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Disenchantment, cynicism and boredom best describe the reaction of most in the direct marketing industry to the deregulation of the postal market.

Disenchantment because so far it has promised much and delivered little. Since that landmark date, March 26 2001, which signalled the end of Royal Mail’s stranglehold on direct mail delivery, regulator Postcomm has issued nine interim licences to competitors, none of which represent a serious threat to Royal Mail nor a viable alternative for most direct mailers.

Cynicism because even when full licences kick in on January 1 2003, many believe that competition is unlikely to be strong enough to force significant efficiency and service improvements on Consignia.

And boredom because any debate about deregulation inevitably involves grappling with important but dull issues such as the cost of accessing Consignia’s delivery network and the protection of the universal postal service.

Yet if you talk to companies about what a fully fledged competitive postal market could and should mean for them in tangible terms, there may be at least a spark of interest.

Organisations could soon have no need for a mail room because one firm collects all its mail at the end of the day, franks it, sorts it and delivers it through the most cost-effective channel depending on whether it is B2B, B2C or international mail.

Mailing houses may be in a position where Royal Mail, Deutsche Post, TNT and Business Post are all pitching aggressively for their business.

Direct marketing agencies should be able to offer their clients new mailing options such as phased delivery or named-day delivery that guarantees a mailing will hit doorsteps on the day an integrated campaign launches.

Most significantly, everyone should be rid of the current unique situation where the media supplier is also the sole media owner.

Of course, all these scenarios are some way off but there's no doubt that Postcomm is serious about making competition a reality. Although it has given Consignia an extra year to adjust to full competition, it has at last set out a clear timetable for liberalisation, culminating on 1 April 2007 when all restrictions on market entry will be abolished. For the direct mail community, competition comes much earlier.

Phase one (from January 2003 to March 2005) sees the delivery of bulk mail above 4,000 items open to competition. This still represents around 30% of the UK letter market and includes the provision of consolidation and niche services.

The bulk threshold will then be adjusted to open up 60% of the market by value followed by a total lifting in 2007.

January is not far off so it's little surprise that players such as Deutsche Post, the Dutch postal authority TPG and Hays DX are already preparing their licence applications. They are all, for different reasons, in strong positions to take advantage of this new market.

Hays DX, for example, has run its Document Exchange service for more than 25 years. It has 35,000 members and 3,500 exchanges, and has recently, by virtue of an interim licence issued in September 2001, opened up its service to members sending mail to key business districts in London, Manchester and Edinburgh.

But, as David Sibbick, director of regulatory affairs at Hays DX, admits, this new service is still limited. "The addition to our document exchange service has been well received, but customers have made it clear they want the facility to be available for more locations." This is likely to form a core element of its licence application to Postcomm.

Deutsche Post, Europe's largest postal administration, is also one to watch, having steadily built up an array of partnerships. Through its majority shareholding of DHL and a joint venture with Securicor (the UK’s second largest parcel distribution company after Parcelforce), it has a sizeable number of vehicles and depots at its disposal. Meanwhile TNT has also been consolidating its position in the UK with the purchase earlier this year of the biggest company in the unaddressed market Circular Distributors.

But while both now have a firm foothold in the UK market, it is unlikely that anyone in the medium term will set up an alternative delivery network to every household in the UK. That's the cross Consignia has to bear and it's this provision of the universal postal service (one delivery and one collection of post throughout the UK on each working day at a uniform tariff), which is often cited as being at the heart of its financial woes.

For part 2 of Marketing Direct's postal deregulation feature see next Friday's DM Bulletin.