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Regulator delivers victory to UK Mail.

Byline: Richard Tyler City Editor

Business Post yesterday secured a victory over the Royal Mail after the industry regulator Postcomm set a lower-thanexpected price the former monopoly can charge for access to its 1,400 local delivery offices. After a year of deliberations, Postcomm said, subject to a three month public consultation, that UK Mail, Business Post's fledgling business-toconsumer mail service, would pay Royal Mail 11.88p for most items under 60 grammes. The Royal Mail had initially hoped for about 21p and Postcomm had indicated last autumn a figure of aabout 14p.

The regulator also rejected Royal Mail's request that Business Post contribute to its overheads on a discount basis rather than Business Post' preferred and cheaper defined cost model.

Royal Mail chairman Allan Leighton said he was 'shocked' by the decision and threatened to fight the plans in the High Court.

'Royal Mail will shortly be announcing its results for the last financial year and they'll show we've cut significantly our losses and started to turn the company around,' he said.

'I'm confident we can get back to profitability, but not unlessPostcomm's plans give Royal Mail a realistic commercial price for access. Just as we have turned a corner, along comes the regulator and throws what could be an almighty spanner in the works.' A Royal Mail source said the issue was 'absolutely fundamental' to the company's future, and was 'more serious' than the Royal Mail's successful lobbying efforts to secure a rise in the cost of its first and second class service.

'We will focus as much management time on this as it requires,' he said.

Paul Carvell, chief executive of Business Post, which has its national distribution hub next to Fort Dunlop, said 'on balance' the company could work with Postcomm's proposed charging scheme.

'We think it is a good basis from which to move on,' he said. UK Mail secured its interim licence to collect light weight business mail and then deliver it using the Royal Mail's 170,000 postmen and women, in November 2001.

It had originally hoped to be trading by April last year, but failed to agree with Royal Mail the access charges to the delivering offices and postal staff.

'You would think by now we would be ready to get moving. It is my sincere wish that Royal Mail now understands the process is complete,' said Mr Carvell.

Business Post will reveal its full year results today and analysts said news of the charging scheme was encouraging.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:May 20, 2003
Words:416
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