In these days of correspondence by email and wireless communication,
most European governments still hold a statutory monopoly on a
significant part of the postal service market.
Outside the European Union (EU), Switzerland maintains a monopoly on the
delivery of letters weighing less than 100 grams. Several countries of
the EU share also this policy. In France, for example, regulations still
shield the incumbent operator (La Poste) from competition for the
delivery of regular mail.
This monopoly which dates back several centuries in some countries is
more and more thrown back into question. A first challenge comes from
the emergence of new means of communication. Faxes opened the
possibility of a partial escape from postal monopoly. Nowadays,
electronic mails allow us in their turn to communicate easily while
avoiding government monopolies that are sometimes prone to strikes.
An additional challenge emanates from European authorities. Since 2003,
it is possible to compete with incumbent operators in the member states
for the delivery of letters weighing more than 100 grams. Since the
start of 2006, this possibility has been extended to letters weighing
more than 50 grams. Finally, a recent proposal put forward by the
European Commission advocates that member states should open their
postal market to full competition by 2009.
Like France, several countries are reluctant to relinquish their
monopoly over regular mail. In all likelihood, they will thus oppose
this proposal which must still be ratified by member states and approved
by the European Parliament.
In some countries – like in the UK for example – post offices,
especially in rural areas, are fulfilling different social roles and are
considered as central to communities presumably giving people
independence or providing them with a meeting place. But a true opening
to competition just give incentives to entrepreneurs through flexible
market prices to respond better to consumers' needs for post services.
Such opening doesn't indeed at all preclude the possibility for
community authorities to continue financing one way or another for these
other "social roles" of rural post offices and to hand them over to
other institutions or organizations, if they decide to.
But the main justificatory argument put forward is an economic one.
According to it, a monopoly is essential in order to secure a universal
postal service, especially in the same remoter rural areas of a country.
Presently, with the uniform tariff that prevails in France, for example,
some customers of La Poste are forced to pay the delivery of their mail
at a price that exceeds its costs to the monopoly, and they thus
subsidize in fine the delivery of the mail of other customers who
enjoy a tariff lower than the delivery costs incurred by it.
Opening this system to competition would supposedly lead to heightened
competition in economically profitable "niches," and only "unprofitable"
sectors would thus be left to the incumbent operator. This mode of
competition would deny to the latter the possibility of resorting to
crossed subsidies, and would, at the same time, place the universal
postal service in jeopardy.
The very concept of a uniform tariff nationwide for postal services
certainly deserves to be called into question, in and of itself. After
all, when you travel by train, the cost of your ticket usually varies
according to the distance and the cost of serving your destination. Why
should it be different when it is your mail, rather than you, that
travels?
Furthermore, it is never economically sound to conceal the real cost of
a service to some customers as this leads to a waste in the use of
scarce resources. Neither is it sound to artificially raise the price
paid by some customers, especially business customers, as this puts many
firms – their mail constituting roughly 90% of dispatched postal mail –
at a disadvantage. This undeniably erodes their competitiveness with
respect to rival firms which can enjoy postal competition, services that
are better tailored to their needs, and lower prices.
But, in reality, even if one wants to maintain universal postal service,
it does not provide a straightforward justification for retaining a
government monopoly. Countries like Finland, Sweden, or the United
Kingdom – while maintaining universal service – have abolished their
postal monopoly.
There remains the obvious possibility of financing remote rural delivery
routes by direct government subsidies – if this is deemed indispensable
– in order to cover part of the costs incurred by operators providing
this service. In order to have mail delivered in such areas, public
authorities can also proceed through competitive tendering among
different postal operators in competition against each other, instead of
being forced to come to terms with a single postal monopoly.
Finally, it is of course possible even to give up on uniform tariff
policy, while providing direct financial aid, if necessary, to customers
living in remote rural areas. All things considered, it is not only
postal services which cost more in these areas, but also the transport
of many other goods, including food products. Yet, no one claims that a
monopoly must be established in order to deliver these products. Why
would the situation be fundamentally different in the case of mail
delivery?
But, beyond issues pertaining to the universal service, we should not
overlook the benefits of opening the postal market to competition.
Indeed, competition urges postal operators to innovate further in
sorting and delivering mail, in being responsive to the needs of their
customers, and in providing services at the lowest cost.
New and more flexible networks – such as food retail chains, filling
stations or tobacco shops – can thus receive and dispatch mail with
extended opening hours that favor consumers. Increased frequency of mail
collection can also be implemented for business customers who request
such a service. In short, in this area like in many others, competition
urges suppliers to provide the best value to consumers.
The examples of those European countries which have relinquished their
postal monopoly, "show that the efficiency and reliability of postal
services have been improved and meet the needs of citizens and
businesses" in the words of the European Commission.
In the last analysis, it is consumers who stand most of all to gain from
full market opening. But, this opening will in all likelihood also allow
the postal service to adapt and expand itself in the face of modern
means of communication. As in telephony, it is conceivable that
entrepreneurial freedom will spur entrepreneurial innovation in this
area also.
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