The report of the President of the Office of Electronic Communications (UKE) on the postal services market in 2008.
Pursuant to Article 1 of the Postal Law Act of 12 June 2003 (OJ of 2008, 189/1159 as further amended) postal activity is defined as economic activity to provide postal services internally or abroad.
Bearing in mind the socio-economic significance of the postal services market, it is necessary to constantly monitor and evaluate its functioning in terms of gradual liberalization and especially in terms of competition development whilst maintaining accessibility to affordable postal services of high quality.
The postal services market, in its evolution, is approaching a break-through point, which is full opening to competition. It thus requires regulation which will ensure a balanced and harmonious growth. It is in this context that the role of a national regulator acquires a special meaning, which is to guarantee the development of fair competition with the above-mentioned accessibility to services.
This study forms part of activities undertaken by the regulator to monitor the postal services market. Its analysis enables one to define developmental trends and to create a model reflecting the desired state of that market.
The compilation is based on information contained in reports on postal activity in 2008, submitted annually by postal operators to the President of UKE, pursuant to Article 44 (1) and and (2) of the Postal Law Act. Reports for 2008 were submitted by the public operator (Poczta Polska) and 106 non-public operators.
Even though there were no major legal changes in 2008, that year, nonetheless, can be regarded as a breakthrough period both for internal (nationwide) and external (European) postal markets. The key development for the entire sector was the publication of the new directive on 27 February 2008 (Directive 2008/6/EC of 20 February 2008 amending Directive 97/67/EC – the so called 3rd Postal Directive) which sets 31 December 2010 as the date of its implementation by Member States. It also provides for full market opening at the beginning of 2011 with a possibility to postpone this date till 2013 in some states, including Poland.
In 2008 work began to implement the provisions of the 3rd Postal Directive in Poland. In March 2008 the Minister of Infrastructure created a team which prepared preliminary premises to a draft act on the fully competitive postal services market in Poland. In the 4th quarter of 2008 work began to prepare a new draft Postal Law Act within the framework of the Transition Facility 2006, the beneficiary of which is UKE. It is expected that these works will be completed at the end of June 2009.
The Polish postal market has been subject to gradual liberalization for a couple of years now. On the one hand the area of services restricted for the public operator is becoming smaller and on the other, the number of entities providing postal services is on the increase. In 2008, there were 182 registered entities (as of the end of 2008) besides Poczta Polska. However, not all of the operators, who have been registered, are active.
Poczta Polska remains the main player on the postal market. It is the only operator which has the infrastructure needed to provide universal service which is its most significant area of activity (within the area of universal services the most significant group is unregistered letter items). The facts mentioned above are confirmed by the data which indicate that in 2008 Poczta Polska rendered almost 2.5 bln postal services (universal services, contractual services, express services), which resulted in over PLN 4.9 bln in revenue, including over 1.9 bln universal services which generated the revenue of approximately PLN 4.5 bln.
Non-public operators rendered over 3 bln services (postal items, direct mail, parcels, non-addressed printed forms) in total (externally and abroad) in 2008, which resulted in over PLN 1 bln in revenue. An analysis of the data submitted by the operators suggests that the bulk share in internal use belongs to non-addressed printed forms which do not play such an important role as far as revenue is concerned, however (16.8%). The main source of income for non-public operators are parcels – internally (nationwide) they generate approximately 61.5% of revenue, externally (abroad) around 66.9%. It should be noted, however, that in their reports for 2008 a greater number of operators than before did not indicate activity in the area of parcels. These operators claim that this sort of services is rendered based on transport law and not based on Postal Law which defines a parcel as a service of the public operator. This is why the 2008 data on parcel-related services rendered by non-public operators is not complete and thus cannot be compared with the data for the previous year (due to the definition of a postal parcel in the Postal Law Act, mentioned above, the President of UKE does not have sufficient legal tools to obtain such data).
In 2008 the number of items of the public operator and non-public operators internally and abroad exceeded 2 bln excluding non-addressed printed forms and 5.4 bln including non-address forms. In 2008 activity in the postal sector (both internally and externally) generated PLN 5.3 bln in revenue and counted with non-addressed printed forms – PLN 5.5 bln.
