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Dáil Éireann díospóireacht -
Tuesday, 24 May 1988

Vol. 380 No. 10

Private Members' Business. - Postal and Telecommunications Services (Amendment) Bill, 1988: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

In discussing this Bill we must recognise the very genuine achievement of the two companies concerned, since their inception. They have made very considerable progress in meeting financial targets. They have pulled the companies around and are providing a better service generally in that area. However, it is crucial that the Dáil be particularly vigilant in seeing that customers get a fair deal when dealing with the monopoly companies of Telecom Éireann and An Post. It is also crucial that the Dáil take a very special approach to overseeing the affairs of its State commercial companies. There must be an emphasis on performance from these companies if we are to achieve new economic opportunity in this country. I am convinced that it is in large measure the State companies and the sort of environment for costs and performance that they engender, that create the sort of economic environment we need for a thriving business economy.

It must be borne in mind by the Dáil that these are companies that are relatively immune from market pressures, holding as they do a monopoly position in the market, and that they command enormous resources. These two companies have a total expenditure and turnover of £700 million between them. There is immense scope for achievement in this area and the Dáil must be vigilant in seeing that they perform economically to the very maximum of their ability. Those two objectives have motivated this Bill — the desire to seek protection for the customer and the desire to see the best possible economic performance by these companies.

In relation to the position of customers, I am very disappointed that the approach of this Government since coming to office has been consistently to show their determination to destroy any independent agencies acting on behalf of the consumer. We have seen this approach in relation to the National Social Service Board and we have seen it to a very great degree in this area. A few months ago the Minister abolished the Users Councils, ostensibly on the grounds of achieving savings, but the Minister of State recognised in the Dáil that the total cost of running these two councils was £80,000 for a year. The Government decided that for a saving of £80,000 they would abandon the consumer watchdog that was to oversee the spending of £700 million by these companies. Those involved in serving on those councils were redeployed to other duties so that it was not a net saving to the Government at all. We can only see this as being motivated to remove from the customer the voice that had been given to him by the Dáil when that Bill was enacted.

We have seen a similar approach in the attitude to the Ombudsman who has been strangled in his operations in recent times. His investigative staff has been halved as a result of cutbacks and it was widely rumoured that the Government's intention was to withdraw the postal and telecommunications services entirely from his remit when they made those cutbacks but they were not willing to come into the Dáil to propose that. It must be borne in mind that the Ombudsman's office was one of the great protections given by the Dáil in the past ten years to consumers. We have seen both the Users Councils set up by the Dáil and the Ombudsman's Office frustrated in their approach to these two monopoly companies. That is to be regretted and it is obviously an important consideration that makes the contents of this Bill all the more important.

When this legislation was drafted in 1982-1983, the legislation fudged the issue of customer service and the rights of the consumer. It decided that these two companies would, uniquely, be exempted from the provisions of the Sale of Goods and Supply of Services Act, 1980. This meant that the ordinary consumer did not even have the right to go to court if he was not satisfied with the service he obtained from them. It also provided that there would be no requirement for the companies to have a code of practice. The Director of Consumer Affairs at the time very eloquently summed up the difficulty when he said that, in effect, the telecommunications and postal services would be judge and jury of their services as regards the consumer and that it could inspire little confidence in a consumer no matter how the companies may say they are striving to provide a good service if at the end of the day when he has complaints he does not have the right of redress to court or the right of redress to a fair code of practice. As a result of the Government's determination to wind down the independent voice that was there and as a result of the weakness of the legislation at the outset, the consumer is now being plunged back into a state of total powerlessness as regards these companies.

I recognise the progress of these companies since they were first established. I also recognise the frustrations of consumers dealing with them. There are numerous examples that could be cited to illustrate that. The highest issue of complaint going to the Ombudsman is from the users of the telecommunications services. A massive 43 per cent of his total complaints come from the users of the telecommunications services and that share has been growing over the years since the Ombudsman took on this responsibility. It is higher than all of the other Government Departments put together. This is a very serious indicator of the extent of consumer frustration with the services and particularly with the billing procedure.

