Our vision for the future of Postal Regulation

In 2015 Ofcom started a fundamental review of the regulation of Royal Mail to ensure the regulatory framework remained appropriate and sufficient to secure the efficient and financially sustainable provision of the Universal Postal Service.

Ofcom concluded in March 2017 that the current regulatory framework should remain in place until 2022. Further information can be found here.

Royal Mail believes there is a pressing need for a positive, pro-active sustainability framework to secure the provision of a market-funded Universal Postal Service.

The current market dynamics – parcel competition, e-substitution and shareholder discipline – create all the necessary incentives to drive efficiency. There is no need for the regulatory framework to incentivise further efficiency or competition. The market is doing its job.

But we operate within an increasingly dynamic market. Intense competition in parcels and ongoing structural decline in letters makes the postal sector very challenging.  

It is with regard to sustainability where regulatory action is needed. Central to this is the urgent need to develop a positive, pro-active sustainability framework to help secure a market-funded Universal Service. This should cover three key pillars:

  • Sustaining revenue pools that underpin the Universal Service. This should include keeping the scope of the Universal Service relevant, contemporary and in line with consumer preferences.
  • Focusing on the financial sustainability of the Universal Service. This should include reforming the quality of service regime to ensure it is fit-for-purpose.
  • Creating a level playing field by raising consumer standards across the industry and engaging in the live debate around “gig economy” employment models. The regulatory burden – and how it is shared between operators – should be a key focus for Ofcom.