Regulation

The Postal Services Act 2000 ("The Act") introduced a series of fundamental changes to the UK mail sector. These included:

• the abolition of the Post Office’s statutory monopoly over the conveyance of letters weighing less than 350 grams and charged at a price of less than £1
• the replacement of the statutory monopoly by a licensed area of equivalent extent
• the creation of an independent regulator, The Postal Services Commission ("Postcomm") to administer it

Postcomm’s primary duties were to ensure the continuation of a universal postal service, to promote effective competition, and to consider applications for, grant, and monitor compliance with postal licences.

Document exchange services, which had been authorised under a class licence since 1982, were specifically excluded from the licensed area under the new Act.

In May 2002, following a trial period with limited interim licences (of which DX secured the first in September 2001) and extensive study and consultation, Postcomm announced its substantive market opening policy for the UK postal sector. This involved a 3-phase approach to market opening, under which 30 per cent (by value) would be opened up to competition from 1 January 2003 (Phase 1), and a further 30 per cent from 1 April 2005 (Phase 2), with full market opening from 1 April 2007 (Phase 3).

Postcomm’s strategy to achieve these objectives was to invite applications for long-term licences (with a minimum term of 7 years) to compete with Royal Mail’s universal services for certain specified activities. DX was again successful in obtaining the first of these licences in December 2002.

Secure Mail Services Limited gained a short-term licence in 2002 and this was converted into a long-term licence in 2004.

On 18 February 2005, following a review of developments since the introduction of Phase 1 together with further extensive consultations, Postcomm announced its formal decision to bring forward full market opening to 1 January 2006, and to abolish the intermediate Phase previously planned for 1 April 2005.

Under full market opening, postal operators wishing to convey letters falling within the licensed area as defined in the Act were still required to hold a licence from Postcomm. New licences with a minimum duration of 10 years were introduced to give effect to the post-January 2006 regime, and DX and Secure Mail Services received their new licences in December 2005. In common with other licensees, these licences were slightly modified in 2008.

Under this regime licensees were free to deliver mail of any description from any customer to any address, and no part of the market remained reserved to Royal Mail. However, although licensees were free to offer any service that meets customers’ needs, in doing so they had to comply with a number of requirements designed to protect both customers and the wider postal market. These included:

• compliance with a Code of Practice covering all aspects of mail security 
• compliance with a Code of Practice dealing with mail intended for one operator which finds its way into the system of another 
• a range of reporting requirements to Postcomm

Following a review of the postal services sector by Richard Hooper the Government decided to privatise Royal Mail and change the regulatory regime.  These changes were enabled by the Postal Services Act 2011. which transferred responsibility for regulation from Postcomm to Ofcom and changed replaced licences with authorisations.  For an initial period these changes had no material effect on the regulatory obligations on regulated postal operators.