Proposals to open up postal deliveries to competition will see private companies able to hire their own postmen, and put up their own boxes. Nick Morrison asks if this means the end of our traditional mail system.

IT may have ended in ignominy, but Charles I's reign was notable for two aspects which still resonate, more than 360 years on. One, was paving the way for Britain's only experiment with republicanism, and the other was setting up a monopoly over delivering mail.

But, while it has survived the transition from ponies to carriages to vans, this monopoly is now facing its greatest challenge. Proposals published yesterday by the industry regulator Postcomm will see the biggest shake-up in the postal system since the Roundheads took the field against the Cavaliers.

Not only do they raise the prospect of private companies employing their own postmen and setting up their own postboxes, but there are fears the plans could undermine the national delivery network. While companies may fight each other for a share of the profitable inter-city deliveries, they may be less likely to put their hands up when it comes to driving their vans along dirt tracks to reach remote farmhouses.

"It will totally destroy the service in rural areas if they open it up to competition," says Brian Cassidy, North-East regional secretary for the Communication Workers' Union (CWU), which represents most Royal Mail staff. "Private companies will cherry pick the best routes, and Royal Mail will be left with just the loss-making routes, and the service will suffer.

"Anyone can make a profit delivering letters within the same city, but Royal Mail won't be able to just do that, they will have to provide a safety net for people in rural areas.

"You can post a letter from Darlington to the Isle of Man or the Scottish islands for 27p, but will a private operator charge you 27p, or will they charge more depending on how much it costs them? And it's not just getting mail, it will affect sending mail as well."

Consignia, the new name for Royal Mail, has a virtual monopoly on deliveries costing less than £1 and weighing up to 350g, but does face competition with parcel delivery firms and private couriers for mail over 350g. Postcomm's proposals would open up almost a third of Consignia's business to competition from April, covering bulk mail of more than 4,000 items a day, which would cover bank statements and electricity bills and is worth around £1.5bn a day.

The second phase, from April 2004, would take in bulk mail of between 500 and 1,000 items, covering letters from schools and health authorities. And the final stage in opening up competition, from March 2006, would abolish all restrictions, enabling private companies to collect and deliver all mail.

Postcomm chairman Graham Corbett says increased competition would give Consignia the incentive it needed to improve its performance. The company is losing around £1m a day and is spending 28p to deliver each first-class, 27p, letter.

But Mr Cassidy says that, while Consignia's performance could be improved, unless competitors were forced to operate under the same conditions of running a universal service, then ending the monopoly would leave some customers worse off.

"I do accept that the service has to improve, but for the last 15 years we have made a profit and it is only in one year that we have lost money, and suddenly we are made out to be inefficient," he says.

"What the regulator is doing is political. Is he going to say that anyone who comes into the market must provide the same service as we do? I don't think so. I think he has had a dizzy turn."

But, he says the union could accept the end of the monopoly if there was a level playing field for the new-look market. "We would like to keep the monopoly, but we are realists and we recognise that we might have to open up to competition. But it has to be on the same basis. If somebody wants to challenge Royal Mail, they should try and provide a better universal service, and not just in city centres.

Consignia itself said it feared "death by a thousand cuts'' if Postcomm's proposals went through, with the universal service coming under threat. But consumer group Postwatch says competition would lead to more choice for customers, encourage Consignia to get its act together, and provide more services.

Chairman Peter Carr says the regulator's proposals would open up the postal market. "Competition is the best way to protect customers' interests. The proposals allow time for Royal Mail to adapt to the changing trading conditions.

"The regulator should be applauded for destroying the myth that provision of the universal service is incompatible with a competitive market. In other markets, the elimination of monopolies has delivered lower prices and better service to customers. I am confident it will do the same in the postal market.

"Royal Mail has lurched from one crisis to the next. Doing nothing was not an option - the regulator has devised a way forward that should safeguard the future of the universal service."

But Consignia chief executive John Roberts says the pace of increased competition could put the future of the whole network in doubt. ''The key issue is that nobody actually knows what the result of this kind of regulatory change is going to be, because nowhere else in the world has anybody tried it this way," he says.

''We are all working in the dark. Until we see what the market is going to do, we won't know. One of the things that does concern us is that the most profitable part of the network, the bulk mail, is the first to be opened up. I can understand why they've done that, but it is the area where we make money which we then use to sustain the universal service.

''My concern is that, if you get this wrong, there's no going back. The key thing for us is that we do want to compete, we are going to compete and we will fight very hard in these markets.'' And for rural areas, the consequences of getting it wrong could be very bleak indeed, according to Sir Edward Greenwell, President of the Country Land and Business Association.

"The first casualty of any postal sell-off will be the least profitable margins, rural delivery service," he says. This would be the 'straw that broke the camel's back' for many rural businesses struggling to keep afloat and it would be a bitter blow to communities on the edge of survival."

For the CWU's Brian Cassidy, there is no doubt that the stakes are high. While city centres might see blue and green postboxes springing up beside their red cousins, in the countryside even the red ones might become harder to spot.

"I'm very fearful of what is going to happen to the service," he says. "We have the best postal service in the world, but if these proposals go through we will go straight from the Premiership to the Vauxhall Conference."