The Austrian parliament has passed a new postal law extending the number of postal outlets in thecountry, forcing all postal operators to agree collective pay deals and subsidising the costs of
the universal service. The mail market will be fully opened in January 2011.Under the law, which gained parliamentary approval this week, the number of postal outlets isfixed at 1,650, which is 150 more than in the past. Austrian Post will be prevented from furtherdownsizing its retail network, and will have to gain permission if it wants to replace a postoffice with a private ‘postal partner’.
Provision of postal services in rural areas has been ensured through a fund to subsidise thecost of the universal service which is designed to prevent private competitors ‘cherry-picking’profitable business areas in future. Moreover, all licensed postal operators, including newentrants, will be legally obliged to agree a collective deal covering the pay and workingconditions of their staff.
Austrian infrastructure minister Doris Bures stressed that the new law would ensure that theuncertainty in the population, among business and Austrian Post staff would be removed, and therewould be no more closures of post offices.
In response, Austrian Post welcomed the new law as providing a clear legal framework andenabling it to plan its strategy for the years ahead. The new Austrian Postal Act will lead toconsiderable competitive challenges, but there are also positive aspects to the new legislation,the company stated.
“On balance, the new law contains regulations allowing for a certain level of flexibility,for example in pricing for large customers or modernising the branch network. But it also involvesburdens which will continue to be imposed on us, for example financing the costs for the universalservice obligation. In the light of the upcoming market liberalisation, it should be possible forus to more effectively position Austrian Post in a manner assuring it of a good future. In additionto increasing revenue, other measures in respect to streamlining costs and staff will be required,”commented Austrian Post CEO Georg Pölzl.
One disadvantage is the fact that Austrian Post will have to bear the burden of financing theinstallation of new cluster box units, requiring the company to invest about €40 million over thenext few years. It is true that competitive providers will have to subsequently contribute a partof the costs in the regions where they operate, corresponding to their respective market share.However, Austrian Post will be responsible for the financing in advance the entire conversion ofthe cluster box units, and has also been saddled with the lion’s share of the costs.
Furthermore, Austrian Post will have to pay most of the costs for providing universal postalservices, i.e. delivering letter mail and parcels (up to ten kg) as well as newspapers andmagazines every working day to every door in Austria. A fund solution is stipulated by the new law,prescribing a sharing of the costs for universal postal services on a pro-rata basis correspondingto the market share held by the licensed postal operators. However, as the largest provider ofpostal services, Austrian Post itself will have to assume the burden of supplying most of thefunding.
The new Postal Market Act also defines the precise number and location of postal servicepoints in Austria for the first time. In the future, the branch network will consist of 1,650postal service points, and thus be denser than in the past. 90% of the population in urban areasmust have access to postal services within a radius of 2 kilometres. A radius of 10 kilometresapplies to rural areas. If Austrian Post itself cannot profitably operate its own post office, thepossibility still exists for the company to subcontract a postal partner to provide the requiredservices. However, the shutdown of a company-operated branch must be formally authorised beforehandwithin the context of a complicated approval process.
“For us, the new Postal Market Act just manages to be an acceptable compromise. It willrequire us to continue achieving improvements at all interfaces within the company, both in termsof increasing revenues as well as cutting costs. We must, want to and will continue to provide thesame high quality universal postal services as in the past, in the spirit of ensuring that theentire Austrian population has access to basic postal services. And now the new Postal Act createsa clearly-defined legal framework which was so essential for us”, Pölzl concluded.
