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UNIVERSAL POSTAL SERVICE

ARCEP sets the price-cap for universal postal service tariffs for 2015 to 2018  

Paris, 25 July 2014

La Poste faces an economic environment that has been changing dramatically, due to an accelerated rate of decrease in mail traffic. Between 2008 and 2012, the number of mail items per capita in France dropped by 4.3% a year. In 2013, mail traffic that corresponds to the scope of the universal service decreased by 5.5%. A similar situation has been observed in many other countries, notably in Europe. It testifies to a decrease in the use of postal services that coincides with the increasing digitisation of written correspondence.

Postal operators' business model is characterised by the existence of economies of scale (the larger the number of items being sent, the lower the cost), by high labour costs and, when applicable, by obligations stemming from a public service mandate. These factors limit their ability to adapt costs to volume. This is why the structural decreases of the past several years are destabilising postal operators' business model. In late 2013, La Poste began to draft its strategic plan for 2014 to 2020. This plan takes stock of the structural decline in the volume of both mail traffic and customer traffic in post offices, and of the resulting shrunken margins. La Poste has set itself a target of developing its business, existing and new, and cutting its costs.

It is within this context that ARCEP began to work with La Poste in early 2014. The regulator and the operator agreed on the need to redefine the system of multi-year tariff control, and to apply these revisions to the period running from 2015 to 2018, i.e. for four years.

On 2 July 2014, in accordance with the French Postal and electronic communications code, La Poste submitted a proposal to ARCEP on the characteristics of a multi-year framework for universal service tariffs. The Authority used this input when establishing a new price-cap for postal tariffs for 2015 to 2018, which comes to replace the one for 2013 to 2015 that is currently in effect.

This new scheme sets a price-cap that is equal to the consumer price index increased by 3.5% a year. It also includes mechanisms for adjustment to inflation and traffic, which allow for the maximum tariff set by the framework to be reviewed during the regulatory period, either on the Authority's initiative or at the request of La Poste.

The scheme contains a rendez-vous clause set for mid-2016, at which point the growth hypotheses established by La Poste will be checked against reality, and the pricing situation examined.

In light of the dramatic changes occurring in the economic environment in which La Poste operates, ARCEP considers that its decision will protect the future of the universal service, while ensuring the financial burden is shared fairly between La Poste and postal service users.

It gives La Poste the means to engage in an overhaul of its development model.



Linked documents

ARCEP opinion n° 2014-0841 (pdf - in French only)

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Linked documents

ARCEP opinion n° 2014-0841 (pdf - in French only)