How we're regulated
As the UK’s universal service provider, Royal Mail is regulated significantly more closely than other postal operators in the UK.
Royal Mail products and services outside of the universal service are now regulated, however, in the same way as other providers. Parcelforce Worldwide and GLS operate entirely in the deregulated parcels market.
Universal postal service
Ofcom has a primary duty to secure the sustainability of the UK’s universal postal service.
The regulator must have regard for the need for the universal service to make a reasonable commercial rate of return on the costs of providing the activities to deliver the universal service, including 6 days a week collection and delivery.
Ofcom must also ensure that the universal service is efficient, and delivers the minimum requirements set out in the Postal Services Act 2011.
Direct price controls have been removed on the vast majority of Royal Mail’s products and services. Previously more than 80 per cent of our revenue was directly price controlled.
This is now less than 10 per cent and relates to our status as the sole provider of the Universal Service.
Royal Mail is, however, still subject to a regulatory margin squeeze framework that restricts our ability to price freely. The constraints imposed by the regulatory margin squeeze control are unnecessary in a competitive market.
Not only are 45 per cent of all UK letters and 75 per cent of bulk mail now handled by competitors, but direct delivery competition is now also being introduced by rival operators.
Registered Office Royal Mail Group Ltd, 100 Victoria Embankment, London, EC4Y 0HQ
© Royal Mail Group Limited 2013