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Brussels, 18 October 2006

Frequently Asked Questions (FAQs) on Postal Services

(See also IP/06/1419)

Why is the Commission making a proposal now?

Under the Postal Directive, the Commission is obliged to report every two years on how the legislation has worked in practice. In addition, it is to confirm whether the 2009 target date for completion of the internal market envisaged in the original Directive remains appropriate. The Commission is now publishing its report and, given the significant positive results to date, is recommending confirmation of the 2009 date.

What is the purpose of Community law in this area?

Good postal services are essential to all economic and social activities and are a vital part of communication within the internal market. With this in mind, Community legislation aims to secure: the maintenance and positive evolution of the universal postal service; improvement in the quality of service; and completion of the internal market for postal services. In short, it is about ensuring the best possible, and most cost effective, postal services for citizens and businesses in Europe.

Has the current legislation worked?

The Commission report points to a very positive record of achievement (as was also confirmed recently by the European Parliament). It finds that there has been a substantial and measurable improvement in the quality of postal services, including in speed and reliability. It finds that all Member States’ Universal Service Providers provide a service that is consistent with or that exceeds the minimum standards required. It finds, in fact, that not only is the quality of postal service high, in general it is higher than was anticipated.

What will the proposed new legislation do?

The proposal does not alter the main provisions of the existing legislation, including the obligation to ensure universal service provision to citizens. The main change is the removal of the concept of ‘reserved areas’ to which Member States can restrict access to certain operators. In effect, this confirms 2009 as the date from which the internal market for postal services is to be completed.

What difference will this make in practice?

As some Member States have already chosen not to have ‘reserved areas’ (Sweden, Finland and UK), the effect of the proposed new legislation will vary. Where Member States have chosen to maintain reserved areas, these will be opened up. This will ensure that, from 2009, users and consumers in all Member State will be able to enjoy the benefits of increased competition, while retaining the high standards and universal service provision required under the Directive.

What will be the impact on employment?

Restructuring measures affecting employment in traditional postal operators have already progressively taken place for a number of years, as a response to growing competition from other communications and transport media (e.g. internet, express services) and automation. In this context, further market opening will be just one of the drivers that may affect workforce levels, but not its main cause.

As a matter of principle, competition creates jobs. Market opening will directly foster the creation of new jobs in new postal companies, as we are already witnessing and, indirectly, in the industries dependent on the postal sector, which will grow with the postal sector.

Longer term, market opening will allow to sustain employment by promoting growth in the sector and by allowing the sector to adapt to the rapid changes of the information society.

Would there be a risk to postponing postal reform?

There are risks that delaying the existing reform calendar would put into question the benefits of the reforms that have been undertaken so far, and ultimately put into danger the future of the sector and the provision of the universal service.

Delaying the process may compromise new investments in the sector and remove the incentives of traditional operators to adapt to changing market conditions, consumer and user's needs.

What benefits will consumers get from an open market?

With the removal of reserved areas, consumers can expect postal services available to them to be more reliable and of better quality. Universal service providers will get incentives to become more efficient, more customer focused, and to develop and innovate. For example, it may become possible to send or receive mail at more convenient times or places. (e.g. convenience stores, delivery stations). Consumers will benefit both as sender and as receiver of mail (for example with services such as track and trace of the mail piece, combining traditional mail with electronic media, more convenient home shopping delivery). At the same time the current requirements for high quality universal service will be fully maintained, and closely monitored by national regulatory authorities. Consumers should also benefit from cost reductions that business users and large volume mailers such as banks or utility companies will incur and could pass on to them.

Will there be more postal operators in an open market?

Yes, it is likely that more postal operators will offer services in an open postal market. However, it is likely that most operators will be found in the area of business originated mail which represents close to 90% of total mail volumes. Private consumers are less likely to be able to choose between different postal operators, at least in the short to medium term.

Which postal services are new entrants likely to propose?

