postcomm analysis summary

8/2/2019 Postcomm Analysis Summary

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Laying the oundations or asustainable postal service

Analysis o markets summary

May 2010


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Analysis o markets summary May 2010

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Introduction

Postcomm, the independent postal services regulator,published its consultation document Laying the oundations

or a sustainable postal service on 27 May 2010.

Postcomm is reviewing the current regulatory ramework and

working to remove regulatory burdens that no longer appear to be

necessary, bearing in mind all o its duties, especially seeking to

ensure the provision o a universal postal service and urthering the

interests o customers.The document, including ve annexes, provides background on

the postal services market today and the issues that Postcomm

is seeking to address. It sets out the steps that we consider

necessary to move towards a new, more robust and fexible

regulatory ramework rom 2012, including the changes we

propose or 2011 to lay the oundations or this. It explains the

provisional conclusions and proposals on which we would likeyour comments.

This booklet and three others have been produced as short

summaries1 o the main points o the consultation, to aid

those interested in understanding the approach we are taking.

The booklets cover:

1 The summaries should not be relied upon in ormulating responses to the consultation andreaders are strongly advised to read the ull versions beore responding to the consultation.

Overview o main proposals

Analysis o markets

Cost transparency

Price control

A glossary o technical terms appears at the end o each o these

booklets. A th booklet contains all the questions we are asking

in this consultation.

The ull overview and the annexes can all be downloaded rom

Postcomms website at: http://www.psc.gov.uk/policy-and-

consultations/consultations/may-2010-consultation.html


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The consultation

Overall, we are consulting on the ollowing set o proposals:The deregulation o packets and parcels based on weight

and volume

The partial deregulation o pre-sorted bulk mail

Changes to the regulation o access and changes to the

headroom control, including reducing the level o headroom and

creating a basket o regulated access and headroom controlled

retail products allowing Royal Mail more pricing fexibility

Rolling over all other eatures o the current price control or

another year

Changes to Condition 7 (Royal Mails pre-notication

requirements or new or changed products)

Measures to introduce greater cost transparency and principles

o accounting separation

Tidying up the current licence

An increase in the price o the product Private Boxes Transer

to P.O. Boxes 12 Months

We recognise that the scope o regulatory changes we are proposing

is ambitious. However, we believe that the changes are urgent given

how signicant are the changes in the mail market since the currentcontrols were introduced in 2006. We will only make changes to the

regulatory ramework i these conditions apply:

we have the evidence to do so;

this is consistent with our duties, particularly on Royal Mails

licensed activities, including to the universal service; and

the changes can either endure beyond 2012 or are consistent

with the wider changes we believe are needed rom April 2012.


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Consultation questions

This consultation provides everyone the opportunity to challenge bothcurrent regulation and comment on our proposals. We are interested

in your views about our proposals or a new regulatory ramework

rom 2012 and the oundations that we are proposing now to take

eect rom 2011. The consultation raises 79 questions2 on which we

are seeking responses, but it is expected that respondents will want to

reply only in relation to those areas which are o most interest to them.

Unless responses or parts o responses are marked as condential,and subject to agreement to publish them earlier, Postcomm

will publish responses on its website. We would encourage early

submissions that we may publish to stimulate debate throughout

the consultation period. I you do not want all or part o your

response to be read by anyone outside Postcomm, please ensure

that you clearly indicate which part is condential. I you are

happy or your contribution to be made public, but do not want

the name o the organisation or the individual who signed it to be

revealed, please indicate this by adding the ollowing: Name o

organisation/sender NOT to be published.

Responses should be sent by 31 August 2010 to:

Tim Brown

Chie ExecutivePostcomm

Hercules House

6 Hercules Road

London

SE1 7DB

Or emailed to:[email protected]

Telephone enquiries to Mick Fews on: 020 7593 2197

2 These are available in a separate booklet.


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Reason or undertaking analysis o markets

Postcomm is undertaking an analysis o the postal servicesmarket as part o the process o reviewing the current regulatory

ramework. The overall objectives o our analysis o the markets

are to:

dene a set o relevant markets;

and determine whether Royal Mail has market power in those

relevant markets.

