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Vision of the telecommunications and postal delivery market OPTA wants an end to the postal monopoly

Den Haag – 1 May 2002 – The liberalisation of the telecommunications market has increased the level of prosperity. This success must now be repeated in the postal delivery and cable market in the Netherlands. “There is no reason to maintain the current postal monopoly enjoyed by TPG,” OPTA chairman Jens Arnbak stated this morning during his presentation of the ‘Vision of the Market’. In spite of the deterioration of the investment climate, the competition in the Dutch telecommunications market has increased. The reason for this is that there is still growth in both the fixed and the mobile telecommunications markets. Moreover, the liberalisation of this market has led to a 50% decrease in the cost of trunk calls since 1998. On average, consumers now pay 83 euros less for their fixed telephony. In total this is a social gain of almost half a billion euros. If all consumers switched to carrier select now, and if the situation of today is compared to that of 1998, this would mean that in 2002 a potential amount of over 980 million euros would be flowing back into society. End of the TPG monopoly The liberalisation of the postal sector is lagging behind other sectors. Europe has not reached uniform agreements regarding the total liberalisation of this sector, even though there are sufficient economic and social reasons for this liberalisation. Following Sweden's lead, the United Kingdom has decided to press on ahead of other European countries. The same reasoning can be applied to the Dutch market: there is no prevailing economic or social reason to maintain the current postal monopoly. There are still a large number of obstacles to competition in the postal market. Development has been slow in some parts of the market that have been freed up, while other free services have not taken off. On the one hand, the reasons for this are economic in nature; on the other hand inadequate legislation and regulations still pose an obstacle to companies who would like to enter the market. Menu for access Although in previous years few parties attempted to enter the postal market, the picture changed in 2001. Even more intense entry into the market is anticipated for 2002. In contrast to these new entrants to the postal market TNT Postgroep NV (TPG) already has a modern network with national coverage. Copying such a network will not be profitable for new entrants over the short term. The (originally) frequently restricted scope of the activities and the associated longer payback time creates an obstacle for investments for newcomers to the market. In OPTA's opinion, it is thus opportune to grant competitors access to the TPG network. A “menu for access” must be created: a market party must be able to decide per consignment at what point the TPG network is utilised - at the mail box, the post offices, the sorting centres or the postman. To a considerable extent the prices that TPG may charge its customers are still regulated via the so-called rate control system. This protects consumers and competitors against unreasonable prices. However, the current system has not realised its objectives and ambitions. For example, the system does not stimulate efficiency and does not take into account the drastic cost reductions that TPG has implemented. Any excessive profits that may be earned are not passed on to the consumers. However, it has never been the objective to use the legal postal monopoly to generate excessive profits for shareholders or to finance an expansion strategy in the free market. The consequence of all this is that consumers and business customers benefit little from the improvements in efficiency that TPG has achieved during the past several years. Chances for the cable In addition to the KPN telephone network, the Netherlands has another fixed infrastructure for electronic communication with virtually national coverage: the cable. Potentially, broadband services offer considerable opportunities for the Dutch cable market. From a European perspective, the Netherlands' utilisation of broadband servic