Royal Mail gets go-ahead for bulk mail price rise

Postcomm, yesterday, said it was "minded to" accept Royal Mail's October 2010 application to generate an additional £100m from bulk mail services.

This would "help maintain the pace of the modernisation programme required to safeguard the provision of the universal postal service", according to Postcomm.

Postcomm has also proposed the following measures, which it hopes can be in place by the end of March:

• Deregulation of packets and parcels weighing more than two kilograms.
• Removal of retail price controls from all packets and parcels weighing more than one kilogram and from second class pre-sorted bulk mail services.
• Reduction in access headroom controls from all packets and parcels weighing more than one kilogram.
• Removal of headroom controls from all packets and parcels weighing more than one kilogram.
• Move to a "wholesale-led" form of price control for second class pre-sorted products.

The regulator said the proposals address Royal Mail's concern that it makes a loss on each item of mail delivered on behalf of its competitors.

The Direct Marketing Association, today, said it remains opposed to the proposed price rise.

In November it claimed it would allow Royal Mail to hike prices by as much as 19% and expressed "grave concerns" that the increases would "jeopardise the future of the industry".

Postcomm, yesterday, said it acknowledged "the impact that such price rises are likely to have on customers and the risk that this may result in a further decline in mail volumes", but was clear that the universal service was under threat if Royal Mail fails to modernise.

Postcomm is due to start a 28-day consultation next week on how the changes to Royal Mail's licence should be implemented.

This article was first published on marketingmagazine.co.uk