Ofcom Review Yields Hidden Benefit for Royal Mail Post Services

Royal Mail Franked Post Service

Royal Mail received good news on March 1st (2017) with the release of an Ofcom report detailing the regulator's review of the Postal Service and its recommendations for the future. The review resulted in no substantial changes to current regulations and, better yet, extended Royal Mail's existing regulatory framework through until 2021. The framework was set to expire in 2019. This is good news for businesses that utilise Royal Mail post services.

The original regulatory framework implemented by Ofcom in 2012 was designed to be a seven-year programme with the goal of returning Royal Mail to a positive financial position. The regulations include, among other things:

  • a means for monitoring Royal Mail's performance and competitiveness;
  • a requirement that Royal Mail offer access to services to their competitors; and
  • a price cap on second-class letters and certain parcels.

In addition to not changing these three things, there is a hidden benefit in the regulator not imposing any further price controls on Royal Mail. This is important to users of Royal Mail post services.

Economic Impact of Price Controls

Government-mandated price controls on any product or service may seem like a good thing from the consumer protection standpoint, but they often have unintended consequences that translate into significant economic impact. Price controls seldom work as promised in a free-market economy.

When price controls are introduced, the default setting is for businesses affected by those controls to automatically charge the maximum price. Because all the players in the sector are charging the highest price that regulations allow, there is little to no competition. Furthermore, those players petition regulators for increases in order to keep driving revenues upward. In short, price controls result in the artificial inflation of prices. It is as true with Royal Mail as any other product or service.

Deciding not to impose further price controls on Royal Mail makes it easier for the universal provider to better compete with private operators. That's exactly what Royal Mail is attempting to do. Even in the midst of new stamp and franked mail price increases that took effect on March 1st, Royal Mail is doing everything it can to compete rather than simply charging the maximum price and forgetting about it.

Franked Mail, Best of The Royal Mail Post Services

Companies utilising Royal Mail post services can do so with standard stamped mail or the franked mail alternative. We obviously recommend franking for a number of reasons, not the least of which is significant savings. Your company can make the most of its Royal Mail post services by purchasing or leasing a MailMark franking machine.

MailMark franking machines save money across the board by way of lower rates offered directly by Royal Mail. The machines also make for greater efficiency, more control over spending, and greater accuracy in the mail room. Regardless of the size of a particular business,it makes no sense to utilise Royal Mail post services but not doing so using a MailMark franking machine.

Sources:

Lexology – http://www.lexology.com/library/detail.aspx?g=9c7659c1-195d-4ca2-b641-9045c7d32b38

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