We have other indicators of growing frustrations. In recent months particularly, the public have become very frustrated with the speed of delivery of post. An Post claimed recently that they are meeting 85 per cent to 90 per cent delivery on the following day. That has been disputed and the evidence of one's own eyes is that it is not being achieved in practice. It may be possible to show an 85 per cent next day delivery service between one part of Dublin and another but great frustration is being felt in other parts of the country because they are not getting that kind of service. This has become such a serious issue that many radio programmes are now carrying regular items on it and it is important that we recognise this is an indicator of frustration.

The condition of telephone boxes is another source of frustration for the public, with phone boxes persistently out of order. Obviously, vandalism is one of the major causes of this but that is little consolation for consumers who feel their rights are not being properly upheld by the company. The uncertainty of the repair service is always on people's lips. When their phones are out of order they are never sure how quickly the service will be restored. They feel they have no redress — which they do not — for undue delay on the part of the telecommunications company in restoring the service.

All of these are important elements but perhaps the greatest source of frustration is the high level of charging we have to face. The Minister has provided figures indicating that the average phone charges in Ireland are running around 60 per cent higher than those in the rest of Europe and the position in regard to postal charges is little different, with charges running at around 25 per cent higher than in other European countries. This is a source of frustration for the consumer and we are all aware of it. No one can expect the companies to solve these problems overnight and no one is suggesting it is possible to do so but it is not enough for them to say they share the aim of resolving the problems. There must be some agent independently evaluating progress on behalf of the consumer and there must be an adequate forum through which the consumer can seek redress.

At the heart of this Bill is the proposal that the balance be titled back in favour of the consumer. It contains a number of reforms which I believe would help to do this. The first is contained in sections 5 and 8 which would give back to the consumer full rights and would remove the derogation these two companies have had from the Sale of Goods and Supply of Services Act. This would mean that the consumer would at the very least have the right to go to court to seek redress in cases where there has been a failure to provide a service. Obviously, it would be tricky for a consumer to take a court action against a company so large as the postal or telecommunications service. It is only a small protection but it is very important that the consumer at the end of the day would have the right to go to court to assert his legitimate rights, in the same way as he could go to court to assert his rights in regard to any other service being provided to him or any goods being supplied to him. It is not too much to ask that these two companies who enjoy a monopoly should recognise the consumer's rights in this area.

In the consumer rights area it would also give the consumers a clear, written contract setting out their rights and this is something we have been striving to achieve in many other areas, such as the lending area. It would be moving with the tide if we were to require that this should also be available to the consumers of the services provided by these two companies.

The second major initiative to protect the consumer is to require the companies to draw up a code of practice for consumers. This proposal is outlined in sections 7 and 9 of the Bill as presented. There are many items which a code of practice could cover but obviously its main purpose would be to set out the standard of service which a consumer could expect to enjoy from these two companies. It should also set out a procedure for handling complaints and arrangements for referral to the Ombudsman if a consumer cannot resolve his dispute with the company.

It would also be important that a code of practice would look at areas where a consumer has automatic redress without having to go through any complaints procedure. There are areas where there should be automatic redress for consumers. For example, where faults persist on telephone lines for several working days, consumers should have the right of redress in respect of telephone bills. This is now a requirement in other countries. Such a right to redress would recognise the consumer's entitlement and would act as a spur on the two companies to resolve these problems.

Similarly, a consumer should have an automatic right of redress in cases where there is undue or excessive delay in delivering postal packages or letters or in cases where the telecommunications company have made a wrong entry in a directory. I am not saying that there should be unlimited liability but the company should provide in a code of practice that they are willing to accede automatically to a certain level of compensation in these cases or in cases where a wrong entry has been made in a directory they could compensate in another form.

Those are the elements which would make up a code of practice. Perhaps the most important from the telecommunications consumers' point of view is that there should be some procedure for dealing with queries in regard to bills. As the House is aware, it is a continual source of frustration for people to receive pro forma letters from Telecom Éireann saying their meter had been checked and that the charges are in order while, at the same time, not feeling there has been a real investigation of their case. By providing a code of practice Telecom Éireann would be able to clearly establish what procedure it carries out and consumers would be able to gain confidence in the system which exists for dealing with queries in regard to bills. This is the greatest source of frustration for customers.