The analysis o the markets is not an end in itsel but is a

key component in enabling us to assess the development

o competition within the context o the regulatory regime.

The results o the analysis will be crucial in enabling us to

determine whether the current licence obligations remain

targeted and proportionate, and whether they should be

modied. The market analysis already has and will continue toinorm our proposals on issues such as price regulation, cost

transparency, the design o accounting separation proposals and

the requirement or, and structure o, an access regime.


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Wholesale and retail markets

In terms o the market analysis, a distinction has been madebetween wholesale markets and retail markets.

Broadly speaking, the term retail market is a postal service

serving a nal customer. For example, i a customer wants to

send a message to be received by the recipient the ollowing day,

the customer could send a First Class stamped letter, which is

considered to be a retail service. This may or may not orm a distinct

retail market, since a retail market could be broader than a singleservice and may include a number o postal services (and possibly

non postal services, e.g. using other communication applications).

To provide a retail service a number o network activities or inputs

are needed. This set o inputs can be thought o as a supply chain

rom the collection o the item o mail to its delivery to the recipient.

Postcomm has dened as wholesale markets the inputs providedbetween collection and delivery that are sold as an intermediary

product to provide a retail service (or example access to Royal

Mails inward sortation and delivery acilities). In terms o

the postal industry, wholesale has traditionally been used to

describe access to Royal Mails downstream network, although

it could also potentially include access to other parts o Royal

Mails inrastructure. This accords with the terminology usedin our analysis, since the access service is typically sold as an

intermediary service to provide a retail service.


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Market power

Market power arises where a rm does not ace eectivecompetitive pressure. Market power can be thought o as the

ability to protably sustain market prices above competitive levels

or restrict output or quality below competitive levels. A rm with

market power might also have the ability and incentive to harm

the process o competition; or example, by weakening existing

competitors, raising entry barriers or slowing innovation.

When assessing whether market power exists, it is necessaryto consider the strength o any competitive constraints, i.e. the

market actors that prevent a rm rom protably sustaining prices

above competitive levels. Competitive constraints can include:

Existing competitors: These are rms that are already

present in the relevant market. I a rm attempts to sustain

prices above competitive levels, this might not be protablebecause customers would switch their purchases to existing

competitors. The market shares o competitors in the relevant

market are one measure o the competitive constraint rom

existing competitors. It can also be important to consider

how the market shares o rms in the market have changed

over time.

Potential competition:

This reers to the scope or new entry.Where entry barriers are low, it might not be protable or one

or more rms in a market to sustain prices above competitive

levels because this would attract new entry which would

then drive the price down i not immediately, then in the

long term.


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Buyer power: Buyer power exists where buyers have a strong

negotiating position with their suppliers, which weakens the

potential market power o the seller.Regulation: Regulation can also aect competitive conditions

and thereby limit the extent to which rms can be said to

possess or can exploit their market power. However, in order

to avoid circularity in the reasoning, it is important to take

account o the act that the competitive conditions observed

may be the result o regulatory constraints that were imposed

specically to address concerns about a rms ability to exploitmarket power (i.e. the act that there are regulatory constraints

that seek to constrain a rm rom exercising market power

does not mean that it does not have market power). Thereore,

we take account o the impact o the regulatory regime in our

market power assessment.

Postcomm believes that the assessment o market power should

be based on considering such indicators in the round rather

than using any one indicator on its own as evidence that Royal

Mail does or does not have market power.


