Utility Regulation in Competitive Markets

Utility Regulation in Competitive Markets

Problems and Progress

Edited by Colin Robinson

This significant new volume contains incisive chapters on a number of prominent concerns, including changes in the British system of utility regulation, the spectrum allocation question, liberalisation of EU energy markets, security of supply issues, reform in the European postal sector, the future of rail regulation, the cost of capital and Ofcom’s strategic approach to regulation. Chapters on each topic are followed by comments from regulators, competition authority chairmen and other experts in the relevant fields. By confronting the most important international developments in utility regulation, the authors offer practical policy recommendations for an effective way forward.

Chapter 5: The end to the postal exception?

Dermot Glynn and David Stubbs

Subjects: economics and finance, competition policy, public sector economics

Extract

Dermot Glynn and David Stubbs INTRODUCTION AND OVERVIEW With the recent proposal of the European Commission to move towards full postal liberalisation by 2009, this is a good time to reflect on the development of postal regulation in Europe and the UK. This chapter’s main conclusion will be that, on balance, the postal sector in the European Union (EU) has in the past suffered from delay in the pace of reform, and regulators and policy makers should support moves to end the ‘postal exception’, by which is meant the delay in postal reform compared to other network-based industries. To set the scene we begin with a brief history of European and UK postal regulatory development to understand the nature and evolution of the postal exception. We shall then briefly review European postal market development and emerging market trends in the sector. We shall conclude by offering some recommendations about how deregulation may best be effected in the sector, suggesting that the universal service obligation could be reduced in scope, opening the way to a regulatory regime focused on ensuring reasonable access by entrants to essential services and eventually to removing retail price controls. One caveat to note at the outset: good comparative data on the sector are difficult to find and while we have endeavoured to use the best available research there remain deficiencies in establishing a precise comparable view of market and regulatory development. In part these deficiencies stem from a...

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