Regulations for the postal and courier market in Oman

Introduction and consultation

7 September 2016 • Philip Bates, Graeme Lee, Ian Streule

Contents

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Introduction to the project

Consultation questions

3Contents

Introduction to the project

Consultation questions

We were engaged to review the postal and courier market, competition framework and regulations

▪ Our starting point was two documents:

– Postal Service Regulatory Law, No. 71/2012

– Executive Regulation, Decision 89/2013

▪ We conducted stakeholder meetings, market research and international benchmarking, and developed our draft recommended regulations for the postal and courier market in Oman

▪ We have provided the TRA with a range of detailed regulatory proposals and mechanisms, as well as guidance and insight into the way the postal and courier market functions, and can be regulated to the benefit of consumers and other stakeholders

▪ The project of the Ministry of Transport and Communications provides key policy objectives in parallel to the TRA proposals

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The TRA has various obligations to support the postal industry for wider economic development

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Principles and objectives of regulation

• Ensuring efficient, accessible, widely-available services• Discussions with stakeholders on the needs of the industry

Implementing the general policy

• Regulating universal services• Accessibility of post offices

Supervising and monitoring

• Gathering, recording and publishing market statistics• Preparing for cost accounting within the sector

Receiving and resolving complaints

• Meeting the legislation on complaints procedures• Receiving, recording, monitoring and resolving complaints

Competition rules and regulation

• Market analysis and assessment of SMP• Tariff approvals and the obligations which come with SMP

Quality of postal services

• Conveyance performance and targets (“D plus 1, 2, 3…”)• Encouraging a quality-focussed industry meeting users’ needs

Licensing• Documentation and procedures• Licence fees

Involvement A selection of the main issues

Our overview of the main issues within the sector

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Universal and reserved services are

being defined by the MoTC

Medium and long-term

market liberalisation is proposed

by the MoTC

There is currently no systematic

measurement of quality

of service

International express

market is well

functioning, but focussed

via Dubai

Cost-based tariffing for

Oman Post is not yet possible

Accessibilityof postal

services is poor by

regional and international

standards

We believethere is, and

we have measured,

poor levels of some service performance

Domestic express market

appears under-

developed

Long distance bus companies

also provide postal

conveyance services

Not all postaland courier

service providers hold a

TRAlicence

Introduction to the project

Consultation questions

7Contents

The regulation consultation covers topics which are important for all stakeholders in the industry

▪ The proposed regulations cover various parties in the industry:

– some are focussed on the universal service operator

– some are focussed on the competitive courier marketplace

– some are focussed on businesses, government bodies and other organisationswho are users or have interests in the sector

▪ We expect the following stakeholders will respond:

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Oman Post

ANY or ALL other licensed postal and courier operators

Unlicensed operators who want to become licensed

Freight firms who have an interest in the sector

The Ministry of Transport and Communications

Business and residential users of postal and courier services

The consultation is arranged in six areas, containing questions where we value your views

▪ There are 23 consultation questions: please answer them with yes/no and an explanation of why you agree or disagree

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1••

••

••

••

••

Market definitionAssessment of competition and implications of SMP

Accessibility of universal postal servicesQuality standards for delivery of universal service items

Delivery of domestic and international express itemsWaiting times at service locations

Information collectionTariff framework and approvals

Provision of complaint forms and procedural informationHandling of complaints by service providers

•Bottlenecks

Markets and competition

Universal service

Quality standards for

other operators

Monitoring framework

Complaints

Other

Market definition

▪ Definition of postal items:

– Letters, packets, parcels up to 25kg

– “M-bags”: collections of newspapers, periodicals, books, printed papers for a single addressee: up to 25kg

▪ Above these weights is cargo

▪ A company accepting packaged postal items from a wide variety of customers including those without a pre-existing contract, for delivery within the stated delivery area, is regarded as providing a postal service and requires a TRA licence

▪ An express service is one designed to meet the TRA’s targets for express delivery (see later)

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Markets and competition1

Assessment of competition and significant market power (SMP)

▪ Significant market power will be determined as follows:

– In reserved markets, Oman Post has de-facto SMP

– In competitive markets, operators with more than 40% of the market by traffic will be considered to have SMP

▪ Being designated with SMP introduces additional obligations in relation to tariff approvals in that market (see later)

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Markets and competition1

Domestic International

DS1 Items up to 250g delivered within

Oman via a multi-day service

IS1 Outbound and inbound standard

speed items up to 250g

DS2 Items over 250g but no more than 2kg

delivered within Oman via a multi-day

service

IS2 Outbound and inbound standard

speed items over 250g but no more

than 2kg

DS3 Items over 2kg but no more than 5kg

delivered within Oman via a multi-day

service

IS3 Outbound and inbound standard

speed items over 2kg but no more

than 5kg

DS4 Items over 5kg but no more than 25kg

delivered within Oman via a multi-day

service

IS4 Outbound and inbound standard

speed items over 5kg but no more

than 25kg

DE1 Express items posted and delivered

within Oman, typically with some form

of tracking

IE1 Outbound and inbound express items,

typically with some form of tracking

Universal service: accessibility

▪ The draft postal policy introduces a precise definition of universal service and proposals on other accessibility and quality criteria

