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Royal Mail concerns about the potential impact of end-to-end delivery on the Universal Service

• Unregulated competition in the mail industry poses a significant risk to the six-day-a-week, one-price-goes-anywhere Universal Service. 
• A high, fixed cost network, currently £6.7 billion a year, is required to provide the Universal Service
• While modest in its initial coverage, TNT Post UK’s pilot in ‘end-to-end’ (E2E) postal delivery in a number of West London postcodes could be replicated in profitable routes elsewhere across the UK.
• Royal Mail supports fair competition. Since 2006, the UK has had the most open postal market in the EU with other companies now handling 40% of all UK letters, including 70% of bulk mail.
• As Richard Hooper CBE pointed in his report for Government in 2010 (Saving the Royal Mail’s Universal Postal Service in the Digital Age): “Cherry-picking cuts into the surplus that is available to finance universal service delivery to areas where delivery costs greatly exceed the uniform price of the Universal Service, clearly undermining the sustainability of the Universal Service.”
• TNT Post UK’s pilot underlines the fact competitors can cherry-pick the most profitable, high-population density routes, leaving Royal Mail to deliver to unprofitable areas.
• Unlike other competitors, Royal Mail needs to maintain a network that can deliver to every single address, six days a week, no matter how many letters there are for delivery or if a rival postal operator is also delivering to that address.
• Ofcom has the power to impose general universal service conditions on E2E market entrants to protect the existing Universal Service for all. Royal Mail will be monitoring the TNT Post UK pilot closely to understand its impact on our ability to deliver the Universal Service.
   

Whilst modest in its initial coverage, this week TNT Post UK starts piloting a rival end-to-end (E2E) mail service offering collection and delivery on behalf of a number of large-volume clients to a concentrated area of addresses in West London. It raises the prospect of competitors cherry-picking the profitable, high population-density routes around the country whilst also being allowed to deliver fewer than 6 days a week. This could potentially challenge the sustainability of the six day a week Universal Service which Royal Mail must deliver.

A rival end-to-end service based on mail posted by a relatively small number of large-volume clients may benefit those few large mail users in the short-term. Without adequate regulation, Royal Mail believes it will be to the long-term disadvantage of ordinary UK business and consumer customers that send modest amounts of mail. Royal Mail will be monitoring the TNT Post UK pilot closely to understand its impact on our ability to deliver the Universal Service.
 

UK the most open and competitive market in Europe
The UK was one of the first countries in the EU to open the postal market to full competition in 2006. This has enabled competitors to currently handle 40% of all UK letters, including70% of bulk mail.
 

Royal Mail is not opposed to end-to-end competition per se, where Ofcom exercises its power to impose general universal service conditions on market entrants to protect the existing Universal Service for all. Royal Mail cautioned against unregulated development of rival end-to-end collection and delivery services in a submission to the regulator Ofcom, published in February 2012.
 

The potentially serious impact of cherry-picking comes on top of the UK’s 25% decline in letter volumes since 2006. In addition, less mail is also being delivered to more addresses. The number of addresses Royal Mail delivers to has increased from 27 million in 2003 to 29 million now.

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Royal Mail announces annual stamp price rise for April 2012

• We know how hard it is for households and businesses when our economy is as tough as it is now. We have thought very carefully about the impact on our customers and on our own business, before deciding to raise our prices.
• Following Ofcom’s decision today about a new regulatory framework, Royal Mail is announcing that from April 30, the price of a First Class stamp for a standard letter will rise from 46p to 60p. The price of a Second Class stamp for a standard letter will increase from 36p to 50p.
• Ofcom has said Royal Mail’s financial position puts the viability of the Universal Service at severe risk. Royal Mail has made a loss on its core mails, including packets, activities of almost £1 billion over the last four financial years. Price increases are therefore needed to put the Universal Service on a sound, sustainable and secure basis.
• Postal service standards in the UK are high and increases are needed to pay for them. Royal Mail’s next day target of 93% is the highest for any major EU country. We also deliver six days a week while many EU countries only provide a five day delivery service.
• For low income households, Royal Mail will keep stamps for letters for Christmas 2012 at the same price as in 2011. Households on pension credit and employment and support allowance (or incapacity benefit) will be eligible. They will be able to buy up to three books of 12 stamps – 36 stamps in total – in one purchase from any of the 11,801 Post Office branches from 6 November until the last posting dates before Christmas

Following Ofcom’s decision today about a new regulatory framework, Royal Mail is announcing that from April 30, the price for a First Class stamp for a standard letter will rise from 46p to 60p. The price for a Second Class stamp for a standard letter will increase from 36p to 50p. The cost of a Large Letter stamp up to 100 grams will rise from 75p to 90p for First Class and from 58p to 69p for Second Class. (Other products, including packets, whose prices are increasing are listed in Editor’s Notes.)

