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DMA raises marketing concerns over postal reforms
Marketing News |
19/12/2011
The Direct Marketing Association (DMA) has warned against proposed changes to price controls on the cost of Royal Mail's commercial bulk mailing services.
Media regulator Ofcom is currently carrying out a consultation on a raft of controversial reforms to postal regulations, which the DMA believes could undermine competition and threaten the long-term prospects of the medium.
The proposals include continuing to allow access to Royal Mail's network for competitors, monitoring Royal Mail's price margins to prevent unfair treatment of rivals, and removing price controls to give Royal Mail the ability to set the cost of its retail products.
However, marketing experts believe changes could be counter-productive.
"Companies that use mail for sending customer bills or statements have already been squeezed by a 15 to 20 per cent price increase this year on the cost of transactional bulk mail services," the DMA stated.
"Many have indicated they plan to withdraw from using mail if Royal Mail takes advantage of its new commercial freedom to impose another round of large price increases."
The association explained that commercial bulk mail users represent Royal Mail's biggest customers and underwrite the cost of an affordable universal service.
Mike Lordan, chief of operations for the DMA, said the proposed changes to postal regulations set out in the public consultation are clearly intended to make Royal Mail an attractive proposition for investors.
"However, we believe there's a danger that the government has gone too far in its plans to prepare Royal Mail for sale to the private sector," he stated.
"The businesses and organisations we've spoken to are in complete agreement that some of the proposed changes to postal regulation could be hugely damaging to the long-term prospects of transactional and advertising mail."
Mr Lordan added that granting a monopoly the ability to raise its prices without adequate safeguards is "very dangerous" and could drive more and more businesses away from mail.
This would be particularly concerning given that mail volumes are already declining year on year, he said.
Posted by Stephen Wilkinson
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