Assessing Diversification in the Postal Sector

This chapter delves into the widespread strategy of national postal operators (NPOs) diversifying into competitive sectors beyond traditional postal delivery. It begins by setting the context with examples from the EU and US, highlighting the extent of diversification in Europe and the more limited approach in the US. The chapter then discusses US legal and regulatory precedents, drawing parallels with concerns in the telecommunications and electricity sectors. It identifies three main concerns with NPO diversification: excessive transfer pricing, non-price discrimination, and cross-subsidization. The author explores these concerns in detail, providing examples and their potential implications for NPOs. Additionally, the chapter examines the issue of vertical integration and the potential mitigating factors of price-cap regulation. It also assesses the justifications for NPO provision of competitive services, including economies of scope and the use of excess capacity resulting from universal service obligations. The conclusion summarizes the key findings and highlights the need for careful consideration of the benefits and costs of postal diversification.