I could not list in detail what a code of practice would contain but we have two agencies which are uniquely well placed to help the postal and telecommunications companies in drawing up such a code — they are the Director of Consumer Affairs and the Ombudsman's Office. The Director of Consumer Affairs has helped to establish similar codes of practice in other bodies and we will see in the coming years a growing number of such codes to protect the consumer. He obviously has great experience in drawing up such codes and that is why this Bill suggests that he be involved. Similarly, the Ombudsman should also be involved because he has the experience of dealing daily with consumer complaints, particularly emanating from telecommunications consumers. He knows the pitfalls, the frustrations which people feel, and the procedures which have fallen down in the past and he is uniquely well placed to help the company to establish a code of practice. The bottom line is that it would help to remove the cause of complaints. The best code of practice is one that never has to be used and that is what we must strive to achieve.

I believe the telecommunications company suffer more public opprobrium than they deserve. The bills which they send out are considerably more accurate than is suggested by the level of public feeling about them. However, the fact that they do not have a clear code of practice, that the consumer feels unprotected, that the consumer has to go through very awkward procedures, receiving what he believes to be a cavalier response, means that this has built up to a major public issue. This is a way of lancing that boil which, in time, will be proven to be to the good of these companies when the provisions of the Bill come into force.

Of course the presence of this code is not sufficient in itself. It is very important not only that there be a code of practice but that there be somebody independently evaluating and monitoring the use of that code. Without such monitoring the code could become a dead letter, another volume of paper the company produce but meaning very little. That is why I have provided, in section 11, that the Ombudsman will take on the duty of monitoring and evaluating this code. There may be a dispute as to who would be best suited for this responsibility, whether it is the Director of Consumer Affairs or the Ombudsman. In practical terms, it points to the Ombudsman because he deals with the major area of billing complaints on a regular basis. At the end of the day, he constitutes the court of arbitration to which people can appeal in respect of the implementation of such a code of practice. He is the ultimate arbiter. It is logical that he should be the person to evaluate its progress. It would be my hope that he would be gradually working himself out of a job through the implementation of this code.

It is only fair to the Ombudsman's office — recognising his existing heavy costs and also that the provisions of this Bill will involve him in extra duties — that the Minister should be given the power for which I have provided, by order, to require the levying of half of the audited costs of the Ombudsman in relation to these companies on the companies themselves. This would provide the Ombudsman with a new source of revenue. Also it would constitute an equitable way of sharing out the costs of investigation and would provide the telecommunications and postal companies with an added incentive to avoid having a high level of complaint if they knew this cost could be eliminated by reducing the level of recourse to the Ombudsman's office. This would be a very good way of allocating the costs: half being paid by the company the subject of a complaint and half by the taxpayer generally.

I know that the Ombudsman himself would have some misgivings about this. He would feel that his independence hinges on his sole and direct funding from the Dáil. I would have to say that I cannot agree with that. I cannot see how this would undermine his independence in any way because the two agencies concerned would not have discretion as to the amount they devoted to this activity. Rather it would be a question of the Ombudsman presenting his audited costs which would automatically become chargeable without the discretion of these companies. Therefore, I would contend that the Ombudsman's concern about the sort of approach to funding is misplaced. Obviously I will be interested to hear what other Members feel about it.

The virtue of this code of practice is that eventually it will mean that both the Ombudsman and the companies will be able to deal much more successfully with complaints. The introduction of Bord Telecom's new technology — that would provide the possibility of giving detailed billing, spelling out exactly what calls were made — provides another opportunity for Bord Telecom to have this issue resolved once and for all in a fair and equitable way. I contend that the combination of these things will constitute a great improvement.

Another area the provisions of this Bill tackle — in order to try to enhance consumer service and the consumer's belief that the company have his real interests at heart — is a requirement that the company should report quarterly on key elements of their service. The sort of thing I have in mind, in particular, is the speed of postal deliveries. That has become a major bone of contention, with people in the more remote, rural areas feeling they are not getting adequate service. I contend the company should be obliged to provide quarterly reports on the speed of delivery between different parts of the country. Similarly, the condition of telephone boxes should be surveyed and results presented on a quarterly basis. In that way we would know the percentage of telephone boxes in working order at a given time in different parts of the country. Also the speed with which telephone repairs are effected should be reported, the extent to which there are problems encountered in post offices with queueing, and also the extent of complaints. These are matters that any company that has an eye to its consumers at all would have at its fingertips. It is important that the company should publish details of their performance in these areas and set themselves targets for improvement. In that way the confidence of the consumer can be restored.