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Markets analysed

Ater conducting an initial assessment o the broad types o retailservices that make up the postal market, Postcomm has chosen

to undertake the analysis o the markets in our parts. These are:

A packets and parcels services (PPS) market study

and assessment o market power (both at the retail and

wholesale level)

A study o candidate retail markets (a supply side analysis o

mail services outside the PPS market study)

A wholesale market study (or mail services not covered by the

PPS market study)

A retail market study (a demand side analysis o candidate

retail markets to complete the analysis o mail services outside

the PPS market study)

Our initial views are that these markets are UK wide, and thatthe PPS and wholesale postal markets should not be widened to

include non-postal alternatives.


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Packets and Parcels Services (PPS) market study

The PPS market study considers those postal services usedto convey:

all packets and parcels weighing up to 32kg; and

all letters and large letters, which are not subject to the

licensing requirements3, but excluding letters and large letters

conveyed using vanilla services (i.e. services that provide no

premium eatures such as tracking or proo o delivery).

As the PPS market covers a broad range o services with varying

characteristics, our analysis is based on the key characteristics

that we ound were important or customers purchasing decisions

and or dening services oered by operators.

Market denition retail

We considered the PPS market with respect to the ollowingcharacteristics:

Customer segment

Speed o delivery

Weight

Customer contract size

Premium characteristics

Customer segment

B2X v C2X

We consider whether the market should be segmented on the

basis o the sending customer: business (B2X) or consumer

(C2X) or items sent (by businesses or consumers) rom a

3 A licence is not required to convey letters which cost 1 or more or which weigh 350g or more(see section 7 (i) o the Postal Services Act 2000)


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collection point such as a Pillar Box, Post Oce or other retail

outlet (Y2X). Within the B2X segment we examine whether it

could be sub-divided into business to consumer (B2C) andbusiness to business (B2B) segments. We examine whether

individual customers and small business users ace similar

competitive conditions because they have very limited options

or sending PPS items in the markets available.

B2X activities generally involve the collection o items rom business

premises by the operator, who transports these items to a hub and

sorts the items or onward transportation. Sortation can be done by

hand or by machine depending on item size, item characteristics

and operator acilities. Once sorted, the items will be transported

to another hub or inward sortation and delivery by large trucks

or vans. Operators have traditionally ocused on the B2X segment

where the collection economics are much more avourable.

In the C2X segment, volumes are generally much lower with nominimum collection volume, resulting in a much higher cost per

item or collection. C2X also requires a dierent feet composition

rom B2X, with smaller vans or cars used or collection rather

than large vans or lorries.

From the demand side, switching between B2X and C2X will

generally be driven by the volumes sent, with customers sending

higher volumes choosing a B2X service.

On the basis o these actors, we do not consider that it would

be very easy or an operator oering or customers buying a B2X

service to switch supply or purchase to the C2X service and vice

versa. We conclude that B2X and C2X are in separate markets.


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Y2X v B2X and C2X

Individual consumers and low volume business senders are

aced with limited sending choices and rely on services provided

at a range o collection points. Royal Mail collects items rom

individual customers and small businesses through its Y2X

network o Post Oces and pillar boxes.

On the supply side, we do not consider that operators would be

able to replicate Royal Mails Y2X network o collection points.

On the other hand, Royal Mail might be able to use some o itsexisting inrastructure to enable it to enter the C2X segment and it

is already active in B2X.

On the demand side, large B2X customers volumes are generally

too high to make posting via the Post Oce a easible option.

Overall, we conclude that B2X and Y2X are separate markets.

With respect to demand side substitution between C2X and Y2X

services, we consider that switching between the two services

would depend on the customers awareness o the dierent

services and the associated costs o using the services, including

costs involved with staying at home waiting or collection as

opposed to travelling to a Post Oce. Direct price comparison o

C2X and Y2X services shows similarities, which could be evidence

that Y2X and C2X exert a constraint on each other. In particular,

we consider that prices o Y2X services are likely to restrain

the prices oered by C2X services, as they are the benchmark

consumers are likely to use to compare prices o C2X services.

Overall, we provisionally conclude that C2X and Y2X are in the

same market; however this may be an asymmetric market with

Y2X services providing a competitive constraint on C2X services

but not vice versa.


