Outlook for telecommunications and postal markets: OPTA wants to abandon the monopoly position

The liberalisation of the telecommunications market has improved prosperity. This success needs to be repeated in the postal and cable markets. ‘There is no reason to retain TPG’s remaining postal monopoly in the Netherlands,’ according to OPTA’s Chairman, Jens Arnbak, who was speaking at the presentation of Market Vision.

Competition increased in the Dutch telecommunications market in spite of a deteriorating investment climate. The reason for this lies in the fact that both the fixed and mobile telecommunications markets are expanding. In addition, the liberalisation of the market has had the effect of reducing national call charges by more than 50% since 1998. On average consumers are now paying €83.00 less for fixed telephone services. Overall, this represents improved prosperity of almost €500,000.00. If all consumers were to switch to carrier selection now, compared with the situation prevailing in 1998, this would have the effect of allowing a potential sum in excess of €980 million to flow back into the community.

End of TPG’s monopoly

The liberalisation of the postal sector is lagging behind. Europe has not managed to make uniform arrangements for the full liberalisation of this sector even though there are sufficient economic and social reasons to do so. Consequently, like Sweden before it, the United Kingdom has nevertheless decided to play a pioneering role. The same may be said of the Dutch market: here too there is no general economic or social reason to retain the remaining postal monopoly.

There are still too many obstacles to competition in the postal market. Some parts of the market which have been liberalised are gradually developing, while other commercial services are simply failing to get off the ground. The reasons for this are, on the one hand, economic in their nature and, on the other, lie in the continued existence of entry thresholds owing to inadequate legislation and regulations.

Access menu

Whereas few organisations sought entry to the postal sector in previous years, the situation changed in 2001. Even more market parties are expected to make their entrance in 2002. Unlike these new entrants into the postal market, TNT Postgroep NV (TPG) already has a modern network boasting national coverage. It is not profitable for new entrants to duplicate such a network in the short term. The limited scope of operation (initially) of the new entrants and hence the longer period required to break even, prevents them from proceeding with investments. OPTA is therefore of the opinion that now is an opportune time to provide TPG’s competitors with access to its network. An ‘access menu’ needs to be prepared. A market player must be able to decide in the case of each consignment at which point it wishes to access TPG’s network: its letterboxes, post offices, its sorting centres and its postal delivery staff.

The prices which TPG is allowed to charge its customers, are to a large extent still regulated by means of a so-called ‘price control system’. This makes it possible to protect consumers and competitors against unreasonable pricing. Nevertheless, the current system has failed to achieve its objectives and targets. For example, the system does not provide any efficiency incentives, nor does it take into account the drastic reduction of expenditure which TPG has achieved. Potential excess profit is not flowing back to consumers. However, the aim has never been to allow the lawfully permitted postal monopoly to be used to generate excessive earnings for shareholders or to fund an expansion strategy in the open market.

As a result of all of this, consumers and business customers are barely sharing the efficiency benefits which TPG has achieved in recent years.

Opportunities for cable

In addition to KPN’s telephone network, the Netherlands has a second fixed infrastructure network for electronic communication which has virtually national coverage: cable. The broadband services sector holds great promise for the Dutch cable market.