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Sep 28

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9/28/2011 

• • Analysis of international postal markets shows competition is key to success of USO • TNT Post calls on Ofcom, the new postal regulator to back removal of VAT distortion London, September 28th 2011: On the eve of postal industry regulation passing to Ofcom from Postcomm on 1 October 2011, new research has found that competition within the postal sector improves the ability of a national postal service provider to meets its Universal Service Obligation (USO). Findings from a survey carried out by the respected postal consultancy, WIKConsult, on the European countries that have already seen much higher levels of postal delivery competition than in the UK, demonstrate that there has been a positive impact on the incumbent postal service provider’s ability to deliver to every household within its territory over the past ten years. In addition, the research found that competition has been a catalyst for modernisation of the postal service, to meet the changing needs of the consumer and the challenges faced from electronic substitution. Head of WIK-Consult’s postal unit, Alex Dieke, concluded that: “In the four countries studied in our report, we believe end-to-end competition has helped to achieve a sustainable universal service and, indeed, improve universal service quality, by putting pressure on incumbent operators to modernise”. TNT Post UK, the largest private sector postal operator in the UK, which has long held ambitions to launch a competing end-to-end service to Royal Mail, calls upon Ofcom to set a regulatory regime which protects fair competition from both access and end-to-end services and to back its campaign for a level competitive landscape in the UK. Currently, Royal Mail is exempt from charging VAT on its business mail services. This makes it uncompetitive for companies like TNT Post UK to compete fully as the financial and charity sectors which account for half of business mail volumes are unable to recover VAT. The findings also reinforce TNT Post UK’s position that a strong regulator is essential to ensure that competition thrives and that customers have real choice in the UK. Nick Wells, CEO TNT Post UK, commented: “The report findings will help allay fears that competition will have a detrimental impact on the ability of Royal Mail to meet its obligation to deliver to every household in the UK. In addition, zonal pricing for business mail where we pay more for the company to deliver in more rural areas will ensure the survival of the USO. “We want a strong Royal Mail but it has to modernise to meet the needs of the market today and in the future and also be open to competitive forces that will ensure its future efficiency and prosperity. “With Ofcom taking over regulation of the postal industry, we call upon on it to back our fight to get a level competitive playing field in the UK which will enable us to make the business case to invest millions in an end to end service as well as thousands of new jobs.””