Equal Playing Field
October 19, 2006
On Wednesday, EU Internal Market Commissioner Charlie McCreevy, who is behind the plan, wants to build on the perceived success of Britain, Finland, Germany, the Netherlands and Sweden, which have already opened their postal markets to competition.
"I firmly believe that completing the Internal Market for postal services is vital for securing further improvements and for sustaining the progress and results achieved to date," he said.
"In preparing the proposal, we have put consumer and user needs first," he added.
"Universal delivery" in danger?
German national postal system Deutsche Post, which is already slated to give up its monopoly in 2008, and the German government welcomed the commissioner's plan.
On the contrary, consumer protection advocates said they were concerned about the fate of universal mail delivery in Germany.
Patrick von Braunmühl of the Federation of German Consumer Organizations said it was still unclear how the postal service could make good on a promise of universal mail delivery without the support of the state.
In contrast to the effect of liberalized telecoms markets, he said, consumers cannot expect significantly lower postage prices. At most, bulk clients could expect rebates, but normal customers will see little, if any, benefit. It could even be the case that business clients get price cuts at the expense of individual users.
But EU Commissioner McCreevy tried to assuage these fears, saying the postal system will continue to deliver the mail universally after liberalization. Deutsche Post and other ex-monopolies in the EU are required to "deliver and pick up letters and packages at least five times a week, at good quality and competitive prices," he reiterated.
Not just packages
"When the market opens completely in 2009, we can expect more innovation, better service, and higher cost efficiency," McCreevy said. He said this was the case for postal services in Great Britain, Sweden and Finland, which already made the switch.
The current plan follows earlier waves of postal liberalization: in 1997 and 2002. At that time, the markets for the delivery of packages and letters weighing more than 50 grams were opened to competition.
Now, McCreevy aims to break state monopolies for the delivery of letters weighing less than 50 grams by 2009 while guaranteeing mail services throughout each country.
"Without (liberalization), EU postal markets will be increasingly unable to meet the challenges of the communications revolution," the Irish commissioner said.
The proposal to fully liberalize the postal market will need the backing of member state governments and the European Parliament to go into effect. Past efforts to liberalize the postal market have met fierce opposition in some countries, and this time is likely to be no different.
States complain
Last week 10 national postal services voiced concern about how, under the reform, they would be allowed to cover the considerable cost of meeting universal delivery obligations without the backing of the state.
The Belgian, Cypriot, French, Greek, Hungarian, Italian, Luxembourg, Maltese, Polish and Spanish postal services said in a joint statement there was "no proof of the efficiency of the measures planned by the commission" to finance the obligation.
In response to such concerns, the commission proposed a range of funding options as well as the possibility of dividing the responsibility to provide full geographic coverage among different postal services.
"Growing industry"
"I'm well aware that there will be considerable lobbying on all sides but it's hardly fair to have some very large markets opened up to competition and other markets that are not," McCreevy said.
He added: "This industry is not a dying industry, it's a growing one, it's a very dynamic one and it's a very profitable for those who operate it efficiently. And that's why operators want to get into it."