33 Exceptions to minimum requirements

(1) Nothing in section 31 requires the doing of anything in relation to a letter or
other postal packet—

(a) whose weight exceeds 20 kilograms, or

(b) 5whose dimensions fall outside the minimum and maximum
dimensions laid down in the Convention and the Agreement
concerning Postal Parcels adopted by the Universal Postal Union.

(2) The requirements in section 31 in respect of the delivery or collection of letters
or other postal packets (requirements 1 and 2)—

(a) 10do not need to be met on any day which is (in the part of the United
Kingdom concerned) a public holiday, and

(b) do not need to be met in such geographical conditions or other
circumstances as OFCOM consider to be exceptional.

(3) Nothing in section 31 is to be read—

(a) 15as requiring a service to continue without interruption, suspension or
restriction in an emergency, or

(b) as preventing individual agreements as to prices from being concluded
with customers.

34 Review of minimum requirements

(1) 20OFCOM may from time to time review the extent to which the provision made
by section 31 reflects the reasonable needs of the users of postal services
provided in the United Kingdom.

(2) A review under subsection (1) may, in particular, consider whether the
requirements imposed by that section could be altered so as better to reflect
25those needs.

(3) OFCOM must send a copy of each review under subsection (1) to the Secretary
of State.

(4) The Secretary of State may at any time direct OFCOM to carry out a review
under subsection (1).

(5) 30Where OFCOM have carried out a review under subsection (1), the Secretary
of State may by order amend section 31.

(6) The provision that may be made by an order under subsection (5) does not
include the making of different provision in relation to different places in the
United Kingdom.

(7) 35An order under subsection (5)—

(a) is subject to affirmative resolution procedure, and

(b) may include such amendments of this Part as the Secretary of State
considers necessary or expedient in consequence of any provision
made by the order.

Universal service providers

35 Designation of universal service providers

(1) OFCOM may designate one or more postal operators as universal service
providers.

(2) 5But there are only two cases in which there may be more than one postal
operator designated as a universal service provider.

(3) The first case is where—

(a) OFCOM have made a procurement determination under section 45
(fairness of bearing burden of universal service obligations), and

(b) 10in the light of that determination, OFCOM consider it appropriate for
the number of postal operators designated as universal service
providers to be greater than one.

(4) The second case is where—

(a) a postal administration order has been made under Part 4, and

(b) 15OFCOM consider it appropriate for the number of postal operators
designated as universal service providers to be greater than one for, or
in connection with, achieving the objective of the postal administration.

(5) OFCOM must publish each designation in such way as they consider
appropriate for bringing it to the attention of members of the public.

(6) 20The procedure to be followed for the making of a designation under this
section must be provided for in regulations made by OFCOM.

(7) OFCOM may—

(a) review the designations for the time being in force, and

(b) consider what (if any) designated USP conditions should continue to
25apply to each of the universal service providers.

(8) The procedure to be followed on a review must be provided for in regulations
made by OFCOM.

(9) Regulations made by OFCOM must provide for a postal operator’s
designation to cease to have effect where, in any case described in the
30regulations, the operator is no longer subject to any universal service
obligations.

(10) Both the procedure for designations and the procedure for the conduct of
review of designations provided for by regulations under this section must be
one appearing to OFCOM—

(a) 35to be efficient, objective, proportionate and transparent, and

(b) not to involve, or to tend to give rise to, any undue discrimination
against any person or description of persons.

(11) OFCOM must notify the European Commission of the designations and of any
case where a designation ceases to have effect (and the notification must
40identify the postal operator designated or ceasing to be designated).

36 Designated USP conditions

(1) OFCOM may impose a designated USP condition on a universal service
provider.

(2) A designated USP condition is a condition requiring the provider to do one or
more of the following—

(a) to provide a universal postal service, or part of a universal postal
service, throughout the United Kingdom, or in a specified area of the
5United Kingdom, in accordance with the standards set out in the
universal postal service order,

(b) to provide, or make arrangements for the provision of, access points for
the purposes of a universal postal service,

(c) to provide specified information (at such times and in such manner as
10OFCOM may direct) to other postal operators and users of postal
services about the services within paragraph (a) that it is required to
provide, and

(d) to do anything else that OFCOM consider appropriate for the purposes
of, or in consequence of, the obligations imposed under any of
15paragraphs (a) to (c).

In this subsection “specified” means specified in the condition.