There are people who say that the provision of this type of information is asking too much of companies. I might add that this type of information is being demanded of monopoly companies in every country. One only has to go to the United Kingdom where there is the office of telecommunications, OFTEL, and POUNC, the body dealing with the post office, bodies with very considerable teeth doing much more than just monitoring or reporting of the type I am seeking. They actually have teeth to change what happens within these bodies. It will be seen that there is nothing onerous about asking companies to report on the quality of the service they provide.

I might now look at the overall economic performance of these companies which control enormous economic resources. They have a combined turnover of £700 million. The fact that they are monopolies means that they are, to a great extent, free from the normal market pressures a normal company would face in the marketplace. This means that the Dáil has no option but to put a different type of pressure on them to perform. The approach I favour in that respect is well summed up in the report of the National Planning Board in 1984 when they examined the whole of the semi-State sector and what it was we needed to achieve a high level of economic performance from that sector. They clearly indicated that there was a need for proxies for market forces in the key areas of borrowing, investment assessment, objectives on pricing and indices of performance, among others.

What I have sought to do by way of the provisions of this Bill is to require these companies, very major ones with a great deal of potential, to improve Ireland's position as a place for conducting business. I am requesting that they be subjected to the sorts of pressures the National Planning Board foresaw as the appropriate way for the Dáil to regulate such companies. This means they should state clearly the annual borrowing limits to which they would be expected to adhere. It means also that they should carry out clear investment assessments, providing a clear indication of what they expect to be achieved through their investment, following that up with a report on what that investment actually achieved or yielded. It is only right that in the case of companies which, at the end of the day, command a guarantee on their loans from the taxpayer or, in some cases, State bodies enjoying support direct from the Exchequer, the taxpayer, through the Dáil, should have access to them to ensure that they are carrying out the types of investment appraisals necessary and not only doing that but are seen to be living up to the assumptions that underlay those appraisals. There is no point in having an appraisal saying everything in the garden is rosy and then finding that a project runs way beyond budget and does not achieve the level of sales expected. That is not investment appraisal; that is just cooking the books. What we want to see is genuine appraisal.

In the pricing area, it is very important that these companies be set a very clear objective, and that is set out in this Bill. We expect them to move to and exceed European levels on pricing. This should be one of their major objectives. They should report regularly on their progress and set targets for what they hope to achieve each year relative to the other countries. This country has enough disadvantages and we should not have to face extra ones in relation to telecommunications and postal charges. These should be made the main activities of the board and I have set them out as new objectives for these two companies.

The planning board had a very interesting discussion on the need for indicators of performance from companies and I think this is very apt for the telecommunications and postal companies. It is important that we see that their performance in relation to meaning, efficiency of utilisation and so on matches that of foreign equivalents providing similar services. These are the ways in which we can get a handle on what the companies are doing. It is very hard to get behind the financial figures of a monopoly body because at the end of the day the market does not operate in the same way, and profits are not a simple indicator of a successful performance by a monopoly body and certainly not by a State monopoly company and therefore, we need to supplement this with these indicators. It is important also that we see transparency between the different elements of their operations. It does not do the taxpayer any good when there is cross-subsidisation and no reason being presented for it. Where cross-subsidisation is occurring this Bill requires that it should be clearly flagged and if it continues there should be adequate justification for it. Obviously in the case of the postal company there will be certain areas where there is adequate justification for it through their duty of universal service but we need to see the extent of cross-subsidisation and get a clear reason for it.

I believe it is our duty to require this sort of information and to act on the recommendations of the National Planning Board because the Oireachtas Joint Committee on State-sponsored Bodies are the only body who oversee, on behalf of the taxpayer, the performance of these companies and if this information is not available to us as members of that committee it is impossible to assess their performance. Equally it is a farce that we come into this House year in, year out, and discuss the Public Capital Programme but we never see a single project appraised; we never see what is expected from a major investment initiative that has been proposed by some of these State bodies; we never see whether an initiative has lived within budget and we never see if the rosy picture that was painted of what could be achieved was delivered a year or two down the road. It is crucial that we focus on economic performance because I am convinced the solution to our employment problem is not to be found in some packaged answer that one can take down off the shelf and say: "Here is the solution, it involves more spending", but in using the resources we have more effectively. All I am asking for in this Bill is that the monopolies who command huge resources should be required to show that they are meeting an adequate level of performance. That is what this Bill focuses on.

