Ofcom has recently unveiled the most significant overhaul of the UK’s Universal Service Obligation (USO) in more than a decade; marking the culmination of a major policy review process responding to seismic shifts in the postal landscape.

Through out work with Royal Mail, we played a major role in this change.

What’s changing and why?

Letter volumes have dropped by around two-thirds over the past two decades, as more communication shifts online. This has made the existing six-day-a-week delivery model increasingly costly to maintain.

In response, Ofcom has introduced a more flexible and financially viable USO model:

• Second class mail will be delivered on alternate days (Monday to Friday).
• First class letters will continue six days a week.
• Quality of Service targets have been adjusted, with a shift in emphasis from speed to reliability.
• New ‘tail of mail’ measures have been introduced to ensure consistency of delivery.

These reforms are projected to deliver annual net savings of £250 – 450 million.

Frontier's role

Working closely with Royal Mail, we helped build the case for change, quantifying the impact of declining letter volumes and shaping a USO model that strikes the right balance between affordability, service reliability, and economic sustainability.

Our experts led the financial impact assessment of the proposed reforms, drawing on operational data, customer insights, and international benchmarks to underpin a robust, evidence-led approach.

Our analysis provided the foundation for Royal Mail’s submissions throughout Ofcom’s engagement process, including the detailed response to the Call for Inputs in April 2024. We explored the net cost of the USO, its societal benefits, and how other countries have responded to similar postal trends.

As Matthew Newman, Chief Legal Officer of Royal Mail said, Frontier was “right at the heart of what was achieved and absolutely instrumental in it.”

To find out more, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.

You can also read our full analysis of the Royal Mail USO reform and what it means for the future of postal policy here.