Royal Mail broadly welcomes the new regulatory framework announcement by Ofcom today. Royal Mail will now review the decision in full. We will also respond to Ofcom's consultation on an extended safeguard cap covering Second Class small parcels and large letters up to 2kg in weight.

The Group has been stressing the need for a very different regulatory framework, as the old approach - including very extensive price controls - accelerated the significant rate of decline in Royal Mail’s finances.

Moya Greene, CEO, said: “We know how hard it is for households and businesses when our economy is as tough as it is now. No-one likes to raise prices in the current economic climate but, regretfully, we have no option.

“Royal Mail provides one of the highest quality postal services in Europe for amongst the lowest prices for both consumers and business. That service is under threat from declining volume, e-substitution and ever increasing competition. Because of these pressures Royal Mail has lost £1 billion over the last four years; the sustainability of the service is now at risk. Price increases are needed to return the Universal Service to sustainability.”

Viability of the Universal Service at risk

Ofcom has said there is a severe risk to the Universal Service, price controls have failed and there is a need for material price increases. Over the last four years, Royal Mail has made a loss in its core mails business, including packets, of almost £1 billion over the last four financial years. The significant deterioration in Royal Mail’s finances can be attributed to a number of factors. Firstly, the previous regulatory regime kept prices artificially low. Secondly, mail volumes fell by 25 per cent in six years and volumes are expected to decline by about 5% a year for the foreseeable future. Thirdly, less mail is being delivered to more addresses. The number of addresses has increased from 27 million in 2003 to 29 million today.

UK Service Standards are high and need to be paid for

Service standards in the UK are appreciably higher than in many other EU countries. Royal Mail is required to deliver six days a week; the EU minimum obligation is five days. Royal Mail’s 93% next day delivery target is also the highest for any major European country, e.g. France’s minimum standard is 84%. A high, fixed cost network (currently costing £6.7 billion a year) is required to maintain this high quality service. Irrespective of the number of items delivered every day, Royal Mail has to maintain a network on the basis that it delivers to 29 million addresses six days a week. Price increases are needed to sustain this high quality service.

A focus on efficiency

Royal Mail is working hard to reduce its costs and continues to improve its efficiency. This is a painful process of ongoing change for our people. Over the past decade, Royal Mail has seen 50,000 of our people leave the company. Sadly, reductions continue at both the managerial and operations levels. We must absorb inevitable cost increases in fuel and energy, and the number of addresses requiring our service six days a week goes up by 300,000 every year. The number of letters handled by the Royal Mail continues to decline.

With traffic changing from letters to parcels, and in the absence of capital to improve technology, unlike other competitors, Royal Mail’s cost structure must reflect the reality of our duty to serve all 29 million addresses every day.

Our programme of modernisation is one of the largest of its kind currently underway in the UK. Every process we are involved in – collecting, transporting, sorting and delivering mail – is being changed.

Our prices are amongst the best value in Europe

For consumers, UK stamp prices are amongst the best value in the EU; they will remain so. The key points are:

• Royal Mail charges the same price per letter up to 100 grams. Other EU operators often charge three different prices up to this weight step.
• In the 51g to 100g weight band, the UK’s new 50p Second Class stamp is the lowest in Europe. For items between 21g and 50g, our 50p price is the second lowest. Less than half of EU countries actually offer a Second Class service.
• In the 51g to 100g bracket, the new 60p price for a First Class stamp will be the fifth lowest in Europe.

UK businesses that use meters also benefit from good value prices and discounts of up to 38% on stamp prices. The prices of Royal Mail meter services used by businesses have lagged behind inflation for many years. After these increases, Meter First Class letter prices will be around 4% lower in real terms than the early 1980s. Meter Second Class prices will be around 13% lower in real terms.

Helping low income households

Royal Mail will have a scheme this Christmas to enable people on low incomes to buy up to a total of 36 First or Second Class Stamps in one purchase at 2011 prices – 46p for First Class and 36p for Second Class. The scheme will launch on November 6 and will be in place until the last posting date before Christmas for First Class stamps.

While postage accounts for a very modest proportion of household expenditure, we know that there are some people for whom any price rise is difficult. People on pension credit and employment and support allowance (or incapacity benefit) are eligible for participation in the Christmas scheme. Around 5 million people are eligible under these criteria.

Eligible people will be able to buy up to three books of 12 stamps – 36 stamps in total – in one purchase from any of the 11,801 Post Office branches. To receive the stamps at 2011 prices, people will need to provide evidence that they are in receipt of benefits, e.g. the Annual Uprating letter or the Award Notice letter from the DWP. Royal Mail will write to every UK household later in the year explaining the scheme and how it works.

