Access Pricing and the Uniform Tariff in the Postal Sector

Abstract

One approach considered by policy-makers and regulators as part of the process of opening up postal markets has been to encourage access by entrants to the postal facilities of the universal service provider (USP). In considering this way of liberalising the postal market, policy-makers have followed an approach first developed in other network industries such as electricity and telecommunications. In particular, because of the natural monopoly properties of delivery there has been interest in opening access to the delivery function of the USP or “downstream access”.The European Commission reviewed this approach to liberalisation as part of its work leading up to the Postal Directive of 2002 although it favoured primarily the approach adopted in the Directive, namely of liberalisation through the reduction of price and weight limits (CTcon 1998, Official Journal, L 176/21, 2002). One of the central issues on access concerns the price that should be charged by the USP for the use of its facilities. The EU Directive requires that, for such purposes, access prices should be on an avoided cost basis or that “tariffs shall take account of the avoided cost, as compared to the standard service covering the complete range of features offered for the clearance, transport, sorting and delivery of individual postal items.”1 In this it follows quite closely the approach used widely in the postal sector for the pricing of workshare discounts which uses the “efficient component pricing rule” (ECPR) as first developed and applied in the US (Cohen et al, 2002).