Examination of Witnesses (Questions 117
- 119)
MONDAY 7 NOVEMBER 2005
POSTWATCH
Q117 Chairman: Mr Carr, welcome to
you and your colleagues. Can I ask you, for the record, to introduce
yourselves to the Committee?
Mr Carr: I am Peter Carr, the
national Chairman of Postwatch. On my left is Gregor McGregor,
the Chief Executive of the organisation, and on my right Dr Roisin
Doherty, who is our Policy Director.
Chairman: Thank you very much. Mr Marris
will ask our first question.
Q118 Rob Marris: In your submission
to us you talked about serious barriers to entry into the postal
market. Could you tell us briefly what you think those barriers
are and say also just how serious you think they are?
Mr Carr: I will take the first
part of the question and give the overview to Gregor who will
tackle the detail. The first thing is, I think it is a good point
that you are making here, that liberalisation in itself does not
equal competition, they are two separate things. Obviously, the
biggest of the barriers, in our view anyway, is Royal Mail itself.
It is a very dominant organisation, it is heavily branded, it
has currently at least 97% of the market and of course it is perceptibly,
in people's minds, a very powerful part of the country really,
of the social fabric. At the moment there is no regulated access
regime, and that of course is absolutely fundamental to the future
development of a competitive market. The other is VAT. This is
a very big and important issue, as far as new entrants coming
into the market is concerned. Also it is important to note here
that the letters market is one of very thin margins and therefore
the room to manoeuvre as between access prices and the end price
to consumers, especially for the new entrants, is very small indeed.
It is a feature of Royal Mail, which is unusual by comparison
with the more successful competitors, that some 75% of their revenues
lies in their letter post, as opposed to the alternatives of parcels
and express, where they are much more balanced in the other parts
of Europe and that is why their average margins are much higher
than those of Royal Mail. It is an industry where the medium and
small customers have not been very well informed about progress
towards competition and that will become an important part of
our job in the future and also that of the regulator.
Mr McGregor: Just picking up on
that last point, obviously customers can only benefit from competition
if they know how to access the competitors and what kinds of products
they are offering. Experience from other marketplaces which have
been opened up to full competition shows that there is quite an
important role both for the regulator and the consumer council
in giving fair and independent advice to customers about the new
services and the new operators. Obviously, you have to draw a
fairly fine line between appearing to market on behalf of the
new competitors and just providing honest and open information.
As Peter said, that is why we are now starting, jointly with Postcomm,
in a series of briefings so that customers can be aware of the
benefits that are available to them.
Q119 Rob Marris: Would it be fair
to characterise the position of Postwatch as being in favour of
further liberalisation and more competition?
Mr McGregor: Yes, indeed. I think
it might be worthwhile briefly just to look back at the customer
experience over the past five years.
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