I know that the boards of the telecommunications and postal services have expressed a fear that this will stifle their freedom of commercial operation. I believe very sincerely that this will not be the case. There is a huge difference between the Dáil requiring them to account for their stewardship and to report on their performance and the Dáil seeking to impose new controls on them. There is no new control contained in this Bill. No one is trying through this Bill to say "We want to block the telecommunications or postal services, from doing this or that" but, as taxpayers and as people who ultimately guarantee the operation of these companies, we want to see that they achieve the highest standards of quality at a price that the customers in Ireland have a right to demand. This Bill is not an attack on these companies; rather is it a recognition that we are living in a very difficult economic climate in the late eighties and that we have to exact the very maximum from the scarce resources available to us.

We have an opportunity in this Bill to make a move in this small section of State enterprise so that we can enhance performance, create new opportunities and prove that we can do the very best with the most efficiency. The telecommunications company are at the leading end of technology. They command high resources and they must be seen to deliver on price and quality. The frustration of consumers will be very quickly lanced and cured if the new duties of the board which are contained in this Bill are adopted by the Dáil.

I have listened carefully to what Deputy Bruton has had to say. We have a common interest in the continuing welfare and development of the companies, in ensuring that the charges are kept at minimum rates consistent with the requirements of the legislation and in seeing that the companies provide comprehensive and efficient service to their customers. However, I am not satisfied that the Deputy's approach to the problems he has outlined is the appropriate one.

The explanatory memorandum circulated with the Bill says that its principal purpose is to improve the responsiveness of Bord Telecom Éireann and An Post to their customers' needs and complaints and to extend the public accountability of both companies. These are aims we can agree to, but I believe the methods proposed by Deputy Bruton for achieving them are not the best.

As Minister for Communications I have to ensure that no action is taken that would weaken the commercial mandate of the two companies and that would require disclosure of information that would work to the economic disadvantage of the companies. I will deal with these points in some detail in a few moments. First of all, I think it appropriate to outline the performances of An Post and of Bord Telecom Éireann since they were set up on 1 January 1984 and the companies' plans for the future. I will deal first with An Post.

Since it commenced operations An Post has been achieving improving financial results each year. Since its establishment the company has shown a continuous improvement. In its first two years of operation the company suffered losses but happily that trend has been reversed and profits were recorded in 1986 and 1987. Last year the company made a profit of £2.776 million, including the national lottery management fee, representing an increase of over £2 million on the 1986 profit figure. The volume of mail handled by An Post has been growing at a steady rate and is now 16 per cent higher than when the company took over four years ago. Particular growth is being achieved in key strategic mail areas such as express mail and business reply. The number of countries to which the express mail service of An Post operates more than doubled last year, from 36 to 75, and that number is expected to reach 100 in 1988.

For the second year running An Post has maintained its postal charges at 1986 levels and the charges will be maintained at least to the end of 1988. The last increase took place in March 1986. In real terms our postal charges have been reduced by 8 per cent over the past four years. It is a source of concern that our postal charges are still so high relative to our European competitors. This situation is a reflection of the operating costs which An Post has had to bear and which it inherited from the former Department of Posts and Telegraphs. I can assure the House that the company is fully conscious of the need to reduce its costs. Thanks to the efforts of An Post our postal charges now compare much more favourably with those of other EC states. In fact Ireland's charges now come fourth in the EC league table, as compared with first and second highest some three years ago. An Post is a labour-intensive company and staffing costs account for 76 per cent of the company's total costs. The company, with a view to making a major reduction in staffing costs and staff numbers, has introduced a self-financing productivity agreement. Last year there was a reduction of some 500 in the staffing of An Post.

The general quality of the mail service has been highly satisfactory since the establishment of An Post. The company in 1986 succeeded in reaching its target of delivery of 90 per cent of letters on the working day after posting. Regrettably, there has been a down-turn lately in the standard of service because of industrial relations problems and this is a cause of serious concern both to the company and myself. An Post is giving the highest priority to resolving the problem. Needless to say, I attach a high priority to surveys of standards of mail deliveries and I will be monitoring the situation very carefully. In fact, I have made arrangements to have the results of independent surveys carried out by An Post made available to my Department.

The parcel service of An Post continues to cause serious problems. Last year there was a loss of £5.6 million on the service. Clearly there is a need for remedial action. An Post has drawn up a plan to solve the problems of this particular service and hopefully the company will succeed in resolving the problems and in building a profitable service that meets the needs of customers.

