Capitalist ingenuity

[Keaney Michael <michael.keaney@xxxxxx>]

Mail may come with the milk

Geoffrey Gibbs
Friday June 29, 2001
The Guardian

Milkmen could collect and deliver letters under radical ideas to inject
competition into postal services.

A consultation document published yesterday by the industry regulator,
Postcomm, argues that users could enjoy "clear benefits"
from liberalisation of the postal services market.

The document stopped short of firm proposals, but said that potential
entrants to the market could include supermarkets,
newspaper distributors and milk deliverers - all of which could carry mail
within a particular licensed area in addition to their core
distribution activities.

Existing postal operators, such as express and courier firms, which have
proliferated since they were allowed to deliver items
weighing more than 350g and costing more than £1, are anxious to extend
their operations into the licensed postal market where
the Post Office - now known as Consignia - enjoys a monopoly.

Consignia, which earlier this month decided against a 1p rise in the price
of sending a letter, handles 19bn letters a year, more
than 80% of which are business post. More than a fifth of its total mail
volume is accounted for by 50 customers.

Drawing on the experience of other countries and on the lessons from
introducing competition in the telecoms, gas and electricity
markets, the regulator said that competition in the licensed area of postal
services would appear "desirable".

The regulator stressed its duty to ensure customers continued to benefit
from a universal service at an affordable uniform tariff, but
stated that "vigorous rivalry" among operators would encourage them to put
the preferences of users first.

"This could give users choice and better value, and encourage efficiency and
innovation," the regulator said yesterday.

The consultation lasts three months, and will be used to draw up plans later
this year. Postcomm's chairman, Graham Corbett,
has held discussions with courier firms, overseas postal operators and milk
distributors among others and is hoping that the first
licences could be issued by the middle of next year.

Peter Carr, chairman of Postwatch, the consumer watchdog set up by statute
but independent of government, welcomed
competition. "Dependence on Consignia is a bad bet for consumers. We have a
declining level of service, and a business that is
failing.

"We believe that the effect of competition will be to reduce prices,
particularly where local delivery is concerned."

Consignia said it would study the consultation document and make a detailed
response later this summer, based on ensuring that
the framework for bringing in competition was in the best interests of
customers overall.

Full article at:
http://www.guardian.co.uk/uk_news/story/0,3604,514195,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx