wik-Consult • final report Study for the European Commission, DG Internal Market Survey on Some Main Aspects of Postal Networks in EU Adhesion Candidate Countries Part I: Overview of all Countries Authors: Alex Kalevi Dieke James I. Campbell Jr. Bad Honnef, August 2003 The views and opinions expressed in this study are those of the authors and do not necessarily reflect the position of the European Commission. ACKNOWLEDGEMENTS WIK wishes to acknowledge the considerable assistance of all parties that contributed to this survey. In particular, the authors gratefully acknowledge the intense cooperation of universal service providers, national regulatory authorities, and ministry officials in the thirteen countries surveyed. Many invested substantial time and resources in gathering, submitting, and discussing the information without which this survey would have been impossible. WIK also gratefully acknowledges the many valuable inputs that were received from the European Commission’s study team. Special thanks are extended to José Luís Saramago, who co-ordinated the Commission services’ involvement in the study, as well as to Manfred Monreal, David Stubbs, and Fernando Toledano. Their challenging questions and comments contributed greatly to the value of this survey. Any errors, however, remain the responsibility of the authors. The views and opinions expressed in this study are those of the authors and do not necessarily reflect the position of the European Commission. Final report: Main aspects of postal networks in AC/CC I Contents Tables III Figures VI Abbreviations VIII Executive Summary i 1 Objectives and Plan of Study 1 1.1 Evolution of postal markets 1 1.2 Objective: a survey of AC and CC postal sectors 3 1.3 Approach and methodology 3 1.4 Market segmentation 9 2 Overview of countries surveyed 11 2.1 Basic information on enlargement countries 11 2.2 Significance of postal markets 15 3 Postal Operators and Services 23 3.1 USP revenues 23 3.2 USP employment, technology and automation 34 3.3 USP letter post services 41 3.3.1 Domestic letter post 41 3.3.2 Cross border letter post 50 3.4 USP parcel services 57 3.4.1 Domestic parcel post 57 3.4.2 Cross border parcel post 63 3.5 USP express services 70 3.6 USP unaddressed mail services 72 3.7 Competitive postal operators 72 4 Universal postal service 75 4.1 Scope of universal service in practice 75 4.2 Reserved service in practice 77 4.3 Access to universal postal services 78 4.4 Transparency of accounts 82 4.5 Quality of service 83 4.6 Postal tariffs 85 II Final report: Main aspects of postal networks in AC/CC 5 Regulatory Framework 89 5.1 Scope of universal service 93 5.2 Access to universal service 94 5.3 Reserved area and sole licenses 96 5.4 Authorisation, licensing, and compensation funds 99 5.5 Transparency of accounts and tariff principles 104 5.6 Quality of service 107 5.7 Complaints and redress procedures 109 5.8 Independent regulatory authority 110 6 Major Conclusions 113 Appendices 125 Appendix 1: Exchange Rates 127 Appendix 2: Comment on the Quality of Time Series Data for Postal Volumes 129 Final report: Main aspects of postal networks in AC/CC III Tables Table 1-1: Information Sources: NRAs and USPs 4 Table 1-2: Availability of USP Revenue Data 6 Table 1-3: Availability of USP Volume Data 7 Table 1-4: Availability of USP Cross-Border Origin/Destination Data 8 Table 2-1: Land and population 12 Table 2-2: Population density and degree of urbanisation 12 Table 2-3: Gross domestic product (GDP) in billion EUR 13 Table 2-4: GDP per capita in Euros and PPS 14 Table 2-5: Significance of postal market and postal sector employment 14 Table 2-6: Perceived competitiveness of postal markets 18 Table 2-7: Estimated USP market shares in postal market segments 18 Table 3-1: USP total revenues, million EUR, 1998-2002 23 Table 3-2: USP postal services revenues, million EUR, 1998-2002 26 Table 3-3: USP financial services revenues, million EUR, 1998-2002 26 Table 3-4: AC USP revenues, by group, 1998-2002 32 Table 3-5: USP employment, 1998-2002 34 Table 3-6: Estimated USP postal employment, 1998-2002 36 Table 3-7: USP automation and sorting centres 40 Table 3-8: Domestic letter post volumes, million items, 1998-2002 43 Table 3-9: Average domestic letter post growth rates, 1998-2002 44 Table 3-10: Possible revision of Polish letter post volumes, 1998-2001 45 Table 3-11: Domestic letter post per capita and per GDP 46 Table 3-12: AC domestic letter posts, by group, 1998-2001 49 Table 3-13: USP outbound cross border letter post, million items, 1998-2002 50 Table 3-14: USP inbound cross border