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The magic of Roald Dahl celebrated on Royal Mail stamps

• Roald Dahl’s timeless children’s classics celebrated on the first Royal Mail special stamps issued in 2012
• Features iconic Quentin Blake illustrations
• 30th anniversary of The BFG celebrated on special sheet of four stamps

Royal Mail has issued a set of six stamps to celebrate some of Roald Dahl’s most popular children’s stories. The stamps feature illustrations by Quentin Blake, whose iconic drawings are synonymous with Roald Dahl’s classics.

The stamps depict much-loved favourites Charlie and the Chocolate Factory (1st Class), Fantastic Mr Fox (66p), James and the Giant Peach (68p), Matilda (76p), The Twits (£1) and The Witches (£1.10). In addition, the 30th anniversary of The BFG (Big Friendly Giant), one of Roald Dahl’s most popular characters, is marked by a special sheet of four stamps, featuring scenes from this legendary tale.

Ophelia Dahl, daughter of Roald, said: "I'm so excited that Royal Mail has honoured my father, Roald Dahl, with these stamps. My dad wrote thousands of letters home throughout his life and never dreamed that one day one of his own characters would grace a stamp. He'd be thrilled. This is an excellent way for us to kick off a year of celebrations to mark 30 years in print for The BFG and it's great that the stamps include a collector's set, devoted to The BFG and other characters from this book."

Stephen Agar, Royal Mail Stamps spokesperson, said: “Roald Dahl’s wonderful stories and timeless creations have touched the lives of children and adults across the UK and around the world.

“We are delighted to be featuring some of Roald Dahl’s most loved stories as we start our 2012 special stamp programme. Later in the year we will be celebrating the life of another iconic writer, Charles Dickens, and a separate series on Britons of Distinction will all help make this a year to remember.”

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Royal Mail welcomes Ofcom's major review

1. Royal Mail welcomes the major review of the UK postal sector that Ofcom has published today (20th October 2011). Royal Mail will carefully review the document before coming to a considered view on its main elements.
2. Royal Mail believes that the Ofcom proposals are a significant step towards securing a sound and sustainable Universal Service.
3. Royal Mail, which reported a £120 million loss last year in its core Universal Service activities and has had negative cashflow for a number of years, has been calling for a different approach to regulation for some time.

Royal Mail believes that the proposed new approach from Ofcom is a significant step towards securing the future of the six-day-a-week, one-price-goes anywhere Universal Service to 29 million UK homes and businesses. Ofcom notes in its review that the obligations that apply to Royal Mail in respect of the Universal Service exceed those that apply in most other countries in Europe.

Radical action needed

Moya Greene, Royal Mail Group’s Chief Executive, said Royal Mail has been stressing the need for a very different approach as the old regulatory framework has accelerated the financial decline of Royal Mail. Ofcom has recognised that the old approach of tight price controls has not worked. Royal Mail has reported negative cashflow for a number of years and reported a loss of £120 million last year in its core Universal Service activities. Headroom price controls and mandated access, however, have driven more revenues out of Royal Mail than the structural decline in volumes. The average daily postbag of 62 million items is now 18 million fewer than just five years ago.

A sound and secure universal service

Royal Mail is pressing ahead with its vital modernisation programme. 45,000 people have left Royal Mail since 2002 as the necessary but difficult process of modernising the company continues. With its unions, Royal Mail is making painful changes to its operations to achieve the efficiencies that the regulator and customers expect.

A new balance must, therefore, be found to give Royal Mail the pricing flexibility it requires alongside the clear understanding that prices remain affordable, especially for disadvantaged households.

A key role in the UK

Royal Mail is an important part of the UK’s economic and social fabric connecting communities, companies and people. Ofcom’s proposed regulatory framework should also underpin the economic contribution Royal Mail itself makes as one of the country’s biggest employers with 163,000 people employed in virtually every community across the UK.

Ms Greene said: “We welcome Ofcom’s major review of the UK postal sector. This document merits a great deal of attention. We will give it just that before coming to our considered view on the new framework Ofcom is proposing. It is clear, however, that the Ofcom proposals are a significant step towards securing a sound and sustainable Universal Service. The proposals are timely too as radical action is needed now given the ongoing decline in volumes and revenues and the inability to cover the costs of our Universal Service activities.”

Royal Mail will give its detailed view on Ofcom’s proposals before the consultation on the proposed new regulatory framework concludes in early January. Ofcom intends to implement the new regulatory framework from next spring.

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Royal Mail stamps to go for gold in London 2012

1. Royal Mail stamps to be issued to mark all Team GB gold medal wins
2. Gold medal stamps a first for Royal Mail
3. Only 3rd time a host nation has issued individual Olympic gold medal stamps
4. Stephen Agar from Royal Mail said: "We're delighted to announce we will be issuing these very special gold medal stamps. We hope that we will be printing many sets, just as the Nation hopes that it will be celebrating many victories next summer."

