Royal Mail wants to see an end to regulations covering franked letters and 'bulk mail'. The company is hoping to increase stamp prices while lowering prices for advertising mail.

In an interview with the Financial Times, Adam Crozier, Royal Mail's chief executive, said the company currently can't compete "freely and fairly" with its competitors. Mr Crozier said Royal Mail loses 6p on each stamped letter it delivers. Falling mail volumes and tough competition are "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, 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 its prices for business mail. This type of mail includes items such as banks statements and utility bills, but also 'direct mail'. The company is losing about £240m a year on 'stamped mail' but business mail is still hugely profitable.

Unaddressed mail already is largely unregulated, but Royal Mail does have a long-standing agreement 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 regulator for postal services in the UK, next week.