Ofcom could regulate Royal Mail alongside ISPs and BT

A major review of the postal service has suggested giving regulatory powers to the communications watchdog as IT changes the way we keep in touch

Royal Mail has been hit by the use of IT

Communications watchdog Ofcom should take over regulation of Royal Mail because of the growing impact of electronic media on the postal service, according to a major report to the government released today.

The study by former Ofcom deputy chairman Richard Hooper makes a series of wide-ranging recommendations for reforming and modernising the troubled Royal Mail organisation.

The report highlights the huge effect that IT has had in changing the way people communicate and so reducing the amount of physical mail sent in the UK.

“For the first time on record, the volume of letters sent in the UK is falling each year as consumers make greater use of electronic media,” says the report.

“The digital age brings both challenges and opportunities for the postal service. Transactional mail (such as bank statements) and social mail are in decline. They account for over a quarter of the UK postal market’s value. Meanwhile, goods ordered online are growing and delivered at a higher value than letters. And new technology heralds new services in which post complements other media,” it says.

As a result, and given Ofcom’s experience of regulating BT in a fast-changing telecoms market, Hooper said the responsibility for regulating the postal sector should be transferred from Postcomm to Ofcom.

“This move will reflect the fact that postal services are increasingly part of the wider communications sector, in competition with broadcasters, internet providers and telephone companies” says the report.

“Ofcom has a deep understanding of these media. It also has the experience of regulating markets undergoing rapid technological change and, in particular, creating a regulatory framework for a large company (BT) facing the challenge of modernisation and liberalisation.”