AN OVERVIEW OF THE ASSOCIATION

  The Mail Users Association was formed in the 1970's when a number of major business mailers joined forces to fight for the restoration of postal services at a time of escalating prices and deteriorating quality of service.

  The MUA is Britain's only independent association of business users concerned wholly with postal affairs. Our members are drawn from a wide range of business interests including Direct Mail, Banking and Finance, Communications, Publishing and postal related industries.

MUA'S OBJECTIVES

  The MUA's primary objective is to secure a healthy and cost effective set of postal services for all domestic and business users. This not only applies to physical mail, but also includes electronic and hybrid mail areas.

  We believe that this will be achieved in a mixed market, offering users a real choice between the obligatory monopoly services of Royal Mail that exist at present, and a set of competing value added options—particularly for business mailers.

  In order to achieve this goal, the MUA believe it necessary to ensure that service providers are:

—  Customer focused in their approach to the products and services they offer;

—  Able to offer cost effective services at realistic prices the market can bear;

—  Have flexibility in their approach to customers whose needs are continually changing;

—  and are able to provide reliable, high quality services on a continuing basis.

MUA'S RESPONSE TO THE WHITE PAPER

Introduction

  MUA as the representative body of Britain's business mail users welcomes the White Paper as a positive move toward an improved postal service, and a demonstration of Government's commitment to ensuring the UK continues to develop a world class postal infrastructure into the next millennium.

  Throughout the Government's Review of the Post Office, MUA has submitted written evidence to DTI and Government, and has met on many occasions with key decision makers to reinforce the important role business mail has to play in the future of UK postal services.

  MUA considers the published White Paper reflects a positive response to this dialogue to date in that it addresses many business mailing concerns, and now looks forward to working alongside Government, the Post Office, POUNC and the regulator in ensuring the vision becomes a reality.

In General

—  MUA welcomes Government's recognition of changing dynamics in the postal marketplace and the need now to act swiftly to ensure the Post Office is no longer disadvantaged against its European competitors. It also applauds the Government's general statements concerning future liberalisation of the market;

—  MUA continues to strongly believe that the Post Office has a vital role to play in the provision of services and within an infrastructure that forms the social fabric of the nation;

—  The creation of a new, transparent and "accountable regulatory framework" is seen by MUA as paramount to the successful implementation of liberalised postal services.

 OBJECTIVE ONE:  TO IMPROVE POSTAL SERVICES FOR BUSINESS AND DOMESTIC CUSTOMERS THROUGH GREATER CHOICE, BETTER QUALITY AND FALLING REAL PRICES

Competition

Benefits of Competition

  Whilst Government's recognition that "greater competition will bring benefits to the consumer"[2] is welcomed, MUA is reassured that the proposed halving of the current monopoly to 50p is seen as "a major first step towards liberalisation". MUA estimates that this "first step" will only release 5 per cent of mail by volume from the reserved sector, and will therefore have little or no impact on the dynamics of the market.

Post Office Monopoly

  EU studies in to postal liberalisation have demonstrated that the funding necessary to sustain the Universal Service Obligation (USO) is far lower than estimated by national postal authorities. MUA would, therefore, urge government to empower/enable the regulator to gain access to otherwise "confidential" statistics that will resolve this issue on a national level once and for all.

Liberalisation of the UK Market

  MUA welcomes the setting of a one year report deadline for examining the scope for further liberalisation as being a demonstration of Government's intention to persevere with postal reform. The regulator's role in setting and then policing the parameters of the new reserved area is viewed as a key element in delivering the necessary market reforms.

Post Office Privileges

  MUA is reassured to see Government is open minded to having more than one postal provider operating within the monopoly area in the future. Such inferences offer potential for further constructive debate on regional franchising.

Regulation

Need for Regulation

  MUA welcomes the establishment of an independent regulator which it views as vital in ensuring the development of a level playing field in competitive areas of the market.

  The Government's decision to not regulate the existing market outside the monopoly area is welcomed by MUA. Such a move will ensure the continuing development of a customer focused marketplace.

Price Regulation

  MUA cautiously welcomes price regulation within the monopoly area, but bases this on the assumption and expectation that any system of price regulation put in place will take into account the volume related aspects of business mailing, and properly reflect market needs.

Enforcing Service Standards

  The issue of quality also remains extremely high on business mailers' agenda. Timely delivery is essential to the smooth running of businesses reliant on the post. MUA welcomes the provisions made for enforcing service standards, but questions how they will be implemented. In particular, MUA would wish to have more detail on how POUNC intends to monitor quality of service.

  MUA wholeheartedly supports Government's proposals for the development of a compensation system for service failure. MUA has already submitted what it believes to be a workable solution for business users (See Appendix A), and looks forward to working alongside POUNC and the regulator in designing the final structure.

Fair Competition

  MUA welcomes debate on the policing of the anti-competitive activities and fully supports Government's references to the Post Office not being allowed to use "its monopoly and size to suffocate innovation and enterprise".[3] It would also highlight the importance of the regulator monitoring the Post Office's adjacent market activities.

