According to Sky News, Ofcom is set to release a consultation paper next week that presents drastic alternatives for changing Royal Mail’s Universal Service Obligation.
Sky News has learned that the regulator will release a consultation paper on Wednesday regarding the future of the Universal Service Obligation (USO). According to industry sources, the paper is expected to include reforms like changing the delivery targets for first and second class, adopting alternate-day delivery in line with European markets like Germany and Italy, offering a government subsidy to support the USO, and permitting Royal Mail to charge more for stamps.
It is also understood that one of the options that will be presented in the Ofcom paper is to amend the current six-day United Postal Order (USO), which requires Royal Mail to deliver to every UK address six days a week for the price of a stamp, to a five-day structure. This would result in the long-standing Saturday delivery system being discontinued.
On the other hand, ministers are unlikely to support completely eliminating the USO, as Denmark has done recently.
Royal Mail has argued that urgent changes to its regulatory framework are necessary because the system, which was designed to handle 20 billion letter deliveries annually, is currently only managing seven billion, and current trends indicate that the number could drop to as little as four billion within five years.
Industry insiders noted over the weekend that the Ofcom document would offer suggestions for maintaining the postal service in a sustainable manner rather than conclusions or strong recommendations.
