Does Royal Mail need to be privatised in order to survive?

The government want to sell a stake of about 30% in Royal Mail to the private sector to help pay for the modernisation of the service. It is argued that the injection of private capital is necessary to fund the modernisation the company needed. Many European postal firms have automated a lot of their services which saved them money and made them more efficient. Union leaders and MPs are worried about the threat to jobs and the impact of private sector involvement on the Royal Mail's "universal service" obligation to deliver mail to every UK home. There are fears that selling off 30% will open the door to full privatisation in the future compromise this obligation. Ministers say they are committed to the universal service but argue that Royal Mail is less competitive than its European counterparts and needs to improve its performance in order to safeguard its long-term survival.

Digital Britain - the consumer knows best?

Following the interim report on 'Digital Britain' by the communications minister, Lord Carter, which emphasies a key role for public sector support to secure Britain's place at the forefront of the global digital revolution, an interesting response in the FT. The chief executive of BSkyB, Jeremy Darroch, argues the case for leaving consumers and the market to determine the direction and nature of developments. He argues that in broadcasting ...'The consumer’s experience has been transformed. That is to be celebrated. But one feature has not changed much at all. The interim report on Digital Britain by Lord Carter, communications minister, reminds us that the traditional distrust of the market’s role in the provision of high-quality content is as strong as ever. Digital Britain proposes to support the creation of digital content and offset the decline in advertising revenues through alternative funding mechanisms.' He believes that a positive climate for commercial investment should be created. 'Consumers could make an informed choice about products and services they wish to consume and pay for. The revenues could drive profitable returns and reinvestment in further high-quality content.' Regulation will be replaced by effective consumer choice that will ensure quality. Link to FT article

Would leaving developments in digital technology to the private market result in efficient allocation of resources or market failure? Is broadband (and other such products) a 'merit good'?