Discussion Papers

Alex Kalevi Dieke, Petra Junk, Martin Zauner

Downstream Access and Delivery Competition in the Letters Markets

No. 336 / March 2010


To date two models of competition have emerged in letter post markets: In case of downstream access, competition has emerged for preparation, sorting and transport of letters while final delivery is carried out by the incumbent postal operator. In case of end-to-end-competition, competitors provide all elements of the postal supply chain including final delivery and there are competing infrastructures for delivery. The first objective of this study is to evaluate the experiences made with both models of competition in selected countries and to assess the impact of downstream access. A second objective is to discuss whether there is a need for additional access products in Germany, and hace a need for additional access regulation.

International experiences show that downstream access has resulted in decreasing postal prices. Senders benefit directly and, on a limited scale, indirectly. In the first case, they use access products themselves; in the second case they hand over their mail items to a consolidator who manages the transfer to the incumbent postal operator. This reveals a specific characteristic of downstream access products in postal markets in contrast to other network industries: Large postal customers have the possibility to use the incumbent’s downstream access products directly and many of them actually do it. In Germany, for example, downstream access is predominantly used by large senders and not by consolidators. However, in other network industries like the telecommunication sector, downstream access to the last mile is (almost) exclusively used by competitors. They act as intermediaries between the customer and the incumbent operator (who owns the fixed line). Consequently, price regulation of access products in letter post markets has the same effect as the regulation of retail prices. In addition, downstream access can have positive effects on mail volume . Finally, downstream access has promoted the development of a mail production and preparation industry.

This study concludes that downstream access appears useful in monopolistic letter post markets without any competitive pressure on postal tariffs. The higher the competitive pressure is, the more likely it is that the incumbent postal operator voluntarily introduces access products.

The German postal regulator BNetzA has implemented the mandatory downstream access at a very early stage of market opening with little competitive pressure on postal tariffs at that time. Today, the requirement of mandatory downstream access does not appear to be binding anymore; Deutsche Post would voluntarily continue offering these services. For this reason, the study concludes that additional access regulation in Germany is not necessary. For the future, the German regulator’s challenge is to ensure that access products are offered in a transparent and non-discriminatory way to all senders, consolidators, and other postal operators.

(Full version only available in German language)

Discussion Paper is available for download.

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