New entrants are likely to propose lower cost, tailor-made and added value services and to differentiate their services from Universal Service Providers. Mail consolidation, consisting of merging volumes from several mailers and thereby obtaining lower mail tariffs from postal services, will most likely also be proposed by new entrants.

How will consumers be able to get information about postal operators and their services/prices in a postal market with more operators?

As in any competitive market, it will become easier to obtain service/price information about operators due to increased advertising efforts. National authorities may also contribute to facilitate comparisons between different service offers.

Will stamps continue to exist in an open postal market?

The situation is likely to remain more or less the same. Universal Service Providers will continue to issue stamps, and sell them in postal outlets and in kiosks, whereas new entrants generally are unlikely to issue stamps. If in a given country stamps from different providers are offered, national authorities will ensure that this does not lead to confusion.

In an open market what will happen to postal delivery, post boxes and post offices?

Daily postal delivery, post boxes and post offices will continue to be provided in the future to ensure accessibility of services and regular mail distribution. Adjustment to the new market situation may lead traditional operators to adapt the way the service is provided. An example may be to replace post offices with less costly franchised postal agencies in some areas– as it is already seen today in some countries. New entrants, on the other hand, may propose different ways of accessing their services. Whatever happens, the obligation to ensure access to universal service remains, under close monitoring of national regulators.

Are EU stamps likely to be introduced?

It is not likely that EU stamps will be introduced. Stamp use is mainly domestic and different postal tariffs apply in Member States.

Will universal postal services become more or less expensive?

Mail prices have been rising in most EU countries for the past few years, in line with increasing fuel and transport costs. The universal service obligations guarantee that all Member States must ensure the affordability of postal services. Prices are closely monitored by the national regulatory authority. (the average spending on postal services as a percentage of total household budgets is on EU average of 0.2% compared to 2/4% in telecoms).

Meanwhile, prices for business mail are likely to fall very soon after market opening, as most new postal companies will focus on this area to begin with. This should also benefit consumers, were business mailers pass these benefits on to their clients.

Will prices of universal postal services remain uniform in an open postal market?

Member States will be able to maintain uniform tariffs (e.g. tariffs equal irrespective of distance of the addressee) for single piece items and items of particular importance for public interest considerations (e.g. delivery of newspapers). It is unlikely that Member States will abolish uniform tariffs for consumers as this contributes to social and territorial cohesion.

Will cross-border prices be the same as domestic prices?

Cross-border prices are already higher than domestic prices and an open postal market is unlikely to change this fact, as the costs involved are generally higher. An open market will, however, allow that the prices for nearby regions in different EU countries are reduced to better reflect distance and costs of distribution rather than nationally organised tariffs.

Will universal postal services become more or less reliable?

Universal/traditional postal services will be as reliable, or even improve, in an open market as quality of service is their main marketing advantage. National Authorities will furthermore adopt measures to ensure overall reliability if several operators are present in the market.

Will universal postal services become more or less accessible in an open postal market?

The current requirements for accessibility of universal postal service remain untouched. The density of access points (post offices and letter boxes) is determined at national level and by market operators. The way in which universal postal services are accessed may evolve in some cases, with new points of contacts and expanded or more convenient opening hours. EU Members States may also recognise the role of post offices beyond accessibility to the service (e.g. as factor of territorial cohesion, such as recently in France, or as platform to provide other public services) and ensure appropriate public financing.

Will mail still be delivered to the rural/remote areas?

Rural and remote areas are unlikely to see significant changes in moving to an open postal market, as full territory coverage is a key advantage for universal service providers. Mail will continue to be collected in and delivered to these areas without interruption. The universal service obligation also guarantees this, under control of the national regulator.

To whom should I complain when my mail is lost or damaged in an open postal market with several operators?

The general rule is that complaints should continue be addressed, in the first instance, to the service provider. As consumers may be uncertain about which postal operator to complain to in a multi operator environment, postal operators will have to ensure a satisfactory complaints procedure by cooperating together, under monitoring of national regulators. Procedures for treatment of complaints are actually reinforced in the proposal.