(3) OFCOM may impose a designated USP condition only if they consider it is
necessary to do so in order to secure the provision of a service of a description
set out in the universal postal service order in accordance with the standards
20set out there.

(4) A designated USP condition may make provision as to the tariffs to be used for
determining prices in accordance with which a universal postal service, or part
of a universal postal service, is provided.

(5) In exercising the power conferred by subsection (4), OFCOM must seek to
25ensure that—

(a) the prices are affordable,

(b) the prices take account of the costs of providing the service or part of a
service, and

(c) the prices provide incentives to provide the service or part of a service
30efficiently.

(6) A designated USP condition may impose performance targets.

(7) If there are two or more universal service providers—

(a) OFCOM must secure that there is no overlap in the universal service
obligations imposed on the providers, and

(b) 35designated USP conditions may require the providers to make
arrangements for securing that a universal postal service operates
uniformly and effectively throughout the United Kingdom.

(8) In this Part “universal service obligations”, in relation to a universal service
provider, means the obligations imposed on the provider by any designated
40USP condition.

37 Publication of information about performance

(1) A designated USP condition must include provision requiring the universal
service provider concerned—

(a) to publish information about the extent to which it is providing
45specified postal services in accordance with specified standards, and

(b) to publish annually an independently audited performance report.

(2) The reference here to an independently audited performance report is to a
report that—

(a) contains information about the provider’s performance in complying
with specified requirements under the designated USP condition, and

(b) 5is audited by an independent person for accuracy and, if there are two
or more universal service providers, for its usefulness in comparing
information published by other universal service providers.

(3) An “independent person” means a person who is independent of both OFCOM
and universal service providers.

(4) 10OFCOM must notify the European Commission of anything contained in a
designated USP condition as a result of subsection (1).

(5) A designated USP condition may require the universal service provider
concerned to meet the costs of the audit required as a result of subsection (1)(b).

(6) A designated USP condition may include other provision requiring the
15universal service provider concerned to publish information about its
performance in complying with specified requirements under the designated
USP condition.

(7) The provision made as a result of this section—

(a) must include provision—

(i) 20requiring information previously published to be updated and
published again, and

(ii) requiring the published information to satisfy requirements
that OFCOM consider appropriate to secure its adequacy, and

(b) may include requirements as to the times at which, and the manner in
25which, the information is to be published.

(8) In this section “specified” means specified in the designated USP condition.

38 USP access conditions

(1) OFCOM may impose a USP access condition on a universal service provider.

(2) A USP access condition is a condition requiring the provider to do either or
30both of the following—

(a) to give access to its postal network to other postal operators or users of
postal services, and

(b) to maintain a separation for accounting purposes between such
different matters relating to access (including proposed or potential
35access) to its postal network as OFCOM may direct.

(3) The provider’s “postal network” means the systems and all the resources used
by the provider for the purpose of complying with its universal service
obligations (and, accordingly, includes arrangements made with others for the
provision of any service).

(4) 40OFCOM may not impose a USP access condition unless it appears to them that
the condition is appropriate for each of the following purposes—

(a) promoting efficiency,

(b) promoting effective competition, and

(c) conferring significant benefits on the users of postal services.

(5) In addition, OFCOM may not impose any price controls on a universal service
provider in a USP access condition unless it appears to them that the provider
concerned—

(a) might otherwise fix and maintain some or all of its prices at an
5excessively high level with adverse consequences for users of postal
services, or

(b) might otherwise impose a price squeeze with adverse consequences for
users of postal services.

(6) In imposing price controls in a USP access condition in connection with the
10giving of access to a universal service provider’s postal network or to part of
that network, OFCOM must have regard to such of the costs incurred in the
provision of that network, or part of that network, as OFCOM consider
appropriate.

(7) In imposing price controls in a USP access condition OFCOM may—

(a) 15have regard to the prices at which services are available in comparable
competitive markets, and

(b) determine what they consider to represent efficiency by using cost
accounting methods.

(8) In deciding what obligations to impose in a USP access condition in a particular
20case, OFCOM must (in addition to taking into account anything relevant for
the purpose of performing their duty under section 29) take into account, in
particular, the following factors—

(a) the technical and economic viability, having regard to the state of
market development, of installing and using facilities that would make
25the proposed access unnecessary,

(b) the feasibility of giving the proposed access,

(c) the investment made by the universal service provider concerned in
relation to the matters in respect of which access is proposed,

(d) the need to secure effective competition in the long term, and

(e) 30any rights to intellectual property that are relevant to the proposal.

