16 September 2009 - Steve Lawson - © Hellmail Postal News

EU Postal Liberalisation Directive is frequently blamed for the difficulties now faced by the Royal Mail in terms of competition, but the principle is in fact being applied across all member states, even if some countries have, for one reason or another, lagged behind on opening up their own postal markets. Whilst it has had some impact, the greatest by far has been the rapid development in digital communications and our apparent demand for the latest and greatest in everything mobile.

Tied up in the liberalisation directive is the adequate provision of a universal postal service consisting of one collection and one delivery a day, even in remote or sparsely populated areas, although there is still debate as to whether the USO actually does have a future other than in a digital context in the longer term. I suspect that with almost all operators dipping their toes in the hybrid mail market, it is probably only a matter of time before foot-deliveries become second best to the 24/7 appeal of access to mail services that digital technology could provide.

The digital revolution has certainly played a key part in volume decline, the growth in mobile phone ownership alone having already reached 1 billion subscribers by 2002 and expected to reach some 4.5 billion by 2012, although we may already be experiencing saturation point this year and the recession having an additional impact on take up.

However, 61% of the world now uses a mobile phone and with the development of more complex software, more advanced power packs, and increases in internet speed, our ability to communicate over enormous distance, sending even greater quantities of data, has never been greater than it has now. My strict (ruler across the knuckles) introduction to handwriting seems to have little use in the modern world, with the keyboard the writing tool of choice for most of us. With flash sticks now having reached the 64GB capacity mark, and solid-state hard drives available in many places, speed and capacity is likely to reach unbelievable proportions over the next few years.

Global internet access grew by 11.1% in 2008 to reach 453.3 million subscribers but this is predicted to grow by a further 49% by 2013 to 678.3 million subscribers, competition that postal operators could well do without, and with the development of online, access-anywhere postal services such as Earth Class (now being adopted by the Swiss), house numbers could eventually be replaced by online mail boxes. We may have some way to go in establishing a global system, but the trend is clearly there.

The Liberalisation of postal services had already recognised the potential for this shift even as far back as 1994 when the the reconciling of the gradual, controlled opening to competition of the postal market was first being discussed.

The move towards a liberalised postal network has not been entirely welcomed by postal unions, many of which raised concerns that it would lead to social dumping and increased job losses. There is some evidence to suggest that this is already happening although much of this has been blamed on volume decline, the result (in part) on greater use of mobile phones and email but certainly establishing a more liberal postal market has had an impact on the profitability of many state-owned postal operators. The potential cross-border markets are in a state of flux since the recession began, with even the great and powerful Deutsche Post DHL forced to consolidate and pull out of the US internal market.

In the case of Royal Mail, lack of investment in the right areas has left it to make a mad dash to comply with the EU directive and redesign its network to meet a rather different product, playing tug-of-war with the postal union in the process. Much of Royal Mail's distribution network was built many years ago, in some cases hundreds of years ago, and based around an entirely different letters business. Even the humble Christmas card has seen a shift towards online equivalents, as has billing, postcards, and in particular hand-written letters. There has been growth in small packets through e-tailing but not enough to counter the decline in mail as a whole. Besides, some of this additional bounty is also being handled by other parcel operators. Now Royal Mail delivers mail for other operators, more direct mail, and at a reduced profit than it might otherwise enjoy if it did all the work itself.

The actual thinking behind liberalisation was partly based on concerns that the Far East had a lead on Europe in economic terms (and more so since the banking collapse) but most member states were in agreement at that time, that the opening up of these markets would expand the overall size of the postal industry, provide sustainable and quality employment within universal service providers as well as facilitate the creation of new jobs in other operators, new entrants and associated economic sectors. What it did not foresee was the rapid decline in postal services and a much slower move (relatively) into digital technology. Most postal operators have simply tried to compete rather than reinvent themselves and it has only been in the last ten years or so that operators have begun to embrace the online world and look seriously at hybrid and other electronic mail services.

The USO for the moment remains a hot potato, and whilst the European Commission recognises that it is an important part of our social network, for regulators it presents enormous challenges in terms of trying to protect it and encouraging competition at the same time. A difficult and seemingly impossible balancing act which has seen the demise (in the UK) of Postwatch, the disbanding of Postcomm (when the government decides it is prudent) and the decision to hand postal service regulation to Ofcom to reflect a more diverse communications industry.

The EU directive sought to break down the monopoly of incumbent operators but with nearly all still providing the USO and competitors only keen on the most lucrative areas of the market, it clearly has a long way to go if it it is to reach its full potential - if it ever does. I have long argued that liberalisation was unlikely to benefit the vast majority of European citizens whilst the plan was so heavily centered on operators and paid little attention to the future role of post offices, which are after all, the only real windows available to ordinary consumers.

Liberalisation has so far only really benefited bulk mailers and processors but the reduction in post offices and slimmed-down delivery services has undoubtedly pushed more of us to make greater use of email which if we're honest, is a good deal faster anyway.

Some see liberalisation as the death knell, others a last hope, but digital and traditional postal services will become more interwoven over the coming years and it seems remarkable that postal deliveries have continued long after the virtual extinction of bread vans and milk deliveries. We are in a digital age that apparently promises so much and whether it be for practical, economic, or even nostalgic reasons, we remain torn between protecting our once great postal services and hanging on to the USO at all costs, and making some kind of giant (if not brave) leap into a world of digital mailboxes.

The latter is fine with me providing I get ample warning, and perhaps that is some indication of how much the value we once placed on traditional post has shifted in more recent times. I could then read my mail in the morning once more - bliss.

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