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Since 1635, when King Charles I opened Royal Mail for use by the public, mailers have used its services for collection and delivery of their post.

This cosy monopoly is being slowly whittled away, as 30 per cent of the UK's letter market opens up to competition. Interim licences for competitive services have been replaced with long-term licences in three key areas: bulk mailings of over 4,000 items, consolidated mail services and niche services.

We still do not have firm details of the range of services to expect, especially from the companies that will use Royal Mail for the final deliveries.

This is because there are still disagreements over 'access pricing' - the price which Royal Mail will charge for the 'final mile' delivery of post.

What we can say at this point is that the suppliers we cover here are likely to be players in the new deregulated marketplace.

Q: What services does Royal Mail currently provide? The Royal Mail services most frequently used by direct mailers are the Mailsort range. These offer savings on postage costs depending on the level of mail preparation that users are willing to undertake.

Mailsort 120 requires customers to sort to 120 selections. Entry level is 4,000 letters and customers can choose 1st or 2nd class delivery.

Mailsort 700 customers sort to 700 selections, with the entry level being 10,000 letters. Customers can chose between 1st class, 2nd class and seven day delivery options.

For Mailsort 1400, customers sort to 1,400 selections, the entry level is 4,000 letters or 1,000 packets. Again, customers can chose between 1st class, 2nd class and seven day delivery options.

Walksort has been specifically designed for high volume or high density mailings within a localised region. It differs from Mailsort in that customers are required to sort their address data (and mail) to match the individual postman's walk. Entry level is 4,000 letters and customers can have 1st or 2nd class delivery.

For all these products price is variable dependent on volume posted, the weight of the item and the physical dimensions. Generally speaking, the smaller your mailing quantity (for example, less than 20,000 items) the more likely it is that Mailsort 120 will offer a better discount.

The best discounts in Mailsort 1400 come with large quantities of mail.

Q: Who will compete with Royal Mail? Looking at the solutions already announced, we see there are two types of service and options for different types of mailing activity.

The types of service are: a) collection and transport of mail for injection into the Royal Mail network for final delivery; b) end-to-end postal services which do not use Royal Mail at all.

1. Deutsche Post

One collection and transport option will come from Deutsche Post, which intends to launch alternative bulk solutions to Royal Mail's Mailsort services. Designed for mailings of over 4,000 items, the bulk services will focus on flexibility to customer requirements, quality of on-time service delivery and will probably require less sortation (eg 120 selections versus Mailsort 2's 700 selections). This could mean either higher discounts or a lower base price, as well as a simplified workload for the mailing house.

2. UK Mail (part of the Business Post Group)

UK Mail will also offer a service where they collect mail from business customers nationwide through their network of 62 local depots. It will sort and consolidate that mail and then carry it to the relevant local Royal Mail office for final delivery to the destination address. The service will be a two-day one with day-definite and deferred delivery options.

Track and trace information will be provided as well as proof of mail delivery.

3. TPG Post UK

Of those companies providing their own distribution network, TPG Post UK will offer services to large companies, publishers and direct marketers with large mailings of over 4,000 items. TPG's service will be based on the independent network originally developed by its subsidiary Circular Distributors for unaddressed mail.

4. Express Limited

Express Limited will use its 106 depot-based delivery network and franchised milk-round staff situated in major conurbations in England and Wales to deliver packets and mail from businesses to households. Express currently delivers 20,000 items each week, such as books, contact lenses and compact discs. It will be interesting to see whether Express concentrates on packets and parcels, or whether it will develop a higher volume letter traffic.

5. Hays Commercial Services

Hays Commercial Services will be offering a B2B service through its own network which includes a pre-8am, next day delivery in the UK.

Q: How will I get the best deal? Your mailing house will be a crucial part of your choice of postal service. It's unlikely that every mailing house will have a contract with each new mail delivery supplier. Contracts are likely to require time and money to implement, new IT systems to be installed, existing systems updated, staff trained and production and fulfilment areas needing to be re-designed.

Mailing houses are not likely to be prepared to invest that time and money unless there is clear demand from their clients. Some mailing houses will offer their clients no more than two options, and it's quite possible that many companies will stick with Royal Mail for the foreseeable future.

Q: What are the cost implications? Again, we should assume that delivery prices will be comparable to existing services offered by Royal Mail but the actual delivery cost is not our only consideration. Mailing houses charge for processing data, sortation and fulfilment. These costs are based on existing systems and processes that adhere to Royal Mail requirements.

A new supplier will have new requirements and these will create new costs.

We do not envisage much change on the data processing side of the operation, but there may well be cost implications for new handling and collection procedures.

One major consideration for some clients is that the alternative postal providers must apply VAT to their invoices. Fundraisers and financial service companies cannot reclaim VAT, so this is a potential show-stopper.

Q: What should I do next? With relatively little detailed information on the options from competitors using the Royal Mail delivery network, it is hard to make an informed choice. But for B2B and urban-focused distributions, it's already time to talk to your suppliers (see box, this page).

These are fascinating times. There are great opportunities for clients and mailing houses who start to plan now on how to take best advantage of the new world of post.

Andrew Johnson is CEO at Dataforce. Nick Pride-Hearn is director of IMD, a direct marketing consultancy

TOP TIPS ON ... CHOOSING A POSTAL SUPPLIER

1. A key issue for direct mailers is the quality and reliability of their postal service provider, especially for time-sensitive deliveries. So think about testing new services. When you test, make sure you have a reliable set of seed names to track delivery performance in every case.

2. As a client, ask yourself what geographical coverage you require.

3. Ask your mailing house if it will be cost-effective to use more than one mailing service at a time.

4. Find out if your mailing house can handle mail for multiple postal services.

5. Check what quality guarantees you are being offered.

6. You will need a formal contract directly with your postal provider. This is not something that can be sorted out at the last minute.

7. See the website of the postal services regulator, Postcomm, for the full list of suppliers already issued with long term licences and their contact details. Go to www.postcomm.gov.uk and click on the 'licensing' button.