Royal Mail has asked Ofcom to allow it to offer tracking for all parcels sent first or second class around the UK, as the company raised concerns over the communications regulator’s planned shake-up of the postal service.
Ofcom has been holding a consultation on a proposed overhaul of the universal service obligation (USO), the remit held by the 508-year-old Royal Mail to deliver nationwide at one price, six days a week, at a time when people are sending ever fewer letters.
In its response to the consultation, which closes on Thursday, Royal Mail called on Ofcom to remove “unnecessary regulation” that prevents it from offering parcel tracking to customers using its standard services.
In order to send a tracked letter or parcel, the USO requires Royal Mail’s customers to select and pay for a tracked service, rather than allowing the company to offer tracking for letters and parcels sent using normal first- and second-class services.
The company said the ability to track parcels was a basic requirement in the competitive delivery market: “The current restriction does not reflect what customers want and renders the universal service unfit for the digital age,” it said.
Royal Mail also outlined concerns that some of the proposed changes to the USO, including reliability targets, would “add significant cost”, potentially resulting in higher prices for consumers.
The £3.6bn takeover of Royal Mail’s parent company, International Distributions Services (IDS), by the Czech billionaire Daniel Křetínský is on track to complete this month, nearly a year after it was first agreed. Křetínský’s EP Group confirmed last week that “all of the regulatory and anti-trust conditions in relation to the offer” had been satisfied.
Ofcom’s proposals for Royal Mail include setting reliability targets requiring 99.5% of first-class letters to be delivered within three days, and 99.5% of second-class letters within five days.
Royal Mail has struggled to make deliveries on time in recent years, and the regulator said it had been fined more than £16m for missed delivery targets over the previous 18 months.
The regulator is also planning to allow second-class letters to be delivered on alternate weekdays and to stop Saturday deliveries, while maintaining first-class letter deliveries six days a week, which it said would still meet the public’s needs.
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On Monday Royal Mail raised the price of first- and second-class stamps for the sixth time in little more than three years, blaming rising costs for the increase. The price of a first-class stamp increased by 5p to £1.70, while second-class stamps went up by 2p to 87p.
Ofcom outlined its proposed changes to the postal service after pressure from IDS to overhaul the universal service obligation, and has said it will publish its decision in the summer. Royal Mail is calling on the regulator to set out the updated regulations by 1 July.
Martin Seidenberg, the chief executive of IDS, said: “It is vital that universal service reform delivers a postal service which is reliable, affordable and better meets what customers need for both letters and parcels.”
Ofcom has previously said its proposals would enable Royal Mail to save between £250m and £425m a year.