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Speed of delivery

Having regard to previous case law, and taking account o evidence

on the potential or supply side substitution and evidence rom

previous consultations, customer interviews and other secondary

sources, we have provisionally concluded that the B2X market

can be urther segmented by speed o delivery. We split this into

Express (same day or next day guaranteed services) and deerred

(non-guaranteed next day and later services).

We have let open whether urther segmentation o the Expressmarket is necessary because we do not consider that this would

substantially aect our analysis o market power.

In the deerred market, we consider the extent to which the

weight o the item, the size o the contract and whether or not

the item requires a premium service are important variables in

determining the competitive conditions in the market.

Weight

With regard to weight we consider three issues:

Whether Royal Mail has cost advantages in its delivery

networks or PPS items

Whether weight is important or operators and customers;

At what weight the competitive situation changes

Most o the customers we interviewed identied weight as a

actor in their purchasing decisions. PPS customers who use

Royal Mail have told us that they actively manage the average

weight o parcels sent through Royal Mail to take advantage o

relative prices at dierent weight steps. They are able to do this

by arranging their volume between Royal Mail and other operators

based on the weight o the items.


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We conclude that parcel weight is important or customers and that

they are likely to substitute between operators based on average

weight with lower weight items tending to be sent via Royal Mail,while higher weights are sent through a range o other operators.

It may not be possible to determine a rm boundary weight

between where the market is competitive and where it is not.

Currently our view is that, based on evidence rom customers,

the boundary point could lie between 750g and 1.2kg average

weights, and it may be higher or customers with low volumes.

Our initial conclusion is that there are separate markets or heavy

and light PPS items but that the boundary between these markets

is very dicult to determine in the absence o consideration o

contract volume. Our initial view thereore is that the market might

be more competitive at an average weight o around 1kg.

We initially nd the ollowing separate markets based on weight:

Deerred Light (below 1kg)

Deerred Heavy (above 1kg)

We also wish to consult on whether a price point refecting

operators costs rather than the weight carried should be

used to set the boundary between dierences in competitive

conditions. This is due to our concerns, rst, that an approach

based on weight may not represent the economics o the marketin the most appropriate way, and secondly, that analysis based on

weights would simply refect Royal Mails current regulated pricing

structure, which may not be set at the competitive level.


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Customer contract size

We look at dierences in the competitive conditions between

higher and lower volume contracts. While there is some indication

that contract size determines the competitive situation, evidence

o sucient quality on a clear volume break point is not available

at this stage. Figure 1 provides an illustration o the competitive

constraints in PPS when we consider the combined actors o

weight and contract volume. For low customer contract volumes

and lower weight items, Royal Mail aces less competition rom

other end-to-end operators. As the customer volumes and/or

weights increase Royal Mail aces increasing competition rom

end-to-end operators.

Figure 1: Competitive conditions by weight and volume

We will continue to gather evidence on this during the

consultation period.

0 Weight (g)

ContractVolume (000)

Increa

singc

ompet

ition


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Premium characteristics

We consider whether we should segment the market based on

whether or not premium characteristics are displayed. Premium

is dened as a service with a eature such as tracking, while vanilla

is a service without tracking or other such eatures. The evidence

shows that or customers who are indierent to a tracked service

(i.e. who would generally opt or a vanilla service) the decision o

which service to buy is based on price. This means that the vanilla

services ace a potential price constraint rom the premium services

(although this constraint does not act in the opposite direction).

We thereore initially conclude that it is not necessary to segment

the market urther based on premium or vanilla characteristics.

Figure 2 shows our initial views on the dierent relevant markets

in the PPS sector. The broken line shows our initial conclusion

that Y2X and C2X are in the same market.


