Royal Mail attacks Postcomm plan for access to network

Royal Mail accused the postal regulator Postcomm of "throwing a huge spanner in the works" after it ruled that the organisation must deliver letters for rival companies for as little as 11.5p compared with the 28p cost of a first class stamp.

Allan Leighton, Royal Mail's chairman, said he was shocked at Postcomm's proposals and warned they could spell the destruction of the universal service guaranteeing deliveries to all addresses in the country for the same price.

The "access price", which Royal Mail can charge for giving rival operators access to its network of 170,000 postmen to deliver letters the "final mile", will be critical to the level of competition that develops.

Royal Mail had been urging the regulator to set an access price of 20p. But the chairman of Postcomm, Graham Corbettt, said: "That would have been an absurd price to pay and would have guaranteed there were no takers."

The proposals unveiled yesterday relate to the price and terms on which UK Mail, a division of Business Post, gets access to the Royal Mail's delivery network. UK Mail is planning to start a new business class service guaranteeing two-day delivery for banks, credit card companies, utilities and the like. It will transport mail to one of the Royal Mail's 1,400 delivery centres for final delivery. But the agreement will set the benchmark for the price at which other operators with UK licences, such as the Dutch and German post offices, can enter the market.

Mr Leighton said: "If the regulator has got the access arrangements wrong then it means the destruction of the universal one-price-goes-anywhere service. It will mean a two-tier or even multi-tier postal service where the price of sending a letter depends on the distance it is travelling." But Mr Corbett said he did not expect his proposals to have a "significant effect" on Royal Mail's ability to operate a universal service, adding that, if they did, he could increase the access price or allow Royal Mail to increase stamp prices.

Paul Carvell, the chief executive of Business Post, said Postcomm's proposals were "not a bad result" adding that he hoped to launch the service towards the end of the year. It is aiming to deliver 2 million letters a day, giving it about 3 per cent of the market but doubling the company's turnover from £150m to £300m a year.

Postcomm's proposals will be the subject of a three-month consultation after which it is expected to take a further two to three months to come up with a final decision. Royal Mail has warned that it will fight Postcomm through the courts if it decides the proposals are too tough.

The consumer body Postwatch backed Postcomm's proposals. Peter Carr, chairman, said: "We welcome any moves that will lead to postal companies being able to use Royal Mail's delivery network. Such access is essential to the development of a fully effective competitive market. Access to the Royal Mail pipeline, could in time, grow the size of the overall market - again, good news for customers and also for the postmen and postwomen of Royal Mail."