Interview: EU must focus on financing universal postal service

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As rules on liberalising Europe’s postal markets look to be adopted in the New Year, Pál Szabó, CEO of Hungary’s Magyar Posta, points to a number of “bad experiences” in countries that have already opened up their postal markets to competition and stresses the need for a “sustainable financing solution” to allow operators to continue providing citizens with quality mail delivery.

In a communication issued on 9 November, the Commission welcomed the formal adoption by EU member states, one day earlier, of a common position on liberalising Europe’s postal services, saying it “fully reflects the key elements of its initial proposal”, despite the fact that it contradicts earlier demands by Internal Market Commissioner Charlie McCreevy for a 2009 deadline to be respected. 

The Council’s common position is instead in line with Parliament’s recommendation to postpone the full opening of postal markets until 2011, or even 2013, for eleven member states, and apply a temporary reciprocity clause to those member states that make use of this transitional period. 

Lawmakers are expected to endorse the text without any changes on 30 January 2008. The Commission will then have the task of drafting detailed “guidance on calculating the net cost, if any, of universal service” in view of ensuring a level playing field among operators and avoiding violations of competition law, as postal operators seek compensation for the financial cost of universal service obligations that are imposed on them. 

In an interview with EURACTIV, Pál Szabó, Chief Executive Officer of Hungary’s Magyar Posta, welcomed the decision to allow some countries more time to implement the directive, saying “the level of readiness of member states is quite different.” He believes that this two-staged market opening will not lead to market distortions of competition as the delay will affect “not more than 10% of the European postal market and will last for just two years.” 

He noted that there had been “some bad experiences” in terms of employment and working conditions in countries that have already liberalised and said that attention should be paid to improving social conditions, including wages and other benefits. 

UK postal workers staged massive strikes at the end of October in a bid to improve working practices at Royal Mail, which has been operating in a fully liberalised market since 2005. The universal service provider now has 17 other companies competing with it and says it has already lost 40% of the corporate market to rivals, highlighting the need to modernise labour practices. 

Szabó noted that, with the gradual liberalisation that has already taken place in the delivery of parcels and express services, “all big international competitors have already entered the Hungarian market […] It is sure that the level of competition will significantly increase”. 

While he does not think the level of service to citizens will be compromised, thanks to a “clearly defined set of obligations for universal service providers”, he stressed that, with the elimination of the reserved area – which he underlined had proved to be a “simple, transparent” and “state-budget friendly” solution – “the most important task at the moment is to find another appropriate and sustainable financing solution in order to have the same high-quality universal services in the future”. 

State subsidies, he believes, are not a feasible option for most of the new member states. He suggested that a ‘pay or play mechanism’, whereby new operators must be granted a license in exchange for respecting certain minimum standards in order to operate in a country’s market, “might be the best possible solution”.


To read the interview with Pál Szabó in full, please click here.

 

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