Slow delivery for EU postal reform

Europe's sluggish timetable for introducing competition to the postal sector should take a small step forward next week when the European Parliament is expected to give a largely uncritical reading to plans hatched out in Paris and Bonn.

However, at the same time as the Franco-German inspired proposals push ahead in Strasbourg, Bonn - domestically, at least - appears to be singing to a different tune from Paris.

Industry observers are also increasingly asking whether the EU's plans for postal liberalisation are not becoming more irrelevant by the day because of fast-moving technological changes such as the spread of e-mail.

MEPs are expected to return the unambitious text of the proposed directive to its European Commission and Council of Ministers' senders without any major amendments after next week's parliamentary plenary session.

The transport and tourism committee rapporteur, British Labour MEP Brian Simpson, has fallen into line with a Franco-German led approach to liberalisation characterised by caution. Any amendments aiming either to step up the pace of liberalisation or slow it down have fallen by the wayside.

There is hardly the width of an airmail letter between the Franco-German approach and stance taken by a majority of MEPs, say industry observers, adding that Simpson is not seeking to make waves and would like to avoid any risk of a disruptive conciliation procedure between the Council and Parliament at all costs.

But European consumers' lobby BEUC is disappointed that a raft of earlier amendments forcing post offices to improve service standards appears to have been dropped.

And it warns that a potentially worrying amendment allowing post offices to set attractive tariffs for special groups is still on the table. This proposal could turn out to be a bonus for deserving causes, but the organisation fears it could also be transformed into a loophole allowing post offices to offer special rates to business customers with the costs being subsidised by the average user.

The Council deal has ended the pressure from Brussels for governments to put liberalisation on a fast track, but has still left individual capitals with the freedom to take their own initiatives.

The German government has proposed a far-reaching opening of its own domestic market which is a long way from the Council of Ministers' agreement not to take any action on European postal liberalisation ahead of 2003 - an approach dictated largely by French reluctance to sanction anything more radical.

'It is all a bit ironical,' said an observer from the European consumers' lobby.

Draft laws from Bonn's economics ministry suggest opening up some services, such as lucrative direct mail, to allcomers and allowing some of the protected services offered by the post office to be carried out by private companies under licence. The post office's monopoly on ordinary mail would be limited to under 100 grams and would continue for a further five years.

'It is what is happening in member states that is going to be crucial in the next few years,' said Manuel Kohnstamm, head of the postal committee of the Federation of European Direct Marketing Associations (FEDMA) and head of public affairs in Europe for Time Warner.

Kohnstamm's company, which delivers Time magazine and runs the Time Life book mail order operation, has estimated that in some European countries, it pays two-and-a-half times the US fee for postal deliveries.

Germany is near the top of the heavy chargers' league, with some of its rates up to one-third higher than those of other European post offices. Kohnstamm says his company is actively looking for cheaper alternatives.

However, there are large questions over whether the Bonn government will be able to deliver on these proposals. 'The German move is still being discussed and the outcome is uncertain,' said Bouke de Vos who, as head of public affairs of the go-ahead Dutch post office PTT Post, is a far-from-uninterested observer. 'It would be a huge impetus for European liberalisation if the Germans did go ahead with these plans, but there is powerful opposition.'

The Dutch analysis is simple: post is only one of many competing information services. Prices must be kept low and customer satisfaction high if the Netherlands' post office is to hold on to its market share.

'It is a short-term policy to try to keep the market closed and avoid competition. The main reason offered by France and Germany for keeping the postal market closed is to avoid job losses, but problems will only be aggravated if they try to postpone developments,' said De Vos.

The answer to whether Europe's post offices are moving at all to improve their performance depends on who you speak to and how they interpret new changes to the way post offices pay one other for handling each other's mail.

Most of Europe's post offices have now signed up to a new deal, Rheims II, which in theory aims to bring postal charges into line with costs and to reward efficient companies by allowing them to increase charges.

All agree that the new formula has deliberately relaxed the quality criteria which firms must meet to increase charges. The previous framework was too rigid and meant that companies making some quality improvements risked not being rewarded at all, says PostEurop, the grouping of Europe's main post offices.

But the Dutch post, which has still to sign up to the new agreement, has attacked the formula as too flexible, adding that it does not force post offices to improve their services.

The first deal was already subject to vetting by Commission competition officials amidst allegations from rival companies that it amounted to a price-fixing cartel by post offices.

'They (the Commission) will definitely have more questions about the second agreement,” said the PTT's De Vos.

Ten post offices from Austria, Denmark, Finland, France, Germany, Greece, Italy, Norway, Spain and Iceland have so far signed up to the new agreement.

The UK's Royal Mail has until next Monday (15 September) to join other post offices and set an end-of-year deadline.

The Dutch say that it is still too early to know what they will do.

The shake-up of so-called terminal dues will eventually mean the post office in the country where the mail is delivered charging the one where it was posted 80% of its local tariffs for the work.

It was sparked by complaints to the Commission by private courier companies that post offices' charges were not related to their costs.

The companies are still waiting for a firm signal that the Commission will act on their claims that public post offices subsidise rival express post operations with cash from their general letter operations.

They had hoped for a clear statement by now of the Commission's stance against cross-subsidies in a long promised notice on how competition rules apply to the sector.

That notice has been promised for almost three years. Private express companies say they have now been told that the long wait may be over by October.

'The notice could be used in cross-subsidy cases, but it would be more a moral than a legal support,' said Eric Merkel-Sobotta, of the European Express Organisation.