The European Postal Market – Quo Vadis?
A Strategic Draft for the Postal Market of the EU
26. August 2014

This article is based on the author’s own experience as the postal regulator in Austria, the deliberations of the ERGP (http://ec.europa.eu/internal_market/ergp/), as well as interviews with National Regulatory Authorities (NRAs), experts and representatives of the European Commission. All estimates and conclusions represent the personal views of the author.

A few observations important for the European postal market should be pointed out first:

• From a strategic perspective, the development of the postal market -and letter post in particular- finds itself “standing with its back against the wall”. This situation requires new strategic concepts for the market and a sustainable development of the business.
• The slow pace of this whole development must be given prudent attention; thus, for example, it took 20 years from the first green paper to a full liberalisation.
• There is an obvious “North-South gradient” in the public perception of the concept and role of the Universal Service, for example the management of the branch network, the role and frequency of delivery to home, and other aspects. These issues generate additional challenges in the form of shared interests as well as possible coalitions of postal companies.
• The public opinion – along with the guiding maxim of politics – is almost always driven by consumer rights.

From the point of view of the postal companies concerned, these observations imply consequences and/or requirements for an effective approach:

• One of the most challenging aspects for any strategic concept to be effective is that one embarks on a long and tiresome journey which also lays forth tough requirements for the development of a new communication concept to get the policy across and to keep the consumer involved.
• Furthermore, the resulting sustainable management of processes requires special attention, just as the creation of the content of the service itself.

Current Developments: It is still hard to assess the impact of the Implementation Report being drafted for the new EU Commission. The whole framework for the postal market was designed in the 1990’s, as is generally known, whereas nowadays only 3-4 per cent of all communication takes place through letters. In Denmark, for example, the number of letters dropped 15 per cent in 2013. The volume of letter post in the EU is in “free fall”. The comprehensive, undisputed “raw material” for the Implementation Report comes from a report by WIK-Consult titled “Main Developments in the Postal Sector (2010-2013)” (http://ec.europa.eu/internal_market/post/doc/studies/20130821_wik_md2013-final-report_en.pdf). Nevertheless, the conclusions drawn by WIK-Consult (upon request by the EC) are being disputed, especially when it comes to the future concept of Universal Service (its scope or even its entire abolition?), the mandate of the national regulatory authorities, and other issues. Besides, defenders of an extensive Universal Service are fighting against the conclusions based on the WIK-Consult report and have commissioned their own “counter-studies”, intending to produce the opposite conclusions.
The Roadmap should be viewed as separate from the Implementation Report; three years ago, we saw the report on the e-commerce market and its problems, such as goods crossing borders, supplier credibility, payment modes, and the physical delivery of goods. This was the hour of birth of the current green paper, which later evolved into the Roadmap. The idea behind it was to finally present a good story about the post market, i.e. to take the eye off the declining letter post, and to redirect attention to the opportunities in the growing segment of parcel traffic (WIK-Consult also made explorations beyond letter post, and elaborated a synopsis covering the parcel market).
Eighteen months later, the Implementation Report and the Roadmap can be merged together again. The Report should not, however, lead to a “4th Postal Directive”, but far-reaching proposals could be made, depending on the ‘courage’ of the new Commissioner (e.g. the modification, reduction or even complete abolition of the Universal Service?). The individual positions across the EU regarding home delivery are strongly fragmented geographically and culturally. Customer needs could be satisfied and resolved better through an aggregation of letter and parcel post. What drives the results of any survey is the wording of the questions, and in particular the question about the public’s willingness to pay for certain services (and service levels) and/or the demand for various service bundles. In Finland, for example, as all the costs of Universal Service were calculated, the question was asked whether the losses from Universal Service should be “nationalised” (i.e. covered by taxpayer money).
For many reasons, the suggestion for a strategic proposal for Universal Service and its future concept is to focus the deliberations on the fact that Universal Service represents the only button that can still be pushed. The price of the service can hardly be raised due to the threat of an accelerated e-substitution.
Another important point to consider is that the extent of the economic dependence on Universal Service on part of the postal companies varies across the EU. To prepare an effective strategic proposal, a new communication concept (including process support) must be established and communicated on both national and EU level subsequently. One of the points to stress is that: the postal market is a sector subject to massive changes; something is being taken away from the user (shrinking letter post and the resulting reductions in service), but something else is being given to the user, for example the improved quality in the area of parcel delivery.
The merger of the Roadmap and the Implementation Report can contribute to a new concept for the future of the postal market. This concept needs the support from the Member States, the European Commission and other stakeholders.
Moreover, the National Regulatory Authorities should be won over as partners for such a concept. Contact should also be established with the ERGP to obtain its support. The time has come to discuss the “concept of postal services in the future”, as the Member States seem now to be better prepared to engage in such a discussion.