The universal service means Royal Mail has to deliver across the UK, six days a week, and for the same price.
Appearing before the Business, Innovation and Skills Committee, Greene said: “If you allow cherry-picking in the urban areas, it siphons off a lot of revenue. It makes the universal service unfinanceable and uneconomic.”
She said the industry needed a “forward-looking regulatory approach where there are standards that apply to the whole industry, not just Royal Mail”.
However, Cable said that Royal Mail was guilty of”scaremongering”.
He said both houses of parliament would have to vote to change the law to get rid of the universal service. “There’s absolutely no question of that change,” he said.