Tag: Europe

Universal Service Obligation (USO) and Supervision
The EC Postal Directive has been implemented and the former Postal Administration, Posten AB, is obliged by law as well as licence terms and conditions to provide nation-wide postal service. In addition, the Basic Counter Service Act also obliges Posten AB to provide a nation-wide basic counter service. Postal items weighing up to 20 kg are distributed every non-holiday Monday to Friday with some minor exceptions. Experience shows that the introduction of competition has if anything enhanced the ability of Posten AB to run a profitable nation-wide distribution of letters without subsidies from the State. After the transformation process of the service network Posten AB meets its customers at 381 Business Centres, 1 600 Postal Outlets and around 2 000 Stamp Agents. In addition 740 000 addressees are served by rural postmen. The National Post and Telecom Agency is an independent regulatory authority engaged in supervision and licensing. No case of non-compliance with the universal service obligations has been reported to the Government since the postal market was totally liberalised.

Quality of service and Tariffs
The previously high service quality of Posten AB has, as a result of the liberalisation and the growing competition, even improved in terms of quality and efficiency. International benchmarking ranks Posten AB among the leading postal operators in the world when it comes to efficiency and quality. 95% ol first class letters are delivered over night. The most important reason for this outstanding performance is that Posten AB for a long time has been used to competition in large segments of the postal market, for instance logistics. Since 1994 there is a price-cap on the domestic letter rate for single piece items. The liberalisation of the postal market in Sweden is not the reason for the increase in prices. Decisions to raise prices were taken when VAT on postal services was introduced and when prices for Posten AB’s letter mail products were re-balanced in relation to costs. These decisions led to increased prices in some segments of the market. However, other more important segments of the market as e.g. bulk mail have benefited from lower prices after competition was introduced. The standard letter rate is on an average European level if the purchasing power of the households is taken into consideration.

Employment and Financial performance
Other companies alike, postal operators have to follow the cycles of business trends and change their staff structure in order to adjust to the new economy and its prerequisites. The introduction of new techniques including highly automated sorting centres and the reorganisation of the post office network, which led to a reduction of the number of employees within Posten AB, had already started before the liberalisation of the postal market and the abolition of the monopoly. However, this has not had any negative impact on the ability of Posten AB to fulfill the universal service obligation. CityMail employed almost 1400 people in Sweden in 2006, all with the same terms of employment as mailmen working for Posten AB . The remaining private postal operators are largely one-man businesses. According to the Annual Report for 2006 of Posten AB, the income had increased with 2 546 million SEK (271 million Euro) compared with the year before of witch 1 930 million SEK (205 million Euro) is attributed to the acquisition of the mail printing company Strolfors. Full competition in the letter market has not affected the universal service provider’s ability to provide a profitable nation-wide postal service at reasonable prices.

Competition
After 14 years of a liberalised postal market, Posten AB still holds 91% oe total market for letters. This implies that the need to protect consumers and new competitors will probably remain in the foreseeable future. However, there is growing competition in several segments of the mark