Postal services to rural areas faced a fresh “threat” yesterday after regulators said it would not impose conditions on Royal Mail’s competitors.
The announcement by Ofcom represented a blow to Royal Mail just days after its chief executive Moya Greene warned that rival firms made a universal service “unfinanceable”.
Ofcom denied that the universal service obligation (USO) – where letters are posted anywhere in the country for the same price – was under threat because of the impact of competition.
However, it said it would initiate a broader review of factors affecting Royal Mail’s ability to deliver the universal service, and consider the company’s efficiency and its parcel delivery performance.
Ms Greene told MPs last week that the obligation costs it £7.2billion and was being threatened by rivals “cherry-picking” lucrative urban routes and shunning loss-making rural areas.
Rivals Whistl and UK Mail deny they cherry-pick work, or that they threaten the universal service.
Ofcom said: “We do not currently consider the evidence shows that end-to-end letter competition by Whistl presents a threat to Royal Mail’s ability to provide the universal postal service.”
The regulator’s chief executive Ed Richards said: “Ofcom’s board has considered all the evidence in the postal market carefully over the past few months.
“We have concluded that there is no present risk to the financial sustainability of the universal service.”
SNP postal services spokesman Mike Weir said: “The UK Government’s botched sell off of the Royal Mail has been a shambles since day one – and as predicted, the privatisation of our postal service is putting delivery to all corners of Scotland under threat.
“It is incredible that Ofcom do not consider there is a growing threat to the USO.”
Ofcom also proposed a change to the rules governing the prices that Royal Mail can charge for “access mail”, where competitors collect and sort mail, before paying Royal Mail to deliver it through its network.
The regulator said proposed new rules would allow Royal Mail to make a fair profit on all “access” letters regardless of where they are being delivered. Royal Mail shares opened 2% lower yesterday.