasonable.
Ofcom said that Royal Mail is currently in the process of reviewing its pricing and licensing framework for PAF, and that it will consider whether an alternative price control mechanism is needed if necessary following this review.
There are currently about 37,000 users of the PAF database, many using it as part of a larger product such as addressing software.
Last month Royal Mail announced a number of new measures for PAF, including providing the service free of charge to some small businesses and charities.
Ofcom said: “[PAF] should be useful and pragmatic, balancing the consensus of demand by stakeholders for a meaningful way of measuring quality, with a pragmatic approach to developing and measuring performance against the target.”