Mixed results for postal competition

14 May 2008
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15 May 2008 | Paul Snell

The liberalisation of postal markets has had mixed results for businesses, according to the initial report into the sector.

Since postal services were opened to competition in 2006, large firms have seen better choice, quality and lower prices as a result of new companies entering the market.

However, according to an independent review led by Richard Hooper, chairman of telecoms firm Artilium, small businesses have seen "no significant benefits" as a result of the changes. The study also found there had been less innovation in the market than originally expected.

"[Small firms] believe Royal Mail's service offers good value for money as it stands. But they have no choice in provider and are paying higher stamp prices. The introduction of a pricing methodology based on weight and dimensions makes life more difficult," said the report.

Since liberalisation 19 companies have been licensed to provide post services along with Royal Mail, which still handles most deliveries. Suppliers blame the high costs of operating a full "end-to-end" service, as well as uncertainty about the future of the market for the limited response.

Independent regulator Postcomm urged the removal of barriers to new suppliers entering the market to encourage wider competition, in a response submitted to the review today.



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