I am pleased to present the Communications Regulation (Postal Services) Bill 2010 for the consideration of this House. This Bill is an important milestone for the postal service. Transposing the third postal service directive represents the last step of the liberalisation process of this important market. All mail in excess of 50 grammes is currently open to competitors and the directive now provides for the removal of the remaining area reserved to incumbent postal service providers. Transposition of the directive will mean there are no legal or regulatory barriers to new entrants in the postal sector.
The Bill sets out the regulatory framework for a liberalised postal market having regard to balancing the protection of the universal service, and the development of a competitive postal sector providing high quality postal services. The objective in liberalising any market is the promotion of effective competition and the encouragement of innovation, with a view to improving choice and ensuring access to high quality, competitively priced and innovative products. Postal services can play a key part in the development of Ireland as a smart economy, but that will require a sharper focus on innovation and satisfying the current and future needs of consumers.
An important consideration to be taken on board is that the postal sector is now largely a means for business communications, with 90% of mail volumes either being sent by or to businesses. It is, in essence, only one of many media that businesses use to communicate with customers.
Technological developments in the communications sector and the increasing penetration of information technology in every day lives mean that the nature of how businesses can communicate with their customers is rapidly evolving. There is a generation of people in this country who do not use landline telephony, let alone send letters.
These changes will continue to have a dramatic impact on shaping the development of the postal sector. That sector continues to undergo structural change worldwide with the move to electronic communications accelerating as the senders of mail increasingly try to reduce the cost of communicating with their consumers. All postal operators are facing the challenge of very significant fall-off in mail volumes. The economic downturn facing the country is only going to add impetus to this migration.
An Post must adapt to this new reality. Fighting liberalisation will not be a valid strategy and to do so would be a futile and expensive waste of time. The Bill contains no surprises. Indeed, the liberalisation of the postal sector has been signalled for a very long time. Postal reform began in the EU in 1988 with a review of policy to bring the sector into line with the European Single Market. In 1992, the Commission published its Green Paper on the subject and in 1997 the first postal directive was published. Since then there has been a gradual and managed phasing in of competition to the sector giving all players the appropriate amount of time to adapt to the changes and implement strategies suitable for the new environment. The final step is the transposition of this third directive which is required by 31 December 2010. Stakeholders have been widely and comprehensively consulted on the general approach.
An Post has many strengths, such as its trusted brand and its strong presence in every community in Ireland on every working day of the year, a presence that very few, if any, competitors will be in a position to replicate. Indeed, my Department has met a number of competitors to An Post who wish to expand the range of services they offer when the market is liberalised, but none has the infrastructure to rival that of An Post and all see the need for a successful An Post.
The Government is committed to a strong and vibrant An Post. I believe a commercially focused An Post, offering high quality, competitively priced services is a must for the development of the postal sector. This was also the very strong message I received at the Department's forum last year. The view was shared by all stakeholders, including competitors and potential competitors to An Post.
The company and its staff must play to their strengths and ensure the company's resources are aligned with the needs of its users. To do so will involve significant change. This should be under way. The new environment must be accepted and the company must adapt to this, re-assessing its relationships with its customers and its competitors. The Bill provides for wholesale arrangements between An Post and its competitors to be negotiated commercially, with a role for the regulator only where agreement cannot be reached. An Post must explore the potential offered through competitive partnerships with rival postal service providers and ensure An Post remains the postal delivery company of choice for the foreseeable future.
An Post currently wins a significant amount of business from Departments, both for postal services and financial services delivered through the post office network. While Government will continue to support An Post strongly, relying on Government contracts in the future is not a valid or robust strategy for An Post to take to address the challenges it faces. It must fundamentally reinvent itself and I am confident the management and staff are capable of this.
The Bill represents a sensible and pragmatic approach to the liberalisation of the sector. It sets out the high level principles underpinning the regulatory framework, striking a balance between ensuring the provision of the universal service, enabling the development of competition and putting in place provisions around consumer protection. At its heart, the Bill recognises the fundamental difference between An Post and other postal service providers. As the incumbent and the largest operator, An Post will be subject to the greatest amount of regulation. The most significant obligation imposed on An Post is that it will be designated as the universal postal service provider for a period of seven years. The universal service, the essential element of which is the collection and delivery of mail to every address in the State on every working day, is an explicit requirement of the directive. Designating An Post offers certainty to An Post, postal service users, the market and the EU that the universal service obligation will be met. This designation does not, however, prevent the development of competition and ComReg is charged with the objective of enabling the development of competition in postal services.
An Post has, to date, met the costs of providing the universal service from its own resources. It is my strong preference that An Post will continue to meet this from its commercial revenues. In line with the options permitted by the directive, however, I have included a provision in the Bill whereby any potential costs that arise in meeting this obligation which are found to be an unfair burden will be met by the postal industry through a sharing mechanism. It is right and appropriate that those postal service providers competing with An Post within the universal service contribute where the regulator verifies that an unfair burden exists. Other member states have also provided for sharing mechanisms. Exchequer funding of the universal service is not an option and consequently the draft Bill does not provide for it.
