Alan Reid, MP for Argyll and Bute, has called on regulator Ofcom to act now to preserve Royal Mail’s Universal Service Obligation (USO).
Speaking in Parliament, Mr Reid said: “Royal Mail is legally obliged to deliver to every home and business in the country, as well as to collect from every post box in the country six days a week, at the same price throughout the country. To back up the legal requirement, the Act imposed on the regulator, Ofcom, the legal responsibility to ensure the sustainability of the USO.”
He added: “Royal Mail relies on its cross-subsidy from profitable urban routes to sparsely populated rural routes.”
Mr Reid also warned of the threat to the USO from TNT Post, stating: ““TNT Post has made most use of the ability to cherry-pick the areas to which it is cheapest to deliver. Its end-to-end business has expanded rapidly since it started trials for the service in west London in April 2012. According to Royal Mail, TNT aims to cover about 42% of UK addresses by 2017.”
He added, “Ofcom has many tools at its disposal to protect the USO. It could impose regulatory conditions on other operators to level the playing field. For example, it could require other providers to deliver over a larger geographical area than just a small urban area or to deliver on more days in the week. Ofcom also has the power to introduce a universal service fund.”
Ofcom plan to wait until the end of next year before carrying out a review on whether or not they need to use the powers at their disposal to protect the USO.
On that point, Mr Reid said, “I see no advantage in waiting another 17 months before beginning the review,” adding, ““I expect Ofcom to do everything possible to protect the USO. I believe that that means holding a review now. I see no purpose that will be served by waiting another 17 months.”