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Figure 2: Initial views on PPS market denition

Y2X

Sameday

Low Volume

C2X

Light(2kg)

B2X: Business to other (where the item is collected rom the senders premises)

C2X: Consumers to other (where the item is collected rom the senders residence)

Y2X: Business or consumer to other (where the item is sent rom an access point e.g. Post Ofce)


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Market denition wholesale

Postcomm has identied as wholesale PPS markets the

inputs provided between collection and delivery that are sold

as an intermediary product to provide a retail PPS service (or

example, access to Royal Mails inward sortation and delivery

inrastructure). Only deerred PPS services are considered

because these are the only wholesale PPS services oered to

other operators.

We initially conclude that on the demand side the wholesalemarkets could be segmented on the basis o weight but should

not be widened to include non-postal alternatives. From supply

side considerations we consider that the wholesale markets may

be segmented on the basis o weight.

We have initially dened the ollowing wholesale markets:

Deerred heavy (initially above 1kg) items

Deerred light (initially below 1kg) items

Market power

Our initial assessment o market power is based on a number o

indicators, including:

Royal Mails market share (taking account o changes in

market share over time)Barriers to entry, exit and expansion

Customer characteristics

Non-postal alternatives

The eect o the regulatory regime


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In the Y2X/C2X market, the small scale o the networks o other

operators compared to Royal Mails and low consumer awareness

o their services means that Royal Mail is likely to have marketpower in this market.

In the next day and same day Express markets, given the high

number o operators, the low relative market shares and the high

levels o customer awareness, Postcomms initial view is that

Royal Mail does not have market power.

In the retail and wholesale deerred PPS markets, Postcommrecognises that there is increasing competition or higher weight

PPS, premium services and customers with large volume

requirements. We have provisionally concluded that Royal Mail

is likely to have market power in both the retail and wholesale

deerred PPS markets at weights less than 1kg and that it is

unlikely to have market power at weights above 2kg. Between

1kg and 2kg we do not have enough inormation to reach a rmconclusion on market power, although we consider that or high

volume contracts Royal Mail is unlikely to have market power.

Figure 3 brings together our initial views on the dierent PPS

retail markets and our views about whether Royal Mail has market

power in those markets (coloured red) or not (coloured blue).


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Figure 3: Initial views on retail markets and market power:

Packets and Parcels Services

Y2X

Sameday

Low Volume

C2X

Light(2kg)

Market power No market power Potentially one market

B2X: Business to other (where the item is collected rom the senders premises)

C2X: Consumers to other (where the item is collected rom the senders residence)

Y2X: Business or consumer to other (where the item is sent rom an access point e.g. Post Ofce)


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Analysis o candidate retail markets (upstream)outside PPS

Our approach to the analysis was to identiy a set o broad mail

types outside PPS that comprised a group o retail services and

then to undertake a supply side analysis o the network activities

(or inputs) that are used to provide those retail services. The mail

types that were identied or the analysis were Pre-sorted, High

volume unsorted and Low volume unsorted. We ocus on the

upstream activities o collection, outward sortation and trunking.

We dene the markets as candidate retail markets since we have

yet to conclude our demand side analysis.

Pre-sorted mail

This mail type is characterised by business customers with very

high volumes o mail that is pre-sorted (by the customer) to the

necessary requirements or an operators inward sortation activity.

Customers will typically sort the mail to the required level by

printing it in sequenced batches. Alternatively, the customer may

choose to outsource the activity o printing items in the correct

order to a mailing house.

For pre-sorted mail we initially nd that:

Speed o delivery is considered to be important in dening

markets. Our initial view is that there is a D+1 market and a

D+2 (and later than D+2) market.

Format o item is not considered to be important rom a

supply side

Our initial view is that the upstream inputs o collection,

outward sortation and trunking should be grouped as part o a

candidate retail market


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Although the D+2 and later market is increasingly competitive,

our initial view is that Royal Mail has market power in the

candidate markets

High volume unsorted mail

As part o the mail type segmentation used, we have separated

unsorted mail into two mail types. The rst o these relates to

unsorted mail sent by business customers in relatively high

volumes. The second o these relates to lower volumes o mail

sent by residential and business customers. The point at whichone mail type segment ends and the other begins (in terms o

volume o items) is not clear cut. We have sought to identiy

where this break point might be and our initial view is that it

occurs at around 250 items per posting.