letter post, million items, 1998-2002 51 Table 3-15: USP cross border letter post, indices, 1998-2001 52 Table 3-16: AC cross border letter post, by group, 1998-2001 54 Table 3-17: Cross border letter post to/from EU and AC/CC, 2002 55 Table 3-18: Intra AC/CC cross border letter post, 2002 56 Table 3-19: USP domestic parcel volumes, thousands, 1998-2002 58 IV Final report: Main aspects of postal networks in AC/CC Table 3-20: USP domestic parcels growth rates,1998-2002 58 Table 3-21: USP domestic parcels per capita and per GDP, 2001 60 Table 3-22: AC USP domestic parcels, by group,1998-2001 62 Table 3-23: USP outbound parcel post volumes, thousands, 1998-2002 64 Table 3-24: USP inbound parcel post volumes, thousands, 1998-2002 64 Table 3-25: USP cross border parcel post, indices, 1998-2001 65 Table 3-26: AC USP cross border parcel post, by group, 1998-2001 66 Table 3-27: USP express services growth rates, 1998-2002 70 Table 4-1: Universal service in practice: Delivery an clearance frequence 76 Table 4-2: Actual competition within reserved area 77 Table 4-3: Access to the public postal network: Postal outlets 81 Table 4-4: Access to the public postal network: Clearance letter boxes 81 Table 4-5: Accounting requirements in practice 82 Table 4-6: USP quality of service: Monitoring, publication and performance 83 Table 5-1: Postal acts 89 Table 5-2: Ministries responsible for postal sector 90 Table 5-3: National regulatory authorities 91 Table 5-4: Legal status and ownership of USPs in 2003 92 Table 5-5: Universal service required by law 93 Table 5-6: Access requirements in law 95 Table 5-7: Reserved area and sole licenses in law 97 Table 5-8: Openings in reserved area/sole license 99 Table 5-9: Authorisation of CPOs outside the universal service area 101 Table 5-10: Authorisation of CPOs inside the universal service area 103 Table 5-11: Tariff Regulation 105 Table 5-12: Accounting requirements in law 106 Table 5-13: USP quality of service requirements 108 Table 5-14: Complaint and redress procedures 110 Table 5-15: Key features of the NRA 111 Table 6-1: AC and CC coverage of key regulatory issues 118 Final report: Main aspects of postal networks in AC/CC V Table A1-1: Currency exchange rates 127 Table A2-1: Comparison of UPU and USPQ domestic letter post data, 1998-2001 129 Table A2-2: Annual variation in domestic letter post, 1999-2002 131 Table A2-3: Comparison of USPQ and UPU domestic parcel post, 1998-2001 133 Table A2-4: Annual variation in parcel letter post, 1999-2002 134 VI Final report: Main aspects of postal networks in AC/CC Figures Figure 1-1: The strategic location of the postal services market 1 Figure 2-1: Enlargement: Land area, population, and GDP in 2001 11 Figure 2-2: Estimated total postal services market, by country, 2002 16 Figure 2-3: Estimated total postal services market, by submarket, 2002 16 Figure 2-4: USP and estimated postal sector employment, 2002 20 Figure 3-1: Size of USPs in AC, CC and selected member states 24 Figure 3-2: Sources of USP revenues, 2002 24 Figure 3-3: USPs: annual growth and profitability, 1998-2002 25 Figure 3-4: Growth rates of USP revenue sources, 1998-2002 27 Figure 3-5: Sources of USP revenue by USP, 2002 28 Figure 3-6: Sources of postal revenue, by USP, 1998-2002 28 Figure 3-7: Composite sources of postal revenue, selected USPs, 2002 29 Figure 3-8: Letter post revenue and volume growth rates, 1998-2002 30 Figure 3-9: Parcel revenue and volume growth rates, 1998-2002 30 Figure 3-10: USP labour intensity, 1998 and2002 34 Figure 3-11: Growth in labour cost and revenue per employee, 1998-2002 36 Figure 3-12: Letter post per employee v. letter post per capita, 2001 38 Figure 3-13: Automation: USP sorting centres and letter post volumes 40 Figure 3-14: EU, AC, and CC domestic letter post volumes, 2001 42 Figure 3-15: Domestic letter post volumes, shares, 2001 42 Figure 3-16: Domestic letter post and GDP growth rates, 1998-2001 44 Figure 3-17: Letter post per capita v. GDP per capita 46 Figure 3-18: Cross border letter post (OCB+ICB) shares, 2001 50 Figure 3-19 USP cross border letter post compared to domestic, 1998-2001] 52 Figure 3-20: Cross border letter post to/from EU and AC/CC, shares, 2002 54 Figure 3-21: USP domestic parcel post, shares, 2001 57 Figure 3-22: Parcel post per capita v. GDP per capita 60 Figure 3-23: USP cross border parcel post (OCB+ICB) shares, 2001 63 Figure 3-24: USP cross border parcel post compared to domestic, 1998-2001 66 Figure 3-25: Cross border parcel post to/from AC/CC, EU shares, 2002 68 Figure 3-26: Cross border parcel post to/from EU, AC/CC shares, 2002 68