2003 Brings Wider Postal Competition in UK

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Licenses allowing a postal operator and a mailing company to carry bulk mail throughout the United Kingdom took effect yesterday in the first of a three-stage effort to open the UK's postal service to competition.

The licenses, for a minimum of seven years, went to TPG Post UK Limited, a subsidiary of Royal TPG Post BV, the Dutch postal operator; and Hays Commercial Services Limited, a UK-based mailing services firm. The licenses let Hays and TPG carry bulk mail and provide consolidation, enhanced document exchange and tracked business-to-business services.

Deutsche Post Global Mail (UK) Ltd., a subsidiary of Deutsche Post World Net, also is applying for a standard license.

The licenses inaugurate wider competition in postal services in the UK. Last year, Postcomm began issuing interim licenses with a 12-month minimum duration. Companies with interim licenses include Securicor Omega Express Ltd. and Express Dairies, which began delivering business mail with milk deliveries in August.

The first stage, which runs from Jan. 1 to March 2005, involves mailings with at least 4,000 pieces. Such mailings make up 40 percent of Royal Mail's domestic letter volume and 30 percent of its letter revenue.

From March 2005 to April 2007, the size of mailings open to competition will be lowered to try to open competition to another 30 percent of Royal Mail's revenue. Competition for all mailings is slated for April 2007.

Postcomm sees competition as a way to push Royal Mail to streamline operations. Royal Mail has struggled to cap rising costs and trim its work force. It lost $1.7 billion for the year ended in March.

Royal Mail said Postcomm is rushing competition.

"Anyone with a shed and a van will be able to set up a rival operation," said Allan Leighton, Royal Mail's chief executive.

Royal Mail said in a statement that "Postcomm's fast-track approach to opening the UK postal market at a much quicker pace than in the rest of the EU is putting at risk the UK's one-price-goes-anywhere universal service."

The UK's direct marketing industry has largely welcomed the proposals.

Meanwhile, Royal Mail asked Postcomm to approve an increase in stamp prices to help pay for a pension fund shortfall. The cost of first- and second-class stamps is to rise by a pence in April, but Royal Mail wants to break an agreement freezing prices for three years after that.

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