Financing the universal service
Economically viable financing
Swiss Post finances the universal service with its revenues from postal services and payment transaction services both inside and outside the universal service. The law does not provide for funding from outside Swiss Post. To safeguard financing, the Confederation grants Swiss Post a reserved area of business: the exclusive right to carry addressed domestic letters up to 50 grams. In practice, however, letters are faced with intense competition from electronic alternatives, so the importance of the residual monopoly in real terms is in decline.
To maintain the diversity of publications and opinion, the Confederation subsidizes the delivery of subscription regional and local newspapers and magazines as well as membership and foundation publications (indirect press subsidies). Swiss Post passes the subsidies on through a reduction per copy, with the amount of the reduction set by the Federal Council. The publications eligible for subsidy are decided by the Federal Office of Communications (OFCOM). The subsidies do not completely cover the cost of delivery.
Costs of the universal service
The costs for universal service mandates are defined as the difference between Swiss Post’s financial result and a hypothetical result that Swiss Post would achieve without the universal service obligation. This difference is known as the net cost of the universal service obligation. The law allows Swiss Post to spread net costs internally, in whole or in part and in compliance with the ban on cross-subsidies, in order to make the business as viable as possible for the company (net cost compensation). The amount of net costs and the net cost compensation are approved annually by the Federal Postal Services Commission (PostCom).