Main Developments in the Postal Sector (2008-2010)
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DG MARKT MAIN DEVELOPMENTS IN THE POSTAL SECTOR (2008-2010) FINAL REPORT | 29 NOVEMBER, 2010 Main developments in the postal sector (2008-2010) COLOPHON Authors: Henrik B. Okholm, Ph.D., Project Manager, Marcin Winiarczyk, Anna Möller, Claus Kastberg Nielsen, Ph.D., quality assurer. Client: DG MARKT Date: 29 November, 2010 Contact: SANKT ANNÆ PLADS 13, 2nd FLOOR | DK-1250 COPENHAGEN PHONE: +45 2333 1810 | FAX: +45 7027 0741 WWW.COPENHAGENECONOMICS.COM 2 Main developments in the postal sector (2008-2010) TABLE OF CONTENTS Preface .................................................................................................................. 5 Terms and abbreviations ................................................................................................. 6 Country abbreviations .................................................................................................... 7 Table of figures ............................................................................................................... 8 Table of tables ............................................................................................................... 10 Chapter 1 Executive summary ................................................................................. 12 1.1. Three main themes: USO, labour market, and competition ................................. 12 1.2. Overview of the report ......................................................................................... 13 Chapter 2 Mail market developments ...................................................................... 21 2.1. Main findings and recommendations ................................................................... 21 2.2. Sector overview ................................................................................................... 22 2.3. Situation of the national postal operators ............................................................. 31 2.4. Prices and affordability ........................................................................................ 36 2.5. Quality of service ................................................................................................. 45 Chapter 3 Regulatory developments ........................................................................ 52 3.1. Main findings and recommendations ................................................................... 52 3.2. Sector overview ................................................................................................... 53 3.3. Role and capacities of the NRA ........................................................................... 57 3.4. Formal status of NRA .......................................................................................... 59 3.5. NRA activity since 2007 ...................................................................................... 66 3.6. Licensing and authorisation ................................................................................. 70 3.7. Price control and accounting requirements .......................................................... 72 3.8. Quality of service monitoring and user protection ............................................... 77 Chapter 4 Development of competition .................................................................. 80 4.1. Main findings and recommendations ................................................................... 80 4.2. Sector overview ................................................................................................... 81 4.3. Regulation of access to postal infrastructure ......................................................... 82 4.4. Market share open for competition ...................................................................... 84 4.5. Competition cases ............................................................................................... 92 4.6. Situation of mail consolidators .......................................................................... 103 4.7. Important entry barriers .................................................................................... 111 Chapter 5 Universal service obligation .................................................................. 120 5.1. Main findings and recommendations ................................................................. 120 5.2. Sector overview ................................................................................................. 121 3 Main developments in the postal sector (2008-2010) 5.3. USO costs and financing ................................................................................... 127 5.4. Discussion about the scope of the USO ............................................................. 132 5.5. Pilot study: assessing the need for the USO ....................................................... 135 5.6. Residential customers’ perspective on the USO .................................................. 139 5.7. Business customers’ perspective on the USO...................................................... 144 5.8. Experiences and recommended approach ........................................................... 149 Chapter 6 Postal labour markets ............................................................................ 151 6.1. Main findings and recommendations ................................................................. 151 6.2. Sector overview ................................................................................................. 152 6.3. Changes in employment conditions: Literature and main findings ..................... 162 6.4. Changes in employment conditions: The Swedish experience ............................ 165 6.5. Experience from other countries ........................................................................ 171 6.6. Employment drivers in the postal sector ............................................................ 181 Chapter 7 VAT ....................................................................................................... 188 7.1. Main findings and recommendations ................................................................. 188 7.2. Sector overview ................................................................................................. 189 7.3. Economic problems of the current VAT treatment ............................................ 191 7.4. Recent VAT-related cases .................................................................................. 195 7.5. Recent initiatives of the European Commission ................................................. 197 Chapter 8 Technological development .................................................................. 201 8.1. Main findings and recommendations ................................................................. 201 8.2. Sector overview ................................................................................................. 202 8.3. Process development .......................................................................................... 203 8.4. Product development ........................................................................................ 210 8.5. Regulatory effects of technological development ................................................ 218 8.6. Development of environmental and sustainability policies ................................. 221 Appendix A: Willingness to pay ............................................................................. 232 Stated preference Techniques ....................................................................................... 232 Residential Customers’ perspective on USO ................................................................. 234 Business Customers’ Perspective on USO ..................................................................... 236 Method for estimation willingness to pay ..................................................................... 240 Games for the residential survey ................................................................................... 241 Business survey games .................................................................................................. 246 STATA-Output Residential Survey .............................................................................. 251 STATA-Output Business Survey .................................................................................. 252 Appendix B: Estimation of employment drivers ......................................................... 254 Appendix C: Purchasing Power Standard (PPS) for countries in 2009 ...................... 258 4 Main developments in the postal sector (2008-2010) PREFACE Copenhagen Economics has been commissioned by DG Internal Market to study the main developments in the postal sector from 2008 to 2010. The main objective of the study is to increase the understanding of which main developments have occurred in the EU27, EEA and Swiss postal sectors since 2008, and how they affect the achievement of the European Union’s own objectives. The project has included significant data collection work. We have contacted all regulatory authorities, ministries and national postal operators in the 31 countries under consideration. To ensure data integrity, following the receipt of initial answers all respondents were invited to review the consolidated versions of country fiches. In addition, we have interviewed a large number of stakeholders, including competitor postal operators; express carriers; repre- sentatives of trade unions; mailers’