OXERA/NORTON ROSE RECOMMENDATIONS
Royal Mail's support of the Recommendations
The OXERA/Norton Rose report makes seven clear
recommendations, each of which (with the exception of recommendation
five which is related to the water sector) Royal Mail would support
to improve the current regulatory situation.
Royal Mail believes that the production of a
forward-looking Regulatory Policy Statement would improve the
apparent ad-hoc approach to regulation. The statement would include
clarification of the Regulator's proposed approach, prioritisation
of objectives and duties and the key approach including building
block methodologies for a price control review. Royal Mail was
critical of the approach adopted by Postcomm at the recent price
control when a timetable, structure and methodology was lacking.
The introduction of resolution mechanisms at
an early stage into the regulatory decision making process would
be important to resolve disputes. The concept of a two stage process,
initially internal to the regulator's office but with an escalation
process to a hearing before a proposed new Regulatory Disputes
Panel in the Competition Commission provides further transparency,
Objectivity and predictability in the regulatory decision making
Although limited to a price control reference,
this approach should speed the process by agreeing issues that
would be excluded from a price control inquiry. Such an approach
should be streamline the inquiry in terms of time taken and issues
heard. The Concordat would prevent companies and regulatory from
cherry-picking issues. The benefits would be a shorter period
of uncertainty and should require less Director and Senior Management
input into the process.
Companies should be allowed to make proposals
to the regulator, at their own initiative, for licence modifications,
including for the removal of obsolete conditions. The regulator
should be required to refer the proposals to the Competition Commission
where it did not accept them. Proposals are limited to non-price
determination related licence modifications but should include
the removal of products and services where there is a de minimis
level of revenue.
6. A NEW
A new right of appeal for issues of concern
to regulated companies, outside of a formal price control or a
licence modification should be introduced. This is important as
the regulatory regime currently provides the regulator with many
opportunities, for example, through the use of determinations
or directions to make significant changes and amendments to the
regulatory contract without a course of appeal to the licensee.
Royal Mail is currently faced with such an issue in relation to
the Access determination. Postcomm is proposing a very low Access
price which Royal Mail believes will undermine the universal service,
but which, save an appeal to the Courts (on very limited and onerous
grounds), is not challengeable.
Responsibility for deciding on cost allocation
following appeals should be transferred from regulators to the
body hearing the appeal, for example, the Competition Commission.
Royal Mail believes that these recommendations
will improve the regulatory system but will not overburden it
by allowing every single issue to be appealed. In particular,
recommendations 2, 4 and 6, above, are set to ensure that the
benefit of additional scrutiny of regulators' decisions, widening
the scope for appeals does not create a regulatory log-jam or
lead to a de facto replacement of the regulator.