(9) For the purposes of this section references to giving a person access to a
provider’s postal network include giving a person an entitlement to use, be
provided with or become a party to any services, facilities or arrangements
comprised in the postal network.

(10) 35In Schedule 3—

(a) Part 1 makes provision about the kind of matters that may be included
in a USP access condition, and

(b) Part 2 makes provision about the resolution of access disputes by
OFCOM.

39 40USP accounting conditions

(1) OFCOM may impose a USP accounting condition on a universal service
provider.

(2) A USP accounting condition is a condition requiring the provider to do one or
more of the following—

(a) 45to maintain a separation for accounting purposes between such
different matters as OFCOM may direct for such purposes as they may
direct,

(b) to comply with rules made by OFCOM in relation to those matters
about the identification of costs and cost orientation,

(c) to comply with rules made by OFCOM about the use of cost accounting
systems in relation to those matters, and

(d) 5to secure that its compliance with those systems is audited annually by
a qualified independent auditor.

(3) An obligation within subsection (2)(a)—

(a) may require the separation to be maintained in relation to different
services, facilities or products or in relation to services, facilities or
10products provided in different areas, and

(b) may impose requirements about the accounting methods to be used in
maintaining the separation.

(4) An obligation within subsection (2)(b) or (c)—

(a) may include conditions requiring the application of presumptions in
15the fixing and determination of costs and charges for any purpose, and

(b) may require the universal service provider concerned to publish such
accounts and other information relating to anything required to be
done as a result of those provisions as OFCOM consider appropriate.

(5) An obligation within subsection (2)(d) may require the universal service
20provider concerned to meet the costs of the audit.

(6) If a USP accounting condition imposes rules on a universal service provider
about the use of cost accounting systems, OFCOM may secure that the
condition also imposes an obligation on the provider to make arrangements for
a description to be made available to the public of the cost accounting system
25used.

(7) If OFCOM impose an obligation under subsection (6), the description of
information to be made available must include details of—

(a) the main categories under which costs are brought into account for the
purposes of that system, and

(b) 30the rules applied for the purposes of that system with respect to the
allocation of costs.

(8) In this section “qualified independent auditor” means a person who—

(a) is eligible for appointment as a statutory auditor under Part 42 of the
Companies Act 2006, and

(b) 35if the appointment were an appointment as a statutory auditor, would
not be prohibited from acting by section 1214 of that Act (independence
requirement).

Persons providing services within scope of universal postal service

40 Services within scope of the universal postal service

(1) 40A postal service is within the scope of the universal postal service if—

(a) the service falls within the description of a service set out in the
universal postal service order, or

(b) the service would fall within the description of a service set out in that
order but for the fact that—

(i) in the case of a service consisting of the delivery or collection of
letters or other postal packets, the delivery or collection is not
made on each of the days required by section 31 (see
requirements 1 and 2),

(ii) 5the service is not provided throughout the United Kingdom, or

(iii) the service is not provided at an affordable price in accordance
with a public tariff which is uniform throughout the United
Kingdom, or

(c) in the opinion of OFCOM the service is of a kind that, from the point of
10view of users of postal services, could reasonably be said to be
interchangeable with a service of a description set out in that order.

(2) In this section any reference to a service includes a part of a service.

41 Notification condition

(1) OFCOM may impose a notification condition on—

(a) 15every person providing, or intending to provide, a service within the
scope of the universal postal service, or

(b) every person providing, or intending to provide, a service within the
scope of the universal postal service of a specified description.

(2) A notification condition is a condition requiring the person to give OFCOM—

(a) 20advance notice of the person’s intention to provide a letters business on
a specified scale (whether or not the person is currently providing a
letters business or any other postal service), and

(b) where the person is already providing a letters business on a specified
scale, advance notice of the person’s intention to expand the business
25by a specified extent.

(3) A specified scale or extent may be determined by reference to any specified
factor.

(4) The Secretary of State may at any time direct OFCOM to impose a notification
condition.

(5) 30The direction may (but need not) specify some or all of the provision to be
contained in the condition.

(6) Where a notification condition applies to a person at a time when the person is
not providing a postal service—

(a) Schedule 7 (enforcement of regulatory conditions) is to have effect as if
35paragraph 7(2) and (3) were omitted and as if, for the purposes of
paragraph 11, the person were providing a postal service, and

(b) Schedule 8 (information provisions) is to have effect as if the person
were a person falling within paragraph 1(2) and as if, for the purposes
of paragraph 8, the person were providing a postal service.

