This analysis takes account of the social, demographic and geographical characteristics of each territory, and the research by Axel Gautier and Dimitri Paolini demonstrates that if you want to establish a level playing field for all providers, it is necessary to come up with tailored solutions. The range of tax solutions proposed – fixed entry fee, tax on profits, tax on gross receipts – can affect market prices and can determine whether competitors compete for the entire market or only parts of it. In homogeneous territories, a fixed fee tax upon entry, which does not affect prices, is the preferred option. With uniform territories, a fixed fee is not used because it discourages participants from entering the market. The most appropriate compensatory instrument is a tax pegged to real profits. Finally, for mixed regions, where cross-subsidies are most important, only taxes that modify prices and territorial coverage are applicable with significant distortions because of the tax.

The case of the Belgian Postal Service

“It is difficult to give an opinion, except to say that the result of the liberalisation of the postal market in Belgium is uncertain,” Gautier says. “What is certain is that it is not going to benefit everybody.” Even though the Belgian legislation included a number of particular arrangements (status of personnel, minimum territorial coverage stipulated at 80%, two deliveries a week minimum) applying to all providers, the target of new providers is not a traditional mail service. Commercial mail service (direct mail, billing, etc.) will attract new service providers. Bulk mailings, pre-sorted by the sender, is subject to particular delivery conditions, which do not require the next-day service we are familiar with, and which was part of the constraints under which the historical provider operated. Bulk mail customers are not numerous, but they generate the majority of pieces of mail and are a prime target for new market providers. These are the primary beneficiaries of competition. In the final analysis, individual customers are not likely to benefit from liberalisation. On the contrary, there are reasons to fear that, as happened in Sweden, actions which cause the cost of commercial mail to go down will cause the cost of traditional mail to go up.
 
Thus, the State should put in place a mechanism that ensures equitable financing for the service while continuing to maintain effective competition in the market place. The task is a complex one, but this is what will be required if the prior level of public service is also to be maintained.

As for Axel Gautier, his research has already taken him a step further. “I am interested in a redefinition of universal service in a competitive environment, not focusing on new postal providers but on a competition between mail and the internet. The appearance of new technologies (internet) should bring about a redefinition of universal service and in particular a reduction of constraints, for two reasons: because of the new technologies consumers are inclined to pay less for quality of service (if a message is urgent, you don’t use surface mail, for example) and we do see a significant reduction in the volume of mail (20 - 30% less), and accordingly less money is available to pay for the service. In some countries we see a desire to give up universal service (the Netherlands have considered fewer delivery days, Belgium has considered a reduction in the number of mail collection points). »