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The third of our terms of reference is concerned with policy options. The panel will consider the range of postal services which consumers require in view of recent developments, which of these are likely to be supplied by a competitive market, the most effective way of regulating to provide the remaining services, the role of Royal Mail and whether changes are needed to enable the company to fulfil this role.
Q20. Is a delivery on each working day important to consumers, either for social or business reasons?
Q21. Is the time at which mail arrives important to consumers, either for social or business reasons?
Q22. Do business or social consumers have sufficient choice of services when sending mail for different purposes?
Q23. Do consumers have sufficient choice as a recipient about where and when mail is delivered?
Q24. Would consumers accept that greater choice in services may mean a variable (but specified) delivery time?
Q25. Would consumers be willing to pay more for a wider range of services, whether as a sender or recipient of mail?
Q26. What services should be offered as a minimum for senders and recipients of mail?
Q27. Which of these services do you believe would not be delivered by the market, on the basis that they are not economically viable?
Q28. The universal service was originally established to ensure that all UK citizens have access to postal services at a uniform tariff. Do you consider that the USO as currently defined fully meets that aim?
Q29. Do you believe that the universal service has other objectives, not covered in the Postal Act?
Q30. Are there elements of the universal service as currently defined which are no longer relevant to consumers?
Q31. Do you believe that bulk mail services for business (either directed at other businesses or consumers) should be part of a universal service, and why?
Q32. What is the (variable, fixed or sunk) cost to Royal Mail of the Universal Service Obligation, as it is currently defined?
Q33. What are the externalities (for example, environmental and social) associated with postal services?
Q34. What are the public goods associated with the provision of postal services?
Q35. What other options are available for meeting consumer needs; and what would be their cost?
Considering both the current and any proposed new definitions of the universal service:
Q36. Do you consider that the obligation to provide the universal service is a commercial benefit or disadvantage for Royal Mail? Why?
Q37. Could the obligation be shared among Royal Mail and alternative carriers?
Q38. What should be Royal Mail’s role in providing the Universal Service?
Q39. Can the universal service continue to be financed internally (without a subsidy)?
Q40. If not, how should the universal service be financed?
Q41. Does Royal Mail have the capacity to deliver the universal service in an effective way?
Q42. If not, what are the changes necessary, in terms of the company’s mission, management, investment plans, structure or working practices?
Q43. Can these changes be delivered within public ownership?
Q44. If not, why?
Q45. What further measures would be necessary to enable the changes listed in your response to Q42? In particular:
Q46. What is the impact of Royal Mail’s pension liability and deficit on the company’s ability to trade; and what are the implications for management?
Q47. Is the “final mile” (the ability to deliver to all 28 million addresses in the UK) a natural monopoly?
Q48. Is the “first mile” (the ability to collect from all postboxes and post offices in the UK) a natural monopoly?
Q49. To what extent has the access regime enhanced the possibility of competition in the final mile, or reduced it?
Q50. Do you believe that the regulator should set limits on prices for social mail, or other forms of mail, and why?
Q51. Which is the more appropriate system of regulation under the current market conditions: ex-ante or ex-post regulation, or a combination of both? Please explain.
Q52. What criteria should be used to determine when regulation can be withdrawn, as competition develops?
Q53. Should the price of different postal services reflect their costs? Or are cross-subsidies a natural and inevitable part of running a network business?
Q54. In current market conditions, what sort of regulatory framework would be most effective in stimulating innovation in the postal services sector to meet consumer needs?
Q55. To what extent is an efficient Royal Mail important for the development of the postal sector more generally?
Q56. Is it feasible that the postal sector should continue to be regulated separately from the wider communications market?
Q57. What sort of regulatory framework would be the most effective in stimulating innovation in the postal services sector, under current market conditions?
Q58. Does the current VAT regime create distortions in the postal market? What are they?
Q59. In what order should any policy changes you believe necessary be implemented?
Q60. Are there any other issues which you believe should be considered by this review which are not covered by the questions set out above?
