Everything you always wanted to know about sacks…but were afraid to ask

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Series Details Vol.7, No.36, 4.10.01, p15
Publication Date 04/10/2001
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Date: 04/10/01

By Peter Chapman

  • QUESTION: How many EU postal staff work for the old post offices across the 15 member states? ANSWER: About 1.2 million.
  • QUESTION: Are their jobs at risk from liberalisation? ANSWER: The European Commission says not - at least not all of them. It says traditional operators have shed 0.4 of their work-force annually due to modernisation and restructuring. Moreover, 400,000 work in the private sector. Liberalisation would add thousands to that number, it claims.
  • JARGON USED: `Reserved area` MEANS: This is the part of the market that post offices have a monopoly on to guarantee a 'universal service' (see below). The present post directive says the reserved area should cover items weighing no more than 350 grams. Some member states already have lower limits.
  • QUESTION: What difference does a few grams make? ANSWER: Not a lot, says the private sector. Internal Market Commissioner Frits Bolkestein wants to reduce the 350-gram threshold to 50 grams. But pro-liberalisers say this apparently huge reduction would only open up to competition an area worth 22.9 of post office revenues from the reserved area.

Put another way, 77.1 of post offices' revenue from the reserved area is for letters weighing 50 grams or less. A cut in the monopoly to 100 or 150 grams, as seems more likely, would have even less impact, pro-liberalisers say.

Critics of liberalisation say the lost revenue would jeopardise the universal service and lead to more job losses.

  • JARGON USED: `Universal service`, MEANS: The concept that anyone anywhere has the right to send and receive a letter, even if they live in a remote part of a country where the costs of delivery outstrip by far the revenue from stamps purchased to send items. Universal service providers at present are the national post offices.
  • QUESTION: Is the universal service all loss-making? ANSWER: The Commission says an average of 5

of universal service deliveries are unprofitable. In fact, postal operators make three-quarters of their revenue from their universal service monopoly.

Critics say more and better studies are needed, showing how further liberalisation would affect the market.

  • JARGON USED: `Cross-border mail` MEANS: Confusingly, this is split into incoming and outgoing. The Commission wants to open outgoing mail fully and open up incoming to the same extent as normal letters. But what does that mean?

Think of outgoing and incoming as two halves of the process. Outgoing is the collection of letters in a country, say France, destined for, say, Germany. Incoming is the other half - delivery to the final destination within the borders of the destination country. Liberalising outgoing cross-border letters would mean anyone could collect outgoing cross-border letters in France, destined for Germany.

The letters would then be sent to the German border and delivered to their final destination by the local post office, in this case Deutsche Post. At this stage they are deemed incoming letters. But, since Bolkestein wants to cut the reserved area to 50 grams, companies would be able to offer a 'start-to-finish' service for letters and small packets above that weight if his proposals become law.

  • JARGON USED: `Direct mail` MEANS: Often unfairly referred to as junk mail. This sector, which now competes with other media such as the internet, could represent one of the most innovative parts of the market. But the direct marketing lobby claims restrictions in competition are stifling its attempts to grab new customers.
  • JARGON USED: `Special services` MEANS: These are features such as electronic tracking and guaranteed delivery times that make a service stand out from ordinary post. Pro-liberalisers want this sector totally opened, but critics, such as Italy, fear it would essentially be full market opening through the back door.
  • JARGON USED: `Final date` MEANS: Pro-liberalisers say a final date for full market opening is more important than an interim lowering of the reserved area. They say a final date, say 2009, would give operators the certainty to invest.

Article forms part of a special report on postal liberalisation.

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