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Challenging times for Česká pošta

Postal service searches for identity in face of a liberalized market

By Victor Velek
Staff Writer, The Prague Post
November 21st, 2007 issue

COURTESY PHOTO
The national postal service expects to lose more customers to the Internet, prompting it to search for new roles for its 3,400 branches.
Traditional postal service providers are experiencing challenging times. The golden age of mail is gone, killed by the advent of electronic communications, while postal operators in the Czech Republic and abroad are pushing to discover new rationales for their existence.
Besides the blow posed by the communications revolution, national postal service providers are losing their old privileges. As of 2011, their monopoly over delivery of letters weighing less than 50 grams should dissolve, ushering in a competitive and level postal services market.
Originally, the European Commission, the EU’s executive arm, advocated opening the postal markets in 2009. However, in the face of strong opposition among some member states, a compromise was reached earlier this year, with the European Parliament expected next year to set 2011 as the deadline.
Although Česká pošta (ČP), the Czech Republic’s state-owned postal provider, and its counterparts in 10 other EU member states have won another two years to prepare for liberalization, deferring the deadline to 2013, the company has already set about preparing for the future’s stiff competition and Internet-era peculiarities.
As of 2009, ČP will be transformed into a joint-stock company. This should make the company more competitive, flexible and customer-friendly, according to the government. The move could also clear the way for a future privatization, observers say.
Apart from this inner change, ČP must cope with outward pressures. Recent research has shown that further switching from traditional postal services to electronic communications is still ahead, said Gabriel Pleska from the ČP press department.
“Česká pošta is aware of the fact that there will be fewer regular letters to deliver,” Pleska noted. “We’ve focused on developing e-services for some time.”
For example, the company offers a digital version of registered mail delivery service — registered electronic post, which can be compared with document custody services performed by notaries. ČP serves as a mediator guaranteeing the privacy of delivery, assuring the electronic document can be accessed only by the authorized recipient, Pleska explained.
There are also projects under way to turn ČP’s extensive network of offices into joint contact points to state authorities. At 3,400 branches nationwide, people can order certified excerpts from the business and land registries, Pleska said.
ČP has also strived to fill the niche opened up by transforming consumer habits, according to Pleska.
“This transformation of lifestyle is reflected by our ‘post office in a shopping mall’ strategy,” Pleska said. ČP has set about establishing offices in shopping centers, and people busy during the week can redirect their package deliveries there, picking up their mail while shopping on the weekend, he said.
ČP will release more details about its strategic plans for the future at the end of the year, said ČP spokeswoman Dita Václavíková.
Frozen competition
Earlier this year, the Finance Ministry approved a hike in postal fees proposed by ČP, which will take effect Jan. 1. The price of delivery of a standard letter, for example, will increase from 7.5 to 10 Kč and sending a priority registered letter of up to 20 grams will cost 26 Kč instead of today’s 19 Kč. The hike was criticized both by other Czech postal operators and some economists.
“In light of the recent EU liberalization deferment, it can be seen as an inappropriate strengthening of Česká pošta’s position,” said Miroslav Ševčík, chairman of Liberální institut, an independent think tank advocating ideas of classical liberalism.
“The rise is excessive and quite unjustified,” Ševčík noted, adding that it will harm the most loyal and frequent users of postal services: older people at odds with electronic communication.
Other postal operators were also critical. The combination of the price hike and the liberalization postponement is bad news for customers, according to Petr Dušek, marketing director of TNT Post, a Netherlands-based postal operator and the largest distributor of commercial leaflets in the Czech Republic.
“Had the postal market opened as originally planned, postal service prices would have never reached such highs,” Dušek said.
Today, TNT Post focuses on corporate clients. But, once the market is open to fair competition, TNT Post will offer fully fledged postal services, Dušek said.
There has been visible progress in ČP’s services over the past five to seven years, at least in large cities, Ševčík said.
“However, the improvement could have been better, had the liberalization of postal services proceeded in a faster pace,” he added.
Clearly, there is much room for improvement. The Czech Telecommunications Office (ČTÚ), the state regulator in the field of postal services and electronic communications, has repeatedly criticized ČP in its evaluation reports for numerous shortcomings — customer neglect, early closings of post offices or failed or mistaken deliveries.
Last year, the ČTÚ imposed fines worth 7 million Kč on ČP.

Victor Velek can be reached at vvelek@praguepost.com


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