An analysis of the volume of services provided in 2008 in market segments indicates that Poczta Polska is a firmly dominant operator in the area of postal items and direct mail (its shares in each of these segments amount to 97.4%). In the segment of parcels Poczta Polska is losing its position to non-public operators which hold 33.9% of the market share (the fact that the 2008 data for this market segment is incomplete should be kept in mind). Non-public operators have also taken over 85.8% of the non-addressed printed forms market. It should be noted, however, that activity is this segment is not subject to registration obligations and so UKE does not have complete data in this regard.
Therefore, it can be assumed that the actual structure of the market is characterized by a significantly smaller share of Poczta Polska. The revenue structure in respective segments is similar to the volume structure outlined above.
Based on data gathered in recent years on the number of non-public operators and the number of items it should be concluded that having gone through a period of dynamic changes, the postal market began to stabilize. It can be assumed that the decision to postpone full liberalization and the macroeconomic situation of the country contributed to this slower development pace.
The situation in which terms and definitions in the current Postal Law are not precise needs to be addressed as well. As a result, practically every year the law is subject “loose interpretation” and so some postal services are moved to the category of transport services. It was observed that this trend had become stronger in 2008.
The fact that the public operator is not fully ready to function in a liberalized postal market needs to be addressed too. This is an important issue as Poczta Polska is the largest player in the postal services market and so the shape of this market, to a high degree, depends on the decisions of the authorities relating to the entity as well as the actions undertaken by it. Bearing in mind that the date of full liberalization of the Polish postal market was postponed to 2013 mainly to allow the public operator to adjust to the new market situation, this entity should use the time gained to solve the relevant problems which were indicated in the postal market assessment last year. In this context, an important task of the authorities is to draft new postal law, not only due to implementation obligations imposed by the 3rd Postal Directive but also to better organize the legal environment in which postal operators function. The new act should safeguard fair competition conditions and guarantee consumers access to affordable and high quality services.
The structure of the Polish postal services market, having experienced a dynamic growth in the number of operators, is stabilizing. As can be seen below, the indicators characterizing the market (the number of registered and active non-public operators, the volume of services rendered by them and the total volume of postal services), have been on the rise since 2006.
Selected indicators characterizing the postal market in Poland in 2006-2008
number of registered non-public operators
number of active non-public operators
volume of items of non-public operators
(including non-addressed printed forms) – in bln
total volume of items (inlcuding non-addressed printed forms) – in bln
Source: compilation by UKE
The changes on the market are not as dynamic as in the initial phase of market development, however. It can be assumed that the decision to postpone full liberalization of the postal market in Poland had its share in the overall slow down as quite a number of operators hoped for market opening as early as 2009. This is why decisions and actions undertaken by authorities should aim at increasing or at least maintaining the development pace of the market.
The need to make terms in the current legal framework sharper becomes even more significant in the light of the findings, gathered in 2008, which indicate that non-public operators have the tendency to move the data relating to postal services to the category of transport services. The data is thus incomplete and incomparable to other years which blurs the real picture of the market and makes its analysis more difficult.
Proper preparation, enabling the public operator to function in a liberalized postal services market remains an important issue, which has been underlined in the assessments of the postal markets completed so far. The need to change requirements relating to the provision of universal services by decreasing costs incurred by the public operator (a reduction in the number of offices, a reduction in the frequency of deliveries) was signaled in the publication last year. This is an important issue as Poczta Polska is the dominant player on the postal market. As mentioned before, the shape of the market, to a high degree, depends on the decisions of the authorities relating to the leading entity as well as the actions undertaken by it. Because the decision to postpone the liberalization date to 2013 was taken above all to allow the public operator to better adjust to the new market circumstances, it is this operator who should be responsible for taking proper advantage of the time thus gained to solve most important problems.
In this situation, the priority for the authorities is to draft new postal law which is indispensible not only because of the need to implement the 3rd Postal Directive. It should also help to better organize the legal environment for postal operators (through the introduction of relevant terms and definitions) and be able to meet the expectations of all postal market players. Finally, the new act should safeguard the conditions for fair competition and guarantee consumers access to affordable and high standard services.
The full text of the report is available in the attached file.