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Royal Mail Says Postal Deliveries To Remote Areas Under Threat

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http://www.theguardian.com/uk-news/2014/may/22/royal-mail-universal-service-threat-rivals

Royal Mail has warned that postal deliveries to rural areas are under threat because rivals are being allowed to cherry pick easy and profitable deliveries in towns and cities without having to run services to isolated homes such as on Scottish islands.

After the furore over its sell-off last year, which sparked accusations the soaring share price at the float had effectively lost the taxpayer £750m in a day, the company issued its warning on Thursday over the universal service obligation as it reported a 12% rise in operating profits to £671m.

Moya Greene, Royal Mail's chief executive, said rival TNT Post UK's ability to pick off profitable routes in big cities was "striking at the economics of the universal service obligation" – its statutory duty to deliver to every address in the country, six days a week, at the same price.

TNT Post UK has launched "final mile" delivery services in London, Manchester and Liverpool, and plans to deliver to up to 42% of addresses by 2017.

Greene said Royal Mail subsidised expensive deliveries to rural areas from the profits it made from services in big cities, and any increased threat from rivals could cost it £200m in revenues by 2017.

A universal mail system only works in a monopoly or you allow higher postage costs for those living in rural areas.

Allowing private companies who only operate in the prime areas clearly creates a problem for the one company that has to deliver everywhere daily. It's not really surprising that the now private Royal Mail is starting to flex it's muscles, what's the likelihood that the RM will split up leaving unprofitable rural deliveries to a zombie company that will need a govt bailout?

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