How will the provision of postal services be organised in a multi operator environment?

Postal operators will cooperate, as it is the case in other industries (e.g. road transport), to ensure that mail services are being provided to quality standards. Member States will be responsible for ensuring that these standards are met as the proposal reinforces consumer protection with identifying the critical elements of postal infrastructure (notably postcode system, address database, post office boxes, collection boxes, redirection service, return to sender) where access must be granted in a transparent and non discriminatory manner. Mail services, therefore, should continue to be provided to the satisfaction of consumers in a multi operator environment.


Background Note

Proposal for a 2006 Postal Service Directive

Postal Services in the EU are covered by the Directive 97/67/EC of 1997. This created a regulatory framework which guarantees citizens a universal service, while limiting the areas to which Member States may choose to restrict access for economic operators (so-called ‘reserved areas – initially mail under 350g, amended in 2002 to mail under 100g and mail under 50g from 1/1/2006 onwards).

The Directive aimed at ensuring the best possible service through a gradual opening of the market, with a final target set for full opening of 2009. It included a requirement that the Commission provide periodic reports on its implementation, and that, before 31 December 2006, it should confirm whether the 2009 date remained appropriate. The proposal is now suggesting that the date be confirmed.

The proposal does not, in any way, alter the obligation on Member States to ensure universal service to citizens. Neither does it lower standards which this service must meet.

Existing situation

Directive 97/67/EC, as amended in 2002, established harmonised rules at EU level for the first time, copper-fastening a universal service obligation, while limiting the restrictions to competition which Member States could apply. It remains the law currently in force. It:

  • requires that all Member States ensure a universal service comprising at least one delivery and collection five days a week
  • requires that all Member States guarantee that postal services are accessible and take account of the needs of users
  • sets quality of service targets for cross-border mail (e.g., 85% of items to be delivered three days after posting) and requires Member States to set compatible national standards
  • requires transparent and non-discriminatory pricing
  • obliges Member States to ensure adequate measures to protect consumers, particularly with regard to complaint procedures
  • limits the parts of the market to which Member States can choose to restrict access (originally this was set as items up to 350 grams in weight, reduced in 2002 to 100 grams. Since the start of 2006, only items up to 50g may be reserved). Some Member States have already decided to remove all restrictions
  • allows Member States to establish authorisation procedures for operators
  • requires Member States to establish national regulatory authorities
  • foresees a sunset clause that would lead the existing Directive (including its measures to safeguard universal service) to lapse at the end of 2008 if no agreement is reached on future reform.

The new proposed directive on postal services

The 1997 Directive contained provisions that made it clear that it was not the last word in the matter. Specifically, it set in motion a gradual process for the completion of the Internal Market. In 2002 the Council and the European Parliament set a target date of 2009 for the removal of final barriers, asking the Commission to report by December 2006 whether this date remained valid. The new proposal responds to this mandate and suggests that the final barriers should now be removed. This means that Member States will no longer be able to have ‘reserved’ areas which are not open to competition.

The proposed new Directive:

  • removes the concept of ‘reservable areas’ and confirms that the market should be fully open by 2009.
  • maintains the main provisions of the existing Postal Directive, including the universal service obligation regarding services that must be provided (letters and parcels) and standards which must be met.
  • offers Member States a menu of means to finance universal service provision in this new context, and offers greater flexibility/clarity on how it can be achieved. It is for Member States to decide which model best suits their needs. (the options provided for include, for example, state aids, public procurement, compensation funds, cost sharing etc)
  • provides for retention of uniform tariffs (ie tariffs which are equal irrespective of the location of the addressee) for consumer/single-piece mail or for public policy reasons, but restricts their use in other circumstances
  • removes unjustified barriers to the entrance of new operators
  • strengthens consumer protection, including by extending mandatory complaints procedures to all operators.

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