Fit for Purpose? A Four-Step Methodology for Evaluating Universal Service Obligations in the Postal Sector

A postal universal service obligation (USO) ensures that all consumers throughout a country have access to basic services within the postal sector, which can constitute a benefit for society. The benefits can arise for promoting social cohesion and inclusivity by providing postal products at a guaranteed quality level and uniform prices throughout the country. Market developments and significant changes to postal user needs in recent years have brought into question whether countries’ current USO scopes are still fit for this purpose. There can be a risk of regulatory failure if the historical objectives of the USO have changed compared to the current market environment. At the same time, the cost of maintaining an extensive USO can increase as some requirements, such as high delivery frequency, become more costly per unit to provide as letter volumes decline. We address the need for optimal design in USO policy, which balances the benefits and the costs of a USO. Further, we present a four-step methodology to evaluate the scope of the USO. The steps are supplemented with case examples from throughout Europe, where the abolishment of the USO in 2023 in Denmark serves as a recent example.