UK Postal Service Faces Competition by 2006

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Consignia, the company that runs Royal Mail, may face full competition by 2006 under plans unveiled yesterday by industry regulators.


The Postal Services Commission, or Postcomm, the independent regulator, ruled that bulk business mail, which incorporates almost half the letters sent in Britain, could be handled by rival operators by April and that all deliveries would be open to competition within four years.


Postcomm has given Consignia and other organizations affected by the proposals until March 15 to comment. The regulator may revise its proposals in the light of these comments, but Consignia is required to implement the final reform package.


Consignia said that it would face "death by a thousand cuts" under the plan and revealed that it is already losing 1 million pounds a day on letter delivery.


Postcomm said Consignia's performance had deteriorated so badly that it faced little choice but to speed up the introduction of alternative operators.


"The current postal monopoly is clearly not providing its customers with the service they want and is failing to contain its costs," said chairman Graham Corbett. "We believe the most effective way to change this is for the company to face real competition."


The report also accuses Consignia of allowing costs to rise at a faster rate than its revenue growth. The U.K. government ended the Post Office's 350-year monopoly on letter delivery last year.


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