▪ The following are the TRA’s proposed supplementary details:

– Post Office opening hours 0800−1400 five days per week (Sunday to Thursday, excluding public holidays)

– Post office waiting times for 90% of customers should be less than 10 minutes

– PO box applications should be handled within one week in 90% of cases where there is spare capacity at the requested location. If capacity increase is needed, this should be provided within 8 weeks or, if impractical to increase, an alternative location within 5km should be offered

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Universal service2

Universal service: delivery quality

▪ The draft postal policy specifies D+1 service for traditional mail in Muscat and D+3 service for traditional mail in the rest of Oman

▪ The TRA proposes that 90% of items should be successfully delivered within these specified times

– data gathered by the TRA indicates that Oman Post is not meeting this target, and the TRA requests Oman Post to provide a plan to explain how the 90% target will be achieved

▪ The TRA proposes that D+1 should be adopted for domestic express services throughout the Sultanate

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Universal service2

Delivery quality should also be expected from private operators

▪ The TRA also proposes minimum standards for private express operators

– D+1 for domestic express services (i.e. same as for Oman Post)

– D+3 for international express services within GCC

– D+7 for international express services to other countries

– recognising that customs delays may be beyond the operator’s control, operator should notify customer as soon as practicable if items is delayed in customs, and thereafter provide at least daily updates

▪ The TRA also proposes a ‘backstop’ delivery standard of D+30 for services not marketed as express

▪ Expected delivery times to be made to customers

▪ Normally less than 10 minutes waiting time at service locations

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Quality standards for

other operators3

In order to ensure quality, the TRA proposes additional info gathering

▪ The TRA already has a programme to collect (and improve) data on traffic volumes, accounting and employee information

▪ The draft postal policy proposes that the USP will publish information about is provision of a universal postal service

▪ The TRA proposes that Oman Post should provide this universal service report annually from 2018, including performance against quality of services targets and PO box applications

▪ The TRA will continue its own independent monitoring of Oman Post’s quality of service

▪ All operators should also submit quarterly statistics on complaints

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Monitoring framework4

Tariff framework and approvals is an important area for the TRA

▪ Tariff revisions already need to be approved by the TRA

– Articles 29-31 of the Postal Service Regulatory Law

– Articles 56-58 of the Executive Regulation

▪ The TRA proposes a framework for tariff approval:

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Monitoring framework4

Universal Service Provider

Other operators without SMP

Other operators with SMP

Tariff framewor

k

Detailed rules – see next slide

Tariff approval for the universal service provider

▪ The TRA proposes to examine the USP’s tariffs in more detail:

– justify percentage increases for different services

– justify affordability of universal services if prices rises above CPI

– demonstrate reasonable relative pricing

– annual review of tariffs (the outcome of which could be ‘null’)

– in markets where the provider has SMP, tariffs should be based on fully-allocated costs, using activity-based costing (FAC-ABC)

▪ standard tariff, discounts and promotions shall be approved with reference to cost plus reasonable profit margin

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Monitoring framework4

Less complex methods are proposed for other operators

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Monitoring framework4

▪ It would be disproportionate to regulate other operators in mainly competitive markets to the same extent as the universal service provider

▪ Therefore, the TRA proposes less complex regulation, depending on whether the operator has SMP in a market

Benchmarking used to approve tariffs, discounts and promotions

Activity-based costing and cost-orientation for tariffs, discounts and

promotions in the relevant market with SMP

Universal Service Provider

Other operators without SMP

Other operators with SMP

Tariff framewor

k

A complaints procedure supports the users of postal services

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Complaints5

▪ The TRA proposes a number of rules regarding complaints:

– the TRA should approve the complaint forms and procedures for handling complaints for a licensed operator

– the licensed operator should make available complaint forms and explanatory leaflets at their service locations and online

▪ Articles 61-72 of the Executive Regulation sets out the process

▪ The TRA proposes a 15-day period response and satisfaction period before a consumer may escalate the complaint to the TRA

The TRA shall engage to discuss changing postal needs

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Other6

▪ The Ministry and the TRA anticipate change will occur in the postal and courier market in Oman

▪ To keep abreast of these changes, regular workshops and discussions will be held with industry stakeholders

▪ At this point, the TRA wishes to gain any further opinions from industry players on two areas:

– are there any significant bottlenecks in the sector?

– are there any postal needs which are not being met?

Next steps▪ Further meetings with operators today

▪ Responses to consultation

▪ Finalisation of our recommendations on regulation

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