An Post is committed to the highest levels of customer service. The company has established customer panels so that its customers will have the opportunity to inform the company of their views of the service and of making suggestions about how it might be improved. An Post is totally committed to the concept of much closer relationships with its customers in every sector of its business.

In the provision of agency services, whether for Government Departments or other bodies, An Post has been providing a most satisfactory standard of service. Deputies will be aware that a subsidiary of An Post, the National Lottery Company, operates the national lottery under licence from the Minister for Finance. The fact that the national lottery has been operating with spectacular success is an example of the capacity and professionalism of the staff of the company in the matter of the provision of agency services. In the collection of television licence fees An Post acts as agents for the Minister for Communications. For the last three years the company has achieved the collection targets agreed with RTE. The number of licence holders is now 100,000 more than in 1984.

The company's capital development programme covering accommodation projects, replacement of motor vehicles and provision of equipment is funded totally from its own resources and borrowings and there is no draw on the Exchequer. Prior to the establishment of An Post investment in the postal service was minimal. In summary, An Post has served the country very well and I am satisfied with the company's progress in the short period of its existence. There are challenges to be faced and I am confident that the company will cope successfully with them. An Post's overall objective is to achieve profitable growth through the development of existing and new services for its customers and continual striving for improved productivity to minimise costs.

Turning to Bord Telecom Éireann I believe it is only fair to record that since its inception the company has brought about a veritable transformation in the national telecommunications system. The quality of the infrastructure has been consistently upgraded and the range and quality of services has been greatly improved. Telecom Éireann has gone a long way towards eliminating the waiting list for telephones. The waiting list today is 17,000 compared with 60,000 in January 1984. This year alone over 75,500 connections were made and 58 per cent of these connections would have been completed within three months of application. The standard of service, which in the past had been a hindrance to bodies such as the IDA who were seeking to encourage foreign firms to locate in Ireland, has been improved to such a degree that it is now a major contributory factor to present day successes in wooing foreign firms to our shores. The Custom House Docks Financial Services project is perhaps the most notable testimony to this fact.

The quality of the service has improved to such an extent that the local call failure rate for the whole of 1987 was significantly better than the 2 per cent target rate set by the company. The call failure rate in 1984 was almost 4 per cent. The failure rate for STD calls is now down to 2 per cent compared to 24 per cent in 1984. The Postal and Telecommunications Review Group in 1979 called for an average faults rate not exceeding one per telephone per annum. At present the average fault rate is one per telephone every two years. This is twice as good as the review group's target. Seventy-eight per cent of the faults which do occur are now cleared within two working days. Improving the quality of the repair service is a long hard haul — it involves upgrading local plant, pressurising cables, computerising testing procedures and organising repair teams in an optimal manner. Telecom Éireann has attacked these areas vigorously from the beginning. Computerised central repair centres which were introduced in Cork in 1985-86 and extended later to Dublin are having a significant impact on the standard of the fault repair service.

Deputies will be well aware that most of the complaints received by the Ombudsman relate to billing. One can never expect a bill to be popular and the telephone bill has as bad a press as the next one. Telecom Éireann gets, and expects to get, a lot of queries about bills. Indeed, it has put much effort, for example by inaugurating a free-phone telephone inquiry service, into making it easier for people to query their bills. They have also tried to facilitate people in paying their bills by introducing a range of new payment methods. Needless to say, paying up will never be painless. To put the problem into perspective over three million bills totalling £516 million approximately are issued annually.

Telcome Éireann is very conscious of the need to improve public confidence in its billing system and to this end decided to invest some £20 million in equipment which will enable it to provide itemised billing for those of its customers who require it. While it is my firm view that Telecom Éireann must constantly strive to eliminate customer complaints, it is worth while to reflect that the number of complaints received by the Ombudsman indicates that less than 0.3 per cent of Telecom Éireann's customers are dissatisfied with the service being provided by the company.

It is also worth mentioning that an independent Swedish consultant firm, which was commissioned by the former Department of Posts and Telegraphs, reported that the billing system was fully satisfactory by European standards and commented that substantial expenditure on generating detailed call information was not objectively warranted by any shortcomings in the billing system. However, the fact that Telecom Éireann decided to undertake this expenditure is, I believe, an indication of the company's commitment to improving its relations with its customers. The new itemised billing system will be available in Dublin this year and nationally at a later stage. As the House is aware, this system is not yet available in Britain or, indeed, in very many European countries.

