Post Office to deliver on super-highway

TRADE and Industry Secretary Stephen Byers will this week unveil plans to turn the Post Office into a key player in the rapidly expanding business of delivering goods purchased over the internet - as part of the effort to shove Britain into the fast lane of the information highway.

"The Post Office story has run as a privatisation story," said an official. "But the real story is the fact that e-mail is consigning Postman Pat to the dustbin of history."

In a long-awaited White Paper, Mr Byers will appease opponents of the Post Office's privatisation by guaranteeing there will be no sale of shares in the Post Office Plc to private investors without prior parliamentary approval.

But he will stress that Post Office Plc must compete against private carriers or die. The White Paper will spell out plans to free up an additional pounds 180m for the Post Office to invest - including a cut in the share of profits handed backed to government from 80 per cent to 40 per cent. The Department of Trade and Industry also wants the Post Office to be able to invest pounds 75m a year without government approval.

In return for these concessions, the Government will trim the Post Office's letter-carrying monopoly. Since 1981, the service has held the exclusive right to deliver parcels priced under pounds 1. That limit will be lowered to 50p.

The Government is really looking, however, at the top end of the delivery market, according to the official. In recent years, private carriers like Federal Express and DHL have creamed off much of the lucrative business of delivering corporate post. Now continental European state carriers are fighting back.

Deutsche Post has spent $4.4bn (pounds 2.8bn) on acquisitions in the last two years, including a 25 per cent stake in DHL. In March, the privatised Dutch postal service, the TNT Post Group, introduced a Quickshipper service that allows customers to track the movement of parcels on-line.

The Government's plans to help the Post Office compete for internet-derived business is part of a wider strategy to position Britain as the European hub of e-commerce, the official said.

This will include enhancing public access. David Edmonds, director-general of Oftel, the independent telephone regulator, is expected this week to publish Oftel's consultative docu- ment on bringing broadband capacity into the nation's homes.

Currently, BT has a monopoly over local exchanges and the last mile of copper linking homes to the national network. BT is expected to roll out a service offering customers mega-charged ISDN lines, providing fast access to the internet - with elaborate images - this autumn.

But BT's competitors want to compete over the last-mile loop and are seeking the right to pay BT to "unbundle last-mile services". "Competition is the way to go," said Craig Barrett, chief executive of US microprocessor maker Intel.