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(Alliance News) - International Distribution Services PLC on Wednesday reported concerns by Royal Mail that Ofcom's proposed reforms will "add significant cost" to the universal service.
Ofcom is the regulatory and competition authority for UK communication industries and oversees the universal postal service.
London-based IDS, which owns Royal Mail, highlighted Ofcom's consultation published in January titled "Review of the universal postal service and other postal regulation", which noted a need to modernise the universal service following declining letter volumes. It noted that Royal Mail has now submitted its response.
IDS on Wednesday said that Royal Mail is concerned that key changes to its proposed reforms will fail to deliver "the efficient, reliable and financially sustainable universal service that customers need."
The universal service obligation currently requires Royal Mail to deliver first class and second class letters six days a week, but Ofcom's consultation proposed delivery of second class post to every other weekday, noted the firm.
IDS also noted concerns by Royal Mail regarding its proposed new additional reliability targets, which it put forward in response to Ofcom's call for inputs back in April last year.
It said that the level at which Ofcom is proposing to set the new reliability targets is both "over specified and will add significant cost", risking "materially higher prices for customers."
It added that the proposal to add a priority access business service to postal regulation is also a concern, as it limits the potential success of the new delivery model.
Further, it said Royal Mail proposes that Ofcom removes unnecessary regulation that prohibits it from offering parcel tracking since "the current restriction does not reflect what customers want and renders the universal service unfit for the digital age."
Shares in IDS were down marginally, by under 0.1%, at 365.24 pence on Wednesday afternoon in London.
IDS noted that Royal Mail urges Ofcom to publish both its consultation decision and updated regulations by July 1.
International Distribution Services Chief Executive Officer Martin Seidenberg 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. These changes we seek are important measures to ensure we can protect the one-price-goes-anywhere universal service for many years to come."
By Lucy Dunnet, Alliance News reporter
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