The cost of the dramatic transformation of our national telecommunications services has been very significant by any standards. Since 1979 when the Government of the day — and I am proud to say I was a member of that Government — decided to reorganise the telecommunications service into a semi-State organisation and to invest heavily in upgrading the infrastructure, almost £1.4 billion has been spent.

In one sense we were fortunate that the rapid development in our network has only taken place in recent years. We have been able to take advantage of the latest technology and now Ireland has one of the most technologically advanced networks in the world. Telecom Éireann is already well advanced in the building of a countrywide Integrated Digital Network, IDN, of exchange and transmission systems. As well as providing better conventional services, this places the company in a very strong position to provide advanced services immediately and to move to full ISDN, Integrated Services Digital Network, whenever the world standards and equipment are fully defined and available. Already all of the main trunk centres as well as many local exchanges are digital and these are being linked by a backbone network of digital transmission systems on microwave radio systems, optical fibres and co-axial cables.

A sum of IR£343 million has been invested in digital switching systems since 1979. Some IR£226 million has been spent on transmission systems, including digital radio transmission and more recently optical fibre systems. The greatest proportion of expenditure has been in the local network, providing circuits to the customer's premises or residence. Since 1979, IR£610 million has been invested in the local network. A further IR£200 million has been spent on new buildings specially designed for computer technology and on various other improvements such as new fault handling systems and computerised operator services.

Telecom Éireann invests in the region of £130 million per annum in the network to ensure that Ireland's technological edge is maintained. A new Ireland-UK fibre optic cable will be brought into service this summer — it will connect Portmarnock in North County Dublin with Annesley — and IR£20 million is being invested in the trans-Atlantic fibre optic cable, PTAT — 1 which will have a spur to Cork.

The entire investment programme has been financed by borrowing and by funds generated internally by the telecoms system. No part of the cost of that borrowing will be borne by the taxpayer. Apart from about £335 million in equity, Telecom Éireann took over in 1984 all the liabilities of the telecoms service in the form of debt. The debt is being fully remunerated without recourse to the taxpayer or to Exchequer funds in any form. It is intended that Telecom Éireann will remunerate its equity capital in due course by way of dividends. Far from imposing on the taxpayer, the company is a major contributor to Exchequer funds. Of a turnover of £516 million, about £150 million goes to the Exchequer in taxes of various kinds.

From a situation where the service was losing money at a rate of £70 million a year in 1984, it is expected that Telecom Éireann will show a modest profit in 1987-88. This has been achieved while keeping real price increases below the rate of inflation. This requires Telecom Éireann to keep a tight and continuing control on costs, a control which they are, in fact, in process of intensifying just now. Prices are still high by international comparisons and the financial pressures constrain Telecom Éireann from doing all they would like to do on prices but some prices have been cut substantially and further reductions are in the pipeline. For example, international call charges to the United States, Canada, the EC and some other countries were cut by 10 per cent on 1 April 1986 and from the 1 October 1988 the following reductions will be implemented: (i) 20 per cent reduction in EC countries and Switzerland; (ii) 25 per cent reduction in North America; (iii) 30 per cent reduction in Australia, Hong Kong, Japan, New Zealand, Saudi Arabia, Singapore and South Africa. There will be no change in Irish or cross-Channel charges this year, thus giving a reduction in charges in real terms as charges for these services were last increased in April 1986.

It has been said that local call rates in Ireland exceed those of our European neighbours but if we are not the cheapest for local calls, we are not the dearest either. On the question of international comparisons, it is not always possible to compare like with like. Because of the variation and complexity of pricing structures, and leaving aside altogether currency exchange considerations and problems of purchasing power parities, a comparison of telephone charges between different countries is seldom straightforward.

We must not overlook the new services introduced by Telecom Éireann since 1984. These include Eirpac — a packet switched data network; Eirmail — an electronic mail service; and Eircell — a mobile cellular radio telephone system. A new nationwide paging system, Eirpage, is about to be launched.

