Royal Mail must be able to deliver for its customers
Just when it looked as if e-mail might kill it off completely, the huge increase in online shopping provided a boon for parcel deliveries.
The watchdog said there would be no imposition of additional price controls as the company already had “strong commercial incentives” to improve efficiency and keep prices down.
However, it warned postal delivery “still has room to improve”.
When the UK government sold off its remaining stake in the Royal Mail in 2015, it became the first time in its 500-year history the company had been fully privatised.
Any lingering nostalagia for a national state-run postal service should now be dispelled in an age of fierce competition between rival courier companies.
But the Royal Mail has always been – and remains – much more than a courier service.
As the provider of the Universal Service, it must meet certain obligations, including at least one delivery of letters every Monday to Saturday to every address in the UK.
The Universal Service had been under significant pressure, incurring a loss of more than £100m in 2011.
The losses resulted from the fact fewer people are sending letters, prompting Ofcom to introduce a new framework for postal regulation to secure the service.
Despite having missed some targets – such as that to deliver 93 per cent of First Class mail within one working day – Royal Mail will not have fines imposed.
The regulator said there had been circumstances “beyond Royal Mail’s control”, including the surge in online shopping deliveries around Black Friday.
Royal Mail is exempt from performance targets during December, to reflect the volume of pre-Christmas deliveries.
But promotional days such as Black Friday and Cyber Monday usually fall in November.
In 2014, Royal Mail warned deliveries to rural areas could be under threat.
It said the Universal Service obligation could become unsustainable if competitors were able to “cherry-pick” profitable parts of the country to deliver letters to.
It may seem an anachronism in the current marketplace but the Universal Service must be guarded at all costs.
It provides a vital lifeline for remote communities in Scotland and elsehwere in the UK and must be protected.
Yesterday, Ofcom said the Universal Service remains effective and working well for companies and households.
The regulator said it was prepared to step in and protect customers from high prices if it needed to.
It must ensure that Royal Mail continues to deliver for everyone, not just its shareholders.