With one year to go to London 2012, Royal Mail has announced that it will issue special gold medal stamps to celebrate Team GB Olympic gold medal wins.

This is the first time that Royal Mail has issued stamps to mark Olympic victories. The stamps will feature both individual and team gold medal wins.

Details of the actual designs themselves are set to be announced later, when Royal Mail will also announce its plans to commemorate the Paralympic Games.

Royal Mail issued its first Olympic Games Stamps in 1948, with four stamps bearing the five Olympic Rings. No stamps were issued in 1908 as Royal Mail stamps at that time bore images of the reigning monarch only.

At the Beijing 2008 Olympic Games Team GB won 19 gold medals. Stephen Agar from Royal Mail said: “We’re delighted to announce we will be issuing these very special gold medal stamps. We hope that we will be printing many sets, just as the Nation hopes that it will be celebrating many victories next summer.”

It will be the third time a host nation has issued stamps to mark individual Olympic gold medal wins. Australia Post was the first postal service to issue gold medal stamps to mark home team Olympic victories in 2000, with Hellenic Post in Greece following suit in 2004. In 2008 China Post issued a single commemorate sheet of stamps to mark their national team’s success in Beijing. More recently Canada Post issued a stamp to mark the first ever gold medal won on home territory at the Winter Olympics in Vancouver in 2010.

The 27th July sees the issue of the final set of ten stamps in Royal Mail’s countdown to the London 2012 Olympic and Paralympic Games. The three-part series has seen 30 stamps issued, reflecting all sports competed.

Royal Mail has a history of celebrating key moments in UK sporting history. England’s World Cup football victory in 1966 was the first UK sporting achievement to be marked by a set of Special Stamps with more recent stamp issues featuring the England rugby team’s 2003 historic World Cup win and the English cricket team’s 2005 memorable Ashes success.

For information on Royal Mail’s range of Olympic and Paralympic Stamps visit royalmail.com/sportscollection.

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Royal Mail becomes world's first postal company to offer digital watermarking

1. Royal Mail launches interactive post with digital watermarking technology
2. Landmark deal means companies can link consumers to websites and videos through the post
3. Customers use their 3G phone to scan digitally-enhanced mail

Royal Mail has become the world’s first postal company to help businesses make their post interactive using digital watermarking technology.

Combining state-of-the-art technology with history and heritage enables people to link from their post to a company’s online content, such as a website, video or Facebook page, in seconds.

People receiving the digitally-enhanced post simply scan the mail with their 3G phone to start an online journey.

To view the digital content, people who receive a mailing with the digital watermark technology will simply download the free Digital Space App (available shortly from the Apple and Android App stores). By holding the 3G phone over the digitally watermarked image - which is indicated by a symbol - users are then given instant access to the digital content available.

The solution, launched by Royal Mail’s Door to Door unit in partnership with Digital Space, provides a digital watermark that can be embedded into pictures on leaflets and mailings. The watermark enables marketers to integrate their print and online material without the need for barcodes or QR codes.

The digital watermark has no impact on the design and layout of a piece of mail:

1. The watermark is embedded into the existing design
2. No special inks or changes to the printing processes are required

Dave Smith, Royal Mail’s Chief Customer Officer, said: “Royal Mail is committed to helping make leaflets and mailings increasingly sophisticated and engaging for the people who receive them. This landmark partnership means that Royal Mail is the first postal company in the world to offer digital watermarking technology to its customers."

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Your invite to the Royal Mail Opinion Forum

At Royal Mail we are constantly looking at ways to improve the products and services we offer to you. As a valued customer, we would be delighted if you were to join the new Royal Mail Opinion Forum. Becoming a member of this online customer forum will give you the chance to help to shape the future of Royal Mail.

The online consumer community will give you access to polls, surveys and forums through which you can tell us what you honestly think of Royal Mail. At regular intervals we will collect all the results and use them to influence decisions made about Royal Mail services.

Created by our Customer Insight team, the Royal Mail Opinion Forum provides all our customers with a quick and easy way to contribute their opinions on Royal Mail services.

Registration is quick and easy … simply choose whether to register as a personal customer or as a business:

Register as a business (new window)

Register as a personal customer (new window)

5 benefits of joining:

1. The choice is yours. Polls, surveys or discussion forums - chose one that suits how much time you have and how much you want to say
2. For every survey you take part in, 50p will be donated to our charity partner Barnardo’s
3. Automatic entry into our prize draw to win £100 with each survey or discussion forum you complete
4. Chat with other Royal Mail customers and collate your opinions and ideas
5. Read and take part in up-to-the-minute polls on topic subjects

We look forward to hearing from you soon.

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International incident bulletin

A summary round up of issues which may be affecting mail services to and from countries around the world. Find out more about International Incident Updates>>

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