The European regulatory scene
2011 is the headline year for postal liberalisation in Europe. Brussels is headquarters of the European Union and its efforts to open up markets to greater competition. So, who better to give readers an overview of the European regulatory landscape than an expert from the Belgian national postal operator? Joost Vantomme is regulatory affairs director for bpost and chairman of the European Affairs Committee of PostEurop.
John Modd asks the questions.
JM: Joost, can you please summarise the current status of postal regulation in Europe, and what is foremost on the regulatory agenda?
JV: The third postal directive dates from February 2008 and calls for the removal of all special and exclusive rights for PPOs (Public Postal Operators) combined with an unchanged USO (Universal Service Obligation). Although FMO (Full Market Opening) on this basis could lead one to believe that there should be less regulation, the reality is that the trend is in the opposite direction, just like our experience of the regulatory waves in such areas as electronic communications and energy. It seems that regulation is here to stay!
Let me give you a flavour of some of the big issues that are still on the table. There are the increasing tensions in the models for USO provision in FMO and how to make the USO sustainable and financially viable. Other topics include interoperability of networks and services, upstream consolidation, social regulation, the initiatives of the newly created European Regulators Group for Postal Services. The list goes on.
So, the job descriptions of regulators and regulatory people in our area are pretty extensive. There are few gaps and no time to waste. My collection of entrance stickers and passes contains the regulatory authority, cabinets, parliament, EU institutions….you name them.
JM: Remind us of the current state of mail liberalisation in Europe. I believe certain countries still have until 2013 to fully open up.
JV: The gradual liberalisation imposed by the postal directive(s) has taken place at different speeds in different countries. For example, full market opening took place well ahead of the current deadlines in Sweden in 1993. Finland opened up in the following year. In the UK bulk mail was liberalised in 2003, with full liberalisation in 2006. Germany was next in 2008, then the Netherlands and Estonia in 2009.
On the other side of the coin eleven member states are allowed to defer full liberalisation until 2013. These include nine of the twelve member states that joined the European Union in 2004 or 2007, when the postal directive was already in force. Greece and Luxembourg are also permitted to defer until 2013.
Hence, the landscape is quite diverse. Some member states have opened their markets as a function of the nature of mail (bulk mail versus single piece) or of the location (intra-city or inter-city). Mail markets undergo imbalances and can be hard hit by the overall state of the economy. One should not forget that competition from other communication channels is already fiercely affecting all of us. That is why business models and working methods are evolving.
JM: How does bpost go about influencing the regulatory debate?
JV: At Belgian level, following the regulatory agenda is obviously key. bpost regularly dialogues with the government, the parliament and with the national regulator.
At EU level, I, and colleagues in our Strategic and Regulatory Affairs team, work with and through PostEurop, IPC (International Post Corporation), the European direct marketing group FEDMA, think tanks and various other bodies. Each of these has its unique value proposition and mission. Our team is also active in the academic field, for example authoring papers on regulatory topics, and through conferences and workshops.
PostEurop brings together 51 European postal incumbents. The incumbent operators from the 27 member states, together with the EEA (European Economic Area: Norway, Iceland and Lichtenstein) and Switzerland constitute the core of the EAC (European Affairs Committee) which I chair within PostEurop. Each incumbent delegates its regulatory expert to the EAC. A good stewardship of this capable group of regulatory experts leads to a true industry partnership. All relevant legal developments for our postal industry are on our radar screen and are discussed in working groups and through our monitoring activities. Bringing in EU officials for discussions further adds value to the positioning.
JM: I understand that the national regulators have now come together in a European Regulators’ Group for Postal Services (ERGP). Please tell us more about what they intend to do.
JV: I would love to answer that question but we, as regulated subjects, are not in the driving seat here.
The ERGP was created by a formal EU Commission decision in August 2010. It considers regulatory practices across Europe and acts as an expert adviser to the postal unit of the Commission. It will also facilitate consultation, coordination and cooperation between the independent national regulatory authorities in the Member States, and between those authorities and the Commission. EGRP is made up of the heads of the 27 national postal regulators and is assisted by a secretariat provided by the Commission.
Unlike the regulatory EU body for electronic communications (BEREC), the ERGP has no decision making powers. Indeed, the rules of the game in the EU regulatory postal directive imply a high level of subsidiarity to member states and national regulators, and a lack of a one-size-fits-all mentality. I expect the ERGP to be a platform of exchange and sharing of practices among regulators, building on the expertise which CERP (the European Committee for Postal Regulation bringing together ministries and regulators)) has already developed.
JM: You have mentioned the tensions around the financing of the USO in a competitive environment. Is this something that is now under discussion at the EU level?
JV: During the preparatory process for the third postal directive the issue did not come to political surface. The adopted directive maintained the definition of the USO on an as is basis.
My understanding is that the topic is still not on the political agenda at the EU but is very much on the technical one. From the High Level Conference speech of Commissioner Barnier, and a recent hearing in the EU Parliament, I understand that the Commissioner and his team are well aware of the dynamics in the sector and the inter-modal competitive pressures.
Consultants Rand Europe has taken the lead in developing a study for the postal unit of DG Internal Market & Services on the measurement of consumer preferences with respect to USO. Copenhagen Economics also touched upon the issue in its latest development study for the postal unit. The question is a societal one and needs to be carefully assessed in a balanced way. Thinking about the role of the mail medium today and tomorrow is pivotal for the assessment. Today is too early, given that the focus is still on the application of the current directive and how to ensure a sustainable USO provision within the current rules.
JM: I know that there are a whole host of other areas that you and your colleagues are involved in that could have significant impacts on posts. Give me some examples, please.
JV: PostEurop’s European Affairs Committee has various working groups and monitoring activities that keep other regulatory developments high on the agenda. Here are just a few examples from the European Commission initiatives:
–DG Justice and Home Affair’s review of, and possibly more stringent legal application for, data protection and privacy.
–DG Internal Market’s initiatives on the Single Market Act, and reviews of the e-commerce package to enhance trade and remove barriers, and of public procurement legislation.
–DG Competition’s consultation and announced review of the public service compensation/state aid package.
–DG Taxation and Custom’s implementing rules on the new harmonised customs code.
–DG INFO’s digital agenda covering broadband, e-trust and e-government.
–DG Move’s initiatives on transport (CO2, efficient use of resources) and on aviation security (security screenings for mail and cargo).
Then there are links into the World Trade Organisation’s activities around market access in other continents.
These and other developments demonstrate clearly why a concerted approach among regulatory policy people is invaluable, necessary and appreciated. We can simply not afford to let these regulatory trains pass by unchallenged.
JM: Let me close by asking about your background, and what is most satisfying about your current role?
JV: I am a lawyer with a specialisation in competition, regulatory law and economics. From 1993 to 2001 I was a legal director at Belgacom. Prior to my current role I was the senior bpost in-house competition and regulation lawyer. My experience in the liberalisation of the telecoms market has proved very helpful.
I speak at academic and industry functions. A former active musician as a trumpet player, I now sing in a choir with my two daughters.
I would say that the most satisfaction comes from having people coming from all over Europe to work together with a shared vision and a common goal. Creating dialogues, synergies and concrete ways forward among regulatory people from all parts of Europe, each of them with different cultures, mindsets, backgrounds and postal business developments gives me fresh oxygen. If you can realise a shared view, develop credible positions and put realistic proposals to European lawmakers, you are making a real contribution towards the continued success of the European postal industry.
This article was published in the June issue of Mail & Express Review. To subscribe to the magazine, click here.