An Post's legal monopoly on the final reserved area of items weighing up to 50 grammes is being removed and the designation of An Post does not in any way preclude other postal service providers from entering the market providing postal services in competition to An Post. ComReg will continue to have the responsibility to ensure the availability of the universal postal service. ComReg will be required to review the designation of An Post, and provision is made for other postal service providers to be designated for universal services after the seven-year period has expired, or for no designation to be made, as the case may be.
Another central theme of the directive and the Bill is the protection of the interests of users. As well as ensuring the universal postal service throughout the country, the Bill also provides for complaints procedures to apply to all postal service providers. The imposition of a price cap will also afford protection against significant price increases for those users who do not have the bargaining power to negotiate a better deal for their postal services, these being individuals and small and medium-sized enterprises.
The Bill contains no new legal or regulatory principles and is not attempting to break new legal ground. The framework being put in place has many similarities to that for the communications sector and other regulated sectors. The detail of the regulation will be the responsibility of the independent regulator, the Commission for Communications Regulation. The regulator has all the resources and powers necessary to do so and I am confident the many lessons learned in the regulation of that sector will be put to good use when regulating the postal sector.
Key to the development of the postal sector and the knowledge society will be the introduction of a location-based code throughout the country. The Bill contains a basic provision to enable the State to establish a national postcode system. Deputies will be aware that in October 2009, I announced my intention to implement such a postcode system with a target implementation date of December 2011. This system will be based on the baseline design recommendation of the national postcode project board with the added capability of being further refined into a location-based code. It will be developed, implemented and maintained by a supplier which will fulfil the role of the postcode management licence holder. This supplier will be procured during 2011.
The Bill is divided into three Parts. Part 1 contains standard preliminary provisions and amendments to other enactments. The main part of the Bill, the regulation of postal services, is set out in Part 2. This part addresses ComReg's role and powers. It defines a universal postal service and provides for the designation of a universal postal service provider, price regulation, authorisation procedures and conditions, and the regulation of the terms and conditions around the provision of free postage to electoral candidates. It also addresses enforcement and offences in relation to postal services. Part 3 provides that the Minister for Communications, Energy and Natural Resources may establish, maintain and operate a national postcode system.
The Bill, when enacted, will be included in the collective citation "Communications Regulation Acts 2002 to 2010", and be read together as one Act. The intention is for the Bill to come into operation on 1 January 2011, with the exception of section 43 which relates to the referral of postal packets to the Revenue Commissioners and Part 3 which provides for postcodes.
Some key postal legislation has been updated by this Bill in order that it is compatible with a liberalised market. Some of this legislation dates back to before the founding of the State and repeals and revocations are provided for in Part 1.
Part 2 is the essence of the directive. ComReg is designated as the national regulatory authority for the directive and its functions, objectives and powers as set out in the principal Act of 2002 are amended accordingly. ComReg is charged with ensuring the provision of the universal postal service, promoting competition and innovation, and ensuring compliance by postal service providers with their obligations.
Part 2 addresses ComReg's enforcement and information gathering powers in relation to postal operators, mainly in chapters 1, 2, 3, 9 and some of chapter 10. The design of the enforcement element of the postal framework must be proportionate. In this regard, the power to summon witnesses and examine them under oath, which represents a very strong enforcement option, is not appropriate for the postal sector at this time. Similarly, I am confident the enforcement powers available to ComReg for pricing and access will allow it to discharge its competition functions without extending co-competition powers to the postal sector.
ComReg's enforcement powers will result in improved services and more choice for the consumer, safeguard the provision of the universal postal service and provide regulatory certainty to encourage more players to enter the market. The individual consumer, the business sector and the wider economy will benefit from increased competition and a broader range of services, which is the ultimate aim of this important Bill.
The essential element of the universal postal service is the collection and delivery of mail to every home and premises in every corner of the State on every working day. This is enshrined in chapter 3. Chapter 4 designates An Post as the universal postal service provider for a period of seven years. ComReg is to review this designation before the end of the period and may designate An Post again, designate another postal service provider or decide that no such designation is required. ComReg is also required to ensure the reasonable needs of users are met and will specify by regulations the services to be provided by a universal postal service provider.
Chapter 4 also provides for oversight by ComReg of a universal postal service provider's terms and conditions. This replaces An Post's power to set out its terms and conditions in schemes under the Postal and Telecommunications Services Act 1983, under which it was established. This is more appropriate in a liberalised market.
ComReg will also have a role in price regulation. In the interests of protecting consumers in those products or market segments in which An Post, as the dominant postal service provider, is not likely to face competition at least in the immediate term, the Bill enables ComReg to impose a price cap, providing certainty to both An Post and its customers.
A central theme of the directive is the protection of the interests of users. In this regard, the Bill sets out in section 23 the tariff principles with which the services of a universal service provider must comply, including affordability and cost orientation.
A Leas-Chathaoirligh, I am slightly concerned about the vote in the Dáil. I have two pages left and I am unsure about the procedure to be followed.