For high volume unsorted mail we nd that:




Letters and large letters are considered to be part o the

same market



candidate retail marketOur initial view is that the candidate markets should not be

widened to include the pre-sorted candidate markets

Although the D+2 and later market is increasingly competitive,

our initial view is that Royal Mail has market power in the

candidate markets


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Low volume unsorted mail

Low volume unsorted mail is characterised by unsorted mail sent

by both residential and business customers o up to 250 items o

mail per posting.

For low volume unsorted mail we nd that:




Letters and large letters are considered to be part o the

same market



candidate retail market

Our initial view is that the candidate markets should not be

widened to include the pre-sorted or high volume unsortedcandidate markets

Royal Mail has market power in the candidate markets

Postcomms initial view is that the candidate markets should be

dened on a national basis


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Study o wholesale market outside PPS

Postcomm has dened as wholesale markets the inputs provided

between collection and delivery that are sold as an intermediary

product to provide a retail service (or example access to Royal

Mails inward sortation and delivery inrastructure).

Evidence suggests that the activity o inward sortation (i.e.

undertaking the walk sequencing o items) is always done by

the operator doing the nal delivery. Our initial view is thereore

that these two activities should be grouped together since thecompetitive conditions or one activity are likely to be mirrored

in the other activity. Thereore, we nd that the activities o

inward sortation and delivery should be grouped to orm a wider

wholesale market.

Speed o delivery is important (rom a supply side perspective)

to dening wholesale markets. Our initial view is that there is a

D+1 market and a D+2 (and later than D+2) market.

An operator that provides a delivery service on a daily basis

will be able to provide both D+1 and D+2 services since it will

deliver items as part o the same delivery walk. On the other

hand, an entrant providing delivery on a reduced delivery day

basis (and providing a D+2 delivery service) will be unable to

provide a next day service on all days. There is thereore an

asymmetry: the D+2 operator is unlikely to provide a price

constraint on a D+1 delivery service, but an operator providing

a D+1 service will be able to place a price constraint on an

entrant providing a D+2 service.

Letters and Large letters are considered to be in the same

wholesale markets


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The wholesale markets are separate rom the candidate retail

markets dened above, since the operational requirements or

outward sortation, trunking and delivery are very dierent romthose required or operational eciency o inward sortation

and delivery

The wholesale market is common to the candidate retail

markets dened in above, because the downstream activities

or pre-sorted, high volume unsorted and low volume unsorted

mail are identical

Royal Mail has market power in the wholesale markets dened

Figure 4 shows our initial views on the wholesale and candidate

retail postal markets.


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Figure 4: Summary o initial views o wholesale markets, candidate

retail markets (based on supply side analysis) and market power

Study o retail markets outside PPS

We are continuing our analysis o the demand side considerations

applicable to retail markets. We intend to consult on our retail

market study towards the end o 2010 and it is possible that

the evidence rom this study may support urther proposals or

deregulation in April 2012.

UpstreamCollectionOutwardSortTrunking

WholesaleMarketsInward sortDelivery

Candidate Retail Markets

Pre-sorted High volumeunsorted

Low volumeunsorted

D+1 (letters, large letters)

D+2 and later than D+2 (letters and large letters)

Market power

Increasingly competitive but market power

D+1

D+2

and

later

than

D+2

D+1

D+2

and

later

than

D+2

D+1

D+2

and

la

ter

than

D+2


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Glossary

Accounting separationThe production o separate nancial statements or dierent

parts o a business which operates as a single legal entity but,

or regulatory purposes, must be treated as comprising dierent

parts: divisions, unctions, or groups o activities.

