28 February 2007 - Royal Mail wants to see an end to regulations covering franked letters and 'bulk business mail'.
In an interview with the Financial Times, Adam Crozier, Royal Mail's chief executive, said that at present the company can't compete "freely and fairly" with competitors.
Royal Mail claims it loses 6p on each stamped letter it delivers. It said falling mail volumes and tough competition were "putting massive pressures on Royal Mail's ability to keep delivering a one-price-goes-anywhere service for every customer".
Mr Crozier said that business mail should be "fully deregulated" and that Royal Mail should be given the freedom to choose whether or not to deliver franked and postage-paid business mail to remote parts of the country. This change would effectively be the end of the universal service obligation (USO), introduced with the 'penny post' in 1840.
The increase in the cost of a first class stamp to 38p and a second class stamp to 29p would allow Royal Mail to reduce the cost of delivering bulk business mail. This type of mail includes items such as banks statements and utility bills, but also direct mailings.
Junk mail is lucrative to Royal Mail. The company is losing about £240m a year on 'stamped mail' while business mail is hugely profitable. So called 'unaddressed mail' is not regulated, but Royal Mail has agreed with trade unions not to deliver more than three items of unaddressed junk mail per week to any household. In October last year it was announced that Royal Mail hopes to scrap the 'three items per week' rule.
Royal Mail is expected to put forward the proposals to Postcomm, the independant regulator for postal services in the UK, next week.