  MUA strongly considers that references in the White Paper to the importance of providing "credible assurances that there is no undue cross subsidy from monopoly to non-monopoly areas"[4] are cause for concern. Such a statement is vague and open to interpretation.

Duties of the Regulator

  MUA fully supports the duties of the regulator as being in the interests of the consumer, and would recommend these obligations are enshrined in promotional material aimed at the general public as a means of growing confidence in the regulator's effectiveness in representing their interests.

Consumer Representation

New Role for POUNC

  MUA welcomes and supports the revamped role of POUNC and looks forward to working alongside it in representing the interests of the consumer. Given the contribution business mail makes to sustaining the universal service, it is essential that the quite specific needs of large volume mailers are understood and fully represented in these arenas.

  As stated in previous submission, MUA would therefore recommend that the regulator and POUNC have a statutory obligation to consult with representative bodies such as MUA.

OBJECTIVE 2: TO MAINTAIN A UNIVERSAL SERVICE OF POSTAL DELIVERY THROUGHOUT THE UK, AND A UNIFORM TARIFF.

The Uniform Tariff Structure

  MUA supports the principle of a uniform tariff for the delivery of mail across the UK. However, MUA continues to view business pricing to be outside this remit, and to be independent of public tariff.

Freedom to Price Commercially

  MUA welcomes recognition of business mails contribution to the maintenance of the universal service obligation.

  MUA would wish to establish how Government envisages the regulator policing the Post Office's price negotiations with individual customers in order to ensure against the misuse of such price flexibility to price in an anti-competitive manner.

Detailed Quality of Service Requirements

  MUA would wish to seek more detailed information on the parameters around which quality of service targets are set.

  MUA would wish to clarify that performance targets also include bulk volume mailing services such as Mailsort and Presstream services.

OBJECTIVE 3:  TO ESTABLISH A CLEAR AND ACCOUNTABLE RELATIONSHIP BETWEEN THE GOVERNMENT, THE POST OFFICE, THE REGULATOR AND POUNC.

Consumer Representation

  MUA would recommend that consumer representation on the Board and Committees of POUNC reflects the make-up of each sector of the industry (ie Representation according to the volume of mail attributed to each sector).

OBJECTIVE 4:  TO EQUIP THE UK POST OFFICE TO MEET THE CHALLENGES OF THE CHANGING POSTAL MARKET BOTH DOMESTICALLY AND INTERNATIONALLY.

Post Office Restructuring

  Whilst MUA recognises the need for the Post Office to adapt to changing market circumstances, and fully supports the "Shaping for Competitive Success" initiative, since this process of change began quality of service levels have been seriously affected. MUA considers it inappropriate to use these present levels as the basis on which the regulator and POUNC set future compensation for service failure parameters.

  Industry strongly believes the Post Office must first and foremost focus its resources on developing the technology and infrastructure required to deliver its core products, and whilst activity in other arenas is recognised to be advantageous to the business as a whole, this must not be undertaken to the detriment of primary services.

Boundaries between the Post Office Businesses

  MUA sees benefits/synergy in keeping the facets of the Post Office together and on this basis welcomes the realigning of boundaries between Royal Mail and Parcelforce. However, mechanisms must be immediately put in place to avoid any type of cross-subsidisation between the businesses.

Conversion of the Post Office into a plc under Public Ownership

  MUA continues to view ownership of the Post Office as a side issue, but has no objections to the Government's proposals to convert the Post Office into a plc under public ownership, given that this will provide added impetus for the organisation to become commercially aware and customer orientated.

 FINANCIAL REGIME

Revised Financial Regime

  MUA welcomes the reduction in EFL payments to a 40 per cent level from the year 2000-01, as this will provide increased opportunities for the Post Office to invest in the technology and infrastructure required to provide its core products and services.

  MUA would point out that the usual commercial level in terms of dividends is nearer 30 per cent.

Pay

  Initiatives linking pay to productivity and performance are to be applauded. MUA would however stress that employee ownership/share sell-off schemes need to be integrally linked and developed alongside "compensation for service failure" payment structures. Thereby ensuring finances in the business are apportioned properly, without detrimental effects to quality of service.

  Such a compensation structure would ensure that dividend payments to shareholders are coupled to the quality of service levels attained by those same employees, and therefore protect against the potential of practices such as "mail blacking"[5] business mail users who may choose to use competitors to the national carrier in liberalised areas of the postal market.

OBJECTIVE 5:  TO SUPPORT A VIABLE NETWORK OF POST OFFICES SO AS TO ENSURE NATIONWIDE ACCESS TO A RANGE OF PUBLIC AND PRIVATE SECTOR SERVICES.

  MUA fully supports the Government's commitment to not allowing the network of Post Offices to deteriorate, not only because they make up an essential part of the UK's social and economic infrastructure, but also because of business mailers reliance on return mail from their customers.

  MUA would stress the importance of gaining support from the general public when developing the post office network, thereby ensuring the continuing viability of this valued national institution.

August 1999

3  (Chapter One, Paragraph 14). Back

4  (Chapter One, Paragraph 14). Back

5   A suggested practice whereby a business customer's mail could be intentionally delayed in the system, because they are known to use another carrier for the delivery of non-monopoly mail. Back