Are five posties better than one?

NZ Post's dominance helped squeeze out National Mail

As the Post Office is forced to face competitors for the first time, we ask if it will make any difference?

Will we one day see rival posties slug it out on our doorsteps? Or might we even see a day when stamps cost less but letters arrive on time and to the right address?

Just make sure it's addressed correctly

For that is the dream of the new postal regulator, Graham Corbett, who this week brought an end to the Post Office's age-old monopoly on letter delivery.

Although Consignia - as the Post Office is now internationally known - can now face rivals on letter delivery costing less than £1, no competitor has yet applied for a licence.

The aim is to emulate the free postal markets in countries such as Sweden and New Zealand - from where Consignia chairman Neville Bain hails.

In New Zealand, where NZ Post lost its monopoly in 1998, at least 30 companies compete to deliver the nation's letters, postcards and parcels.

NZ Post "is a company which [last] May told its staff to stop 'over performing' because they were often delivering standard post items the same day

NZ Herald editorial

As the photo above shows, rival post-boxes can line up on street corners like gormless robots waiting for a bus.

Most of the new post companies focus on local deliveries or niche markets.

But analysts expect the number of competitors to drop as weaker firms succumb to market forces and the survivors begin to merge.

Tough times

Battle between the companies has not always been clean, says Murray McBeth, director of Pete's Post, which has franchises in 12 cities.

Yet customers have been better served since deregulation, Mr McBeth says.

Residential customers and small businesses can get cut-rates on letters sent locally, and many companies have been able to secure better deals with NZ Post by threatening to change networks.

Snail mail v e-mail

Although NZ Post claims 96.5% of the market share- 2% down on its pre-deregulation figure - its profits have dropped by more than a third in the past two years.

Is letter-writing a dying art?

But this can, in part, be attributed to the increasing use of electronic mail and commerce. The volume of mail posted has been dropping by about 6% a year.

The free market in NZ has already claimed its first big victim.

National Mail, which mostly delivered bulk mail-outs for business customers, laid off its 200 staff just before Christmas after just 18 months in business.

Stand or fall, these rivals have kept NZ Post on its toes. Improving accountability by having rivals snapping at the heels of a former monopoly has long been one of the goals of introducing competition.

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The UK's postal watchdog claimed last week that two million first class letters were failing to be delivered the next day, as they should have been. It also claimed that a million letters a week were simply not being delivered at all, getting lost in the system. The Post Office denied this high figure, but did accept that about 500,000 letters a year did not reach their destination.

One problem NZ Post's competitors have had in their attempts to gain a foothold has been the former monopoly-holder's reputation for delivering a reliable service at a relatively low cost.

According to the New Zealand Herald newspaper, NZ Post gives few people cause for complaint.

In an editorial on the demise of National Mail, the Herald said that NZ Post, "is a company which [last] May told its staff to stop 'over performing' because they were often delivering standard post items the same day".

UK letter-writers: contain your envy.