A tale of two sectors


mailThirty years ago, the British Telecommunications Act 1981 became law. In effect, it split the Post Office’s telecoms operations from its mail responsibilities. As such, it provided the legal underpinning for the deregulation of the UK telecoms markets, which has thrived on competition, with far greater choice for customers, lower prices and higher investment.

Furthermore, this Act and subsequent legislation enabled British Telecom to become the world’s first mass privatisation in 1984 and heralded the emergence of Vodafone, the world’s largest international mobile phone company. Indeed, within 20 years of its incorporation, Vodafone had become the fourth most valuable company worldwide, after such behemoths as Microsoft, Cisco and General Electric.

But what happened to the Post Office’s mail operations? Under the Royal Mail name, they have been becalmed in the public sector, clocking up numerous policy reviews, massive pension liabilities and a sharp decline in mail volumes. In recent weeks, the Royal Mail has been in the news – for the wrong reasons.

To be fair, the weather has been dreadful especially in the lead-up to Christmas, the Royal Mail’s peak delivery period. Yet, the quixotic pattern of recent deliveries for many households seems to be based on the accounting LIFO principle – last in, first out. Hence, many Yuletide greetings cards continue to appear.

A Bill to privatise the Royal Mail is currently before Parliament – at long last. Despite falling letter volumes, the Royal Mail still has tremendous potential. After all, no British undertaking has access to 27 million addresses, where its messenger – the local postman – is almost always very welcome.

Surely, a privatised Royal Mail can generate decent returns from this unique franchise, especially with on-line shopping booming. If 30 years ago, the postal sector had been deregulated, Royal Mail’s plight would be less parlous. Perhaps, if it had been privatized in time, it could have been the world’s top postal business.