Regulated sector : the Postal Industry
(European Commission, Regulatory Authorities, Governments.)

Context

Since 2001 I have been in charge of studies for the negotiation of European Postal Directives. In 2001, the 2nd European Postal Directive (2002/39/EC) was negotiated. The European Commissioner Mr F. Bolkenstein was informed by PostEurop, Federation of 15 European Postal Operators. He was shown quantified impacts of different agendas of liberalization which I computed with the advice of McKinsey. Between November 2005 and May 2006 the European Commission asked an external study on the Impact of Full Market Opening (FMO) on the Universal Servive Obligation (USO) in the Postal Sector in the European Union. It has to envisages the full opening of the EU postal market to competition by 1 January 2009. The study was awarded to PricewaterhouseCoopers (PwC) for ist European network of Postal Experts, Prof. Dr. Paul Kleindorfer, the recognized world specialist in Postal economics from Wharton School of Economics (Pennsylvenia) and myself for my international expertise in quantitative economic decision models.

Customer Demand & Needs in 2001

• Create a consensus of the postal operators in the European Union, to be discussed with the European Commissioner Mr. F. Bolkenstein, on the basis of objective analysis and quantitative arguments

• Construct quantitative scenarios of possible liberalization processes of the postal industry and its impact on the quantitative objectives of multiple stakeholders in Belgium and in the European Union.

• Convince the stakeholders - the minister in charge of De Post -La Poste, the trade unions, the General Assembly, the CEO and the directors of incumbent operators - about an appropriate agenda of liberalization of the postal industry.

Benefits for the Postal Industry

• Generate arguments for the negotiation of the 2nd European Directive and for a feasible compromise between the speed and extent of liberalization and a productivity improvement agenda for the historic operators

• Understand the costs and benefits for the incumbent and the competitors of a change in each separate regulatory lever and its impact on NPV, market shares, employment, etc.

• Balance cost and benefits for the customer of the universal service obligation of the incumbent

• Compute the sensitivity of the business plan of De Post-La Poste under alternative regulatory setups

• Forecast next year's demand using conjoint analysis of customer behaviour.

Work done

• Quantified regulatory levers: areas to be retained, licensing conditions, price caps, price homogeneity, network access, access pricing conditions (timing, monopoly below certain package weight, geographic coverage, minimum quality requirement, obligations for competitor, points of access, cost rules for access pricing.)

• Ran and extended a McKinsey built model : customer/product/geography items produced, cost profiles per activity segment of incumbent operators and competitors, customer behaviour (loyalty and elasticity, sensitivity to quality), market structure and profit maximization process

• Identified scenarios and solved the model to provide impacts on quantified stakeholder stakes

Other work done on Regulatory issues in the Postal sector, with Mr Bernard Amerlynck

• In 2005 I presented a communication on « Profitability of the Universal Postal Service Provider in a Free Market with Economies of Scale in Collect and Delivery» at the 13th International Conference on Postal and Delivery Economics held in Antwerp (Belgium); click here for article and here for slide presentation.

• In 2004 I presented « Economics of Scale in the Graveyard Spiral of the Postal Sector» at the 12th Conference in Postal and Delivery Economics in Cork ( Ireland )

• In 2003 I presented « Financial Viability of the Universal Postal Service Provider under Uniform and Cost-related Tariffs » at the 11th Conference in Postal and Delivery Economics in Toledo (Spain), published in "Competitive Transformation of the Postal and Delivery Sector", edited by Michael Crew and Paul Kleindorfer, Kluwer Ac. Pub., 2004.

• PREMO, model for the negotiation of the Postal Directive at De Post-La Poste ( Belgium ); click here.

Other regulated industries

•  Telecom
•  Energy

up