1 / 33

Universal Service Obligation

Universal Service Obligation. Social Partners Preparing for Change. Contents – Universal Service Obligation. Key concepts and state of play Key challenges in the future. Key concepts and state of play. State of play and emerging practices. Contents

ignatius-mendoza
Download Presentation

Universal Service Obligation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Universal Service Obligation Social Partners Preparing for Change Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  2. Contents – Universal Service Obligation Key concepts and state of play Key challenges in the future Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  3. Key concepts and state of play Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  4. State of play and emerging practices • Contents • The main objective of postal services and USO • Elements of the USO • Ensuring the USO • Financing, cost estimation, compensation funds • Consumer needs and willingness to pay • Role of regulator Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  5. The main objective of postal services and USO • Postal services are defined as “services of general economic interest” • Long tradition of imposing legal obligations to provide countrywide postal services Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  6. The main objective of postal services and USO • Consumerprotection appears to be the main argument for having the USO: • Ensure presence and availability of services • Ensure affordable prices • Ensure uniform prices throughout the territory Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  7. The main objective of postal services and USO • The legal basis for the USO at the European level is defined in the Third Postal Directive (2008/6/EC): • Recital 12 – defines the role of the USO • Article 3 – defines the minimum quality of USO to be provided Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  8. The main objective of postal services and USO …the aim of the universal services is to offer all users easy access to the postal network through the provision, in particular, of a sufficient number of access points and by ensuring satisfactory conditions with regard to the frequency of collections and deliveries; whereas the provision of the universal service must meet the fundamental need to ensure continuity of operation, whilst at the same time remaining adaptable to the needs of users as well as guaranteeing them fair and nondiscriminatory treatment; Recital 12 of the Third Postal Directive: Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  9. The main objective of postal services and USO • Article 3 of the Third Postal Directive: MemberSatesshallensure (…) the permanent provision of a postal service of specified quality at all points in their territory at affordable prices for all users. The main minimum requirements (exemptions apply): • Density of points of contact/access points to reflect user needs • Activities on minimum 5 working days per week • One collection and delivery per day • Postal items up to 2kg and packages up to 10kg • Provision of registered and insured items • National and cross-border services Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  10. Elements of the USO – services • The services required by Article 3 can be generally classified as as ‟basic letter post” and ‟basic parcel post” • Member states have an option to define their own USO scope and quality standards implementing the Directive • Some Member States defined a narrow USO with a limited range of products • Other Member States have a wider USO including products for business customers, e.g. bulk letters, bulk parcels and direct mail • A debate concerns the scope and quality of USO and the flexibility allowed by the Directive allow in terms of specifying the range of universal services: • What products, what frequencies, what networks? Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  11. Elements of the USO – services Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  12. Elements of the USO – delivery frequency * With geographical limitations Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  13. Ensuring the universal service Article 4 of the Third Postal Directive introduces an obligation to provide universal service Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  14. Ensuring the universal service • The Third Postal Directive (Recital 23, Directive 2008/6/EC) provides three ways for ensuring universal service: • Market forces • Designation • Public procurement • Members States can choose the most efficient and appropriate mechanism Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  15. Ensuring the universal service Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  16. Cost estimation, financing, compensation • The Third Directive brings in several new elements: • Net cost estimation: • It defines the net cost of the USO (Recital 29 & Annex I) • Financing mechanisms for USO • It elliminates the reserved area • It gives the possibility to set up compensation funds • NB. in case a net cost is detected it must constitute an ”unfair burden” on the universal service provider Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  17. Cost estimation methods • Cost estimation requires a comparison of: • A USP fulfilling the universal service obligations • A hypothetical situation in which the USP is free to determine their postal services on a purely commercial basis. • Consequence: • The method implies that it is necessary to estimate the costs that a universal service provider would have avoided had there been no USO Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  18. Application of the approach • USO costs = profit without USO – profit with USO • Step1: What would be different without USO? • Approach: Are the legal constraints binding? • Step 2: How big are the cost savings? • Approach: Estimate incremental cost • Step 3: How big are the revenue effects? • Approach: Estimate incremental revenue Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  19. The CEPR recommendation • Challenges: • Quantifyingintangibles • The European Committee for Postal Regulation (CERP) has published guidelines for calculating the net cost of the universal service obligation. • Not legally binding but canbeuseful in the practicalimplementation of the method Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  20. Cost estimation methods • EU countries have developed a number of different calculation methods • Current uncertainties: • Are the national cost calculation methods in line with the Directive requirements (Annex I)? • Are the USPs ready to supply the required data (do they have the correct accounting systems?) • Are the NRAs able to apply these methods correclty? • E.g. What is the meaning of ”unfair”? Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  21. Financing • The Directive specifies two methods for financing USO: • Compensation funds • Public funds Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  22. Financing • The significance of the reserved area is diminishing • 16 EU countries had to abolish the reserved area on 1.1.2011 • 11 countries (Cyprus, Czech R., Greece, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Romania and Slovakia) can extend reserved area until 31.12.2012 • The process of creating compensation funds has started but the funds are not yet activated • Estonia, Latvia, Slovenia and Sweden include the possibility to use public funds Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  23. Financing • Compensation funds can only be activated if the net cost of the USO is shown to be an unfair burden • The size of funds is largely unknown yet • The calculation of net costs is lagging behind -- the presence of an unfair burden has not been established yet Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  24. Financing – compensation funds Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  25. Role of regulator Roles differ between Member States, however, the national regulatory authorities are vested with ensuring that the three objectives of the Directive are achieved: Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  26. Key challenges Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  27. Key challenges • Contents • Is there an intrinsic need for the USO? • Estimating the future USO: Consumer needs • Other drivers of the future USO • Conclusions and challenges Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  28. Intrinsic need for the USO? • Is there an intrinsic need for the USO in the future? • Technological development, e-substitution, e-commerce and e-services reduce the demand for mail in general • Parcels and higher value-added services are expected to grow • USO targeted at private consumers – not firms • New services cannot automatically enter the USO (Recital 21) Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  29. Intrinsic need for the USO? • There will be continued demand for postal services but their nature will change • Future USO may be less extensive than the existing USO: • Time: fewer deliveries per week or longer transit time • Products: removing certain products from the USO, e.g. bulk mail • Geography: reduce the requirements on geographical coverage, e.g. fewer post offices. Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  30. Estimating future USO: Consumer needs • Some preliminary evidence from recent consumer survey in Austria, conducted by Copenhagen Economics for the EC: Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  31. How to estimate future USO? – Other issues • The scope of a future USO is shaped by many drivers Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  32. Conclusions – Legislative and regulatory challenges • A key challenge for regulators in the future will be to define the scope of USO, taking into account the potential net cost • A problem of timing: availability of net cost estimates vs. design regulation on the future scope of USO and its financing. • Relatively little research on consumer willingness to pay for USO services • Very few net cost estimates are available today! Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

  33. Conclusions – Social challenges • A reduced scope of USO may put a part of postal labour force under pressure • The significance of USO for postal operator’s employment is not easy to estimate but appears to be related to the level of USO that will be provided anyway Short presentation | Okholm, Möller, Winiarczyk | Budapest | May 26, 2011

More Related