(7) 40In this section—

• “advance notice” means written notice given at least a specified period of
  time before the person intends to do as mentioned in subsection (2)(a)
  or (b),

• “a letters business” means a postal service which consists in the delivery
  45of letters, and

• “specified” means specified in the notification condition.

42 General universal service conditions

(1) OFCOM may impose a general universal service condition on—

(a) every postal operator providing a service within the scope of the
universal postal service, or

(b) 5every postal operator providing a service within the scope of the
universal postal service of a description specified in the condition.

(2) A general universal service condition is—

(a) a condition containing such obligations as OFCOM consider necessary
to impose for, or in connection with, securing the provision of a
10universal postal service in accordance with the standards set out in the
universal postal service order, or

(b) a condition containing such obligations as OFCOM consider necessary
to impose for the purposes of section 46.

(3) A general universal service condition may require a person—

(a) 15to make contributions in accordance with any scheme established
under section 46, and

(b) to take such steps as may be required by any such scheme as regards
contributions made by users of services within the scope of the
universal postal service.

(4) 20At any time when there is a universal service provider, nothing in subsection
(2)(a) is to be read as authorising the imposition of a condition requiring a
person—

(a) to deliver or collect letters or other postal packets as mentioned in
section 31,

(b) 25to provide a service throughout the United Kingdom, or

(c) to provide a service at an affordable price in accordance with a public
tariff which is uniform throughout the United Kingdom.

43 Recovery of administrative charges incurred by OFCOM

Schedule 4 makes provision authorising OFCOM to impose charges on postal
30operators providing services within the scope of the universal postal service to
meet costs incurred by OFCOM in carrying out their functions in relation to
postal services.

Financial support for universal postal service

44 Review of costs of universal service obligations

(1) 35OFCOM may from time to time review the extent (if any) of the financial
burden for a universal service provider of complying with its universal service
obligations.

(2) In carrying out a review under this section OFCOM must consider the extent
to which, in their opinion, the provider is complying with its universal service
40obligations in a cost-efficient manner.

(3) If—

(a) regulations under section 35 require the financial burden of complying
with universal service obligations (or proposed universal service

obligations) to be taken into account in determining whom to
designate, and

(b) the regulations provide for a particular method of calculating that
burden to be used for the purposes of that determination,

5that must be the method of calculation applied on a review under this section.

(4) If subsection (3) does not apply, the financial burden of complying is to be
taken to be the amount calculated by OFCOM to be the net cost of compliance
after allowing for market benefits accruing to the universal service provider
from—

(a) 10the provider’s designation, and

(b) the application to the provider of universal service obligations.

(5) After carrying out a review under this section OFCOM must either—

(a) ensure that the calculations made by them on the review are audited by
a person who appears to them to be independent of universal service
15providers, or

(b) carry out an audit of those calculations themselves.

(6) OFCOM must ensure that a report on the audit—

(a) is prepared, and

(b) if not prepared by OFCOM, is provided to them.

(7) 20OFCOM must publish—

(a) their conclusions on the review, and

(b) a summary of the report of the audit which was carried out as respects
the calculations made for the purposes of that review.

(8) The publication must be in such manner as OFCOM consider appropriate for
25bringing it to the attention of the persons who, in their opinion, are likely to be
affected by it.

(9) The Secretary of State may at any time direct OFCOM to carry out a review
under this section.

(10) Unless directed to do so by the Secretary of State, OFCOM may not carry out a
30review under this section before the end of the period of 5 years beginning with
the day on which this section comes into force.

45 Fairness of bearing burden of universal service obligations

(1) This section applies if OFCOM—

(a) have concluded on a review under section 44 that complying with its
35universal service obligations imposes a financial burden on a universal
service provider, and

(b) have published that conclusion in accordance with that section.

(2) OFCOM must determine whether they consider it is or would be unfair for the
provider to bear, or to continue to bear, the whole or a part of the burden of
40complying with its universal service obligations.

(3) The determination by OFCOM of—

(a) whether it is or would be unfair for the provider to bear, or to continue
to bear, that burden, or

(b) the extent (if any) to which that is or would be unfair,

must be made in accordance with regulations made by OFCOM.

(4) OFCOM must publish the determination.