Ofcom published its proposed changes to Royal Mail’s Universal Service Obligations (USO) at the end of January, with the consultation period closing at 5pm tomorrow.
In its formal response published today (9 April), Royal Mail said it was concerned that “key changes by Ofcom to Royal Mail’s proposed reforms will not deliver the efficient, reliable and financially sustainable Universal Service that customers need”.
The postal operator said that the level at which Ofcom is proposing to set the new reliability targets – 99.5% of First Class letters delivered within three days, and the same percentage of Second Class letters within five – is “over specified and will add significant cost to the delivery of the Universal Service”.
It warned it would put the service at risk, and could lead to “materially higher prices for customers”.
Martin Seidenberg, CEO at Royal Mail parent group International Distribution Services, commented: “It is vital that Universal Service reform delivers a postal service which is reliable, affordable and better meets what customers need for both letters and parcels.
“These changes we seek are important measures to ensure we can protect the one-price-goes-anywhere Universal Service for many years to come.”
Regarding a key issue for business users such as direct mail specialists and mailing houses, Royal Mail said it was also concerned that Ofcom’s proposal to add a Priority (D+2) Access business service to postal regulation “significantly reduces the chances of achieving a successful roll out of the new delivery model and goes against the wider government drive to reduce unnecessary regulation”.
Royal Mail has also called for Ofcom to remove regulations that stop Royal Mail from offering parcel tracking for Universal Service customers, which it described as “a hygiene factor” in the growing and hugely-competitive parcels sector.
“The current restriction does not reflect what customers want and renders the Universal Service unfit for the digital age,” Royal Mail stated.
It also urged Ofcom to publish its consultation decision by 1 July.
The current proposals include First Class mail being delivered six days a week, as now, but Second Class letters would be delivered on alternate weekdays and not on Saturdays.
The price of a First Class stamp went up by 5p to £1.70 on Monday (7 April), with Second Class up 2p to 87p.
Letter volumes have declined from a peak of 20bn a year in 2004/05 to 6.7bn a year in 2023/24.