Asymmetric market

This reers to a case where there are two relevant markets (A and B)where there is a competitive constraint rom market A on market

B, but the reverse is not the case

B2X

Items sent by businesses to either businesses or consumers

(where the item is collected rom the senders premises)

C2X

Items sent by consumers to either businesses or consumers

(where the item is collected rom the senders residence)

Candidate retail market

A retail market that has been dened on the basis o supply side

analysis only

Customers

Large businesses, small and medium sized enterprises (SMEs)

and residential consumers; both those who send mail and those

who receive it


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D+1

Postal service or delivery the day ater collection

D+2

Postal service or delivery two days ater collection

Deerred services

Non-time-guaranteed services that deliver next day and later than

next day items

Demand side analysis

Demand side is concerned with the analysis o the behaviour o

customer in the ace o relative price changes

Downstream

The activities o inward sortation and delivery

Downstream access

Access to Royal Mails distribution systems at an inward mail

centre or any point in the postal activity chain ater that

Express

Services that deliver a time-guaranteed service either same dayor next day. These products are typied by the presence o value-

added eatures, such as tracking, proo o delivery, or additional

insurance, as standard


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Large letter

Any postal item exceeding the dimensions o a PiP Letter and

equal to or less than 353mm x 250mm and 25mm thick, and

below 750g in weight

Letter

Any postal item equal to or less than 165mm x 240mm and

10mm thick

Market

A market has both a product and geographic dimension. The

product dimension includes all products and/or services that are

regarded as interchangeable or substitutable. The geographic

dimension is the area where operators are involved in the supply

and demand o the product and/or services and where the

competitive conditions are reasonably similar, and are dierent

rom neighbouring areas

Packet

Any postal item that is greater than 250mm x 353mm o any

thickness or less than 250mm x 353mm but more than 10mm

thick. Packets are now categorised as letter packet, fat packet,

packet and bag.

Packets and Parcels Services (PPS)

Services used to convey items up to 32kg which are not within the

licensed mail area, whether they are handled by mail or parcel

operators, express or courier companies or any other operator.

This excludes letters and large letters or services without any

tracking or other premium attribute.


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Premium

Services where value-added eatures are present, such as

tracking, proo o delivery, or additional insurance

Pre-sorted

Products where the sender has sorted their mailing items to a

predetermined level beore handing them to the operator

Retail

A postal service serving a nal customer

Supply side analysis

Supply side analysis addresses the questions o whether, to what

extent, and how quickly, a producer o a good or service would

start to supply a product in response to a relative price change

Trunking

Distance transportation o bulk mail (letters, large letters, packets

and parcels)

Universal (postal) Service

Postal products and associated minimum service standards that

must be made available to all 28 million addresses in the UK

Unsorted

Service where the mailing items handed to the operator are not

pre-sorted

Upstream

The activities o collection, outward sortation and trunking


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Upstream access

Access to Royal Mails distribution systems at a point in the postal

delivery chain beore the inward mail centre

USO

Universal Service Obligation

Vanilla

Services that provide no premium eatures, such as tracking,

proo o delivery, or additional insurance

Wholesale

Postal activities that are sold as intermediary products to provide

a retail service

Y2X

Items sent by either consumers or businesses rom an access

point (e.g. Post Oce) to a consumer or business


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Crown Copyright 2010

The text in this document (excluding the Royal Arms and other departmental

or agency logos) may be reproduced ree o charge in any ormat or mediumproviding it is reproduced accurately and not used in a misleading context.

The material must be acknowledged as Crown copyright and the title o the

document specifed.

Where we have identifed any third party copyright material, you will need to

obtain permission rom the copyright holders concerned.

For any other use o this material, please write to Ofce o Public SectorInormation, Inormation Policy Team, Kew, Richmond, Surrey TW9 4DU or

email [email protected]

This publication can also be viewed on Postcomms website, www.psc.gov.uk

A large-print version o this report is available

rom Postcomm telephone 020 7593 2100or email ino@psc gov uk

postcomm analysis summary

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