Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 8: Calculating the Cost of the Universal Service Obligation: The Need for a Global Approach
* Christian Jaag, Martin Koller and Urs Trinkner INTRODUCTION 1 In Switzerland as well as in the European Union (EU) postal market liberalization is a current issue. The reserved area has been the traditional means to ﬁnance the provision of universal services. In the absence of a reserved area, other means of funding are needed. If universal service obligations are delegated to one or more postal operators, compensating them is an important issue. There are two problems to solve: ﬁrst, the cost of the Universal Service Obligation (USO) needs to be estimated; second, the universal service providers (USPs) have to be reimbursed. Our chapter deals mainly with the former issue. The chapter proceeds as follows. Section 2 provides the background and motivation for calculating the cost of the USO and analyzes the new regulations of the European Community (EC) in this regard (2008/6/EC). The EC follows a disaggregated approach by instructing member states to calculate the total net cost of the USO by summing the net costs arising from the speciﬁc components. Section 3 discusses the limits of this approach and advocates a global view which takes into account the dependencies between individual components of the USO. These considerations are complemented in Section 4 by an econometric assessment of the net cost resulting from obligations concerning the postal outlet network in Switzerland. A cross-section dataset of the postal outlet network is analyzed and the diﬀerence between a disaggregated and a global approach is illustrated. Section 5 concludes. 2 CALCULATING...
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