ADVICE TO THE GOVERNMENT
ARCEP publishes the opinion delivered to the Government on the cost of
La Poste’s print media transportation and distribution solution
Paris, 15 October 2015
The Government solicits ARCEP’s advice
On 19 June of this year, France’s Minister of the Economy, Industry and Digital Affairs, along with the Minister of Finance and Public Accounts and the Minister of Culture and Communication, requested ARCEP’s opinion on La Poste’s regulatory accounting with regards to the cost to the national post office of providing its print media transportation and distribution solution.
The opinion solicited from ARCEP concerns, “on the one hand, the total cost to the public service of the transportation and postal distribution of print media, along with the method used for allocating these costs and, on the other hand, the main factors behind the changes in print media distribution between 2008 to 2015 in terms of revenue (impact of volume, price, product range, evolution of distribution areas) and the complete set of costs attributed to print media (spontaneous change in costs and productivity gains)”.
At the same time, the Government tasked Emmanuel Giannesini with drafting different scenarios for the period following the expiration of the “Schwartz” Memorandum of Understanding (MoU) between the State, print media and La Poste.
Today ARCEP publishes a public version of the opinion that it delivered to the Government on 7 July.
ARCEP’s opinion on the cost of La Poste’s print media transportation and distribution solution
The main conclusions of the opinion are:
1. In 2014, the public service’s print media accounts showed a gross deficit of €506 million, which corresponds to the difference between the costs incurred by the print media transportation and distribution solution (€904 million) and the revenue earned from print media publishers (€398 million). The State compensation to La Poste (€150 million in 2014) remains well below this loss.
2. To satisfy the Government’s request for an opinion, ARCEP sought, first, to test the sensitivity of the results to certain accounting parameters, under existing regulations and, second, to re-examine the fundamental principles of existing regulations and to simulate the use of alternative ones.
Neither the sensitivity analyses nor the simulations had any effect on the veracity of the sizeable losses reported for the La Poste print media accounts in 2014.
3. Even if it has no immediate effect on the state of La Poste’s print media accounts, ARCEP’s analysis reveals that there would be medium-term benefits from updating existing regulations to take better account of changes in La Poste’s economic situation, and in guaranteeing that the regulatory accounting system continues to ensure that the economics and costs of postal distribution, and their evolution over time, are adequately measured.
La Poste has itself been working to bring changes to its industrial apparatus and its organisation, in particular with a view to reducing fixed costs, even if several factors hamper its ability to adapt costs to volume. This is why, in its Decision No. 2014-0841 of 22th July 2014, ARCEP opted for an average annual increase in universal service tariffs equal to the rate of inflation plus 3.5 points, for the period running from 2015 to 2018. This decision includes a rendez-vous clause, calling for a review in mid-2016. It is under these circumstances that ARCEP will perform an analysis with La Poste of the changes that are likely to affect the postal service’s industrial apparatus, to be able to then determine whether it would be relevant and beneficial to modify existing allocation regulations. This work will include a public consultation. If the process does result in changes to current regulations, they will apply to all postal items, including ordinary mail, print media and parcels. And they will need to be implemented progressively to allow pricing structures to adapt, when applicable.
4. Lastly, through its interactions with print media publishers and La Poste, ARCEP noted the benefits of having a solid and predictable framework in place that allows stakeholders to program the changes they will need to make over time to all of the production systems involved along the chain, and their associated investments. The Schwartz MoU was exemplary in this regard. It also enabled La Poste and certain print media publishers’ associations to pinpoint ways to improve industrial processes and the postal solution.
In any event, ARCEP recommends that the Government provide all of the stakeholders, i.e. print media publishers as much as La Poste, with the greatest possible clarity over the long term.