Postal network access pricing

Project by Link Economics Group

infrastructure pricing nz

Evaluation of the access pricing methodology for a new postal product, 2018

Postal network access prices in New Zealand have been set using the Efficient Component Pricing Rule (ECPR). Until 2019 the Postal Network Access Committee (PNAC) set the terms of access. In 2018, NZ Post introduced a new bulk mail product that provided a rebate for delivery to designated metropolitan post codes for customers that meet a minimum volume threshold. PNAC commissioned a consultant’s report to evaluate whether the new product was compatible with ECPR and PNAC’s pricing principles, and whether the product raised issues under the Commerce Act.

Link Economics prepared an expert report that commented on the advice received by PNAC. We highlighted that an additional consideration was whether the product was predatory against bypass operators (rather than only whether it would result in a price squeeze). We also identified some of the practical difficulties in using ECPR to set access prices in a context of changing prices and pricing structures, including that these commercially sensitive changes would need to be communicated to access seekers.

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