On the Correct Net Avoided Cost (NAC) Methodology to Be Applied in the Postal Sector

This chapter is a contribution to the discussion on the calculation of the net cost of the universal service in the postal sector. From our analysis emerges that the cost calculation processes discussed in Annex 1 of the postal directive might need some revisions and adaptations to specific national contexts. The different evolution of the strategy of postal operators in the past decade signals that in each member state the concept of postal network differs. These differences depend on two intertwined main strategic decisions that postal operators have taken: (1) the level of the diversification away from traditional postal services (letter and parcel) and (2) the established ubiquity and control of the post office network. These strategic decisions strongly affect the calculation of the net cost (cost, revenues, and the intangibles) of the Universal Service Obligation (USO). In the chapter, we suggest a way forward for applying the Net Avoided Cost (NAC) which better adheres to the reality of Postal Network, however, defined the postal network present in each member state.