For subscribers connected to digital exchanges a new range of services, un-dreamt of here a few years ago, is available. Subscribers can activate their own alarm clock calls, direct calls within their own exchange area, learn by a special tone that there is another call waiting, participate in a three party conference call or have a "hotline" facility whereby a pre-programme number is automatically entered on lifting the handset. This new service is especially useful to the elderly and people living alone.

What of Telecon Eireann's future development plans? As I mentioned earlier, the company invests about £130 million annually in the network in order to keep abreast of technological developments. Apart from the imminent launch of its new national paging system — Eirpage — the company from mid-1988 will provide an overlay Digital Network offering the latest in digital leased data circuit technology to Irish business. The company is committed under our EC obligations to have an Integrated Services Digital Network in place by 1993 and is well ahead of its commitments in this regard. An Integrated Services Digital Network, ISDN, will mean that fax, telephone, telex and data services will be carried on a single network and the user will probably have a single multi-purpose ISDN terminal.

Work is progressing internationally on the development of the technical specifications, standards and equipment for ISDN and Telecom Éireann is taking part in the EC ISDN trials. ISDN will be another step in information technology by making the access to and use of information even easier for the user.

Broadband communications are another service of the future. Broadband communications would involve very high capacity circuits carrying voice, text and video information over the same network. It is thought that the technology to provide these sophisticated services will be available by the middle of the next decade. Telecom Éireann's associate company, Broadcom Éireann Research Limited, was established to carry out research into broadband communications and it recently secured contracts from the EC RACE Programme for research in this field. In the light of all of these developments I am sure that it will be generally accepted that, on the whole, Telecom Éireann's performance since its inception has been a praiseworthy one.

I now propose to outline my greatest concerns about the Bill. First of all, nothing must be done by legislation which cuts across the commercial mandate of the companies. They were set up by Act of the Oireachtas and given certain commercial objectives. These objectives cannot be lightly set aside after only four years.

An Post and Telecom Éireann are still at their development stage and in only their fifth year of operation. Proposals to amend the legislative structure governing the two companies should be brought forward as soon as serious flaws in the performance of the two companies have been identified and all other possible corrective measures have been exhausted. I do not accept that such a situation has been reached. I am also concerned lest the companies should be required by law to publish commercial information which would place them at a commercial disadvantage vis-á-vis other participants in the market place. As you will know, both companies have competitors in the marketplace and the publication of commercially sensitive information could not but place certain of their activities in jeopardy.

The Bill would require the two companies to include in their annual reports a comparison with similar companies in the European Community in relation to certain management performance indicators. Compilation of the range of information required by this provision could well be a time-consuming and financially expensive exercise. The basic comparative data may not always be readily available or forthcoming. By their very nature, international comparisons of performance are not always meaningful because of variations in the underlying factors such as different distribution networks, different distributions of populations and traffic volumes.

Publication of revenue and cost summaries for the different business components of operations of the two companies would have to be carefully considered to ensure that economic damage would not be done in the case of An Post. For Telecom, for example, allocation of costs between residential and business users is not technically possible and to legislate for this would be meaningless.

The size of the capital development programmes of An Post and Telecom Éireann is set out in the public capital programme which is published each year. I do not see the need, therefore, for advance publication of the borrowing requirements of the two companies. As regards publication of appraisal of major investment proposals, I feel that the House will understand that the disclosure of such information would be commercially imprudent. Such a requirement would also represent undue interference with the day-to-day activities of the companies. It would also be seen by them as heralding a return to the detailed ministerial control of the operational aspects of the postal and telecommunications services that existed prior to the establishment of An Post and Telecom Éireann.

With regard to quarterly reports I should inform the House that I already get extensive quarterly reports from the two companies. These reports cover the principal operational areas of the companies. However, these are reports prepared for management information purposes. To have them prepared pursuant to a statutory provision would put them into quite a different category and would serve as another mechanism to pull the day-to-day operations of the companies into the political arena.

The Sale of Goods and Supply of Services Act, 1980, already applies to both companies, save for section 39. That section could not be applied to the provision of international services by either company, for reasons I will come to in a moment. There is also an exemption for internal services but there is an existing legislative mechanism for removing that exemption. In fact, the question of making an order to remove the exemption for internal services is already being considered but I could not anticipate the outcome as so many very significant factors have to be taken into account. For example, I am advised that application of that section to the postal service would require An Post to introduce detailed checking and tracing systems from acceptance point to delivery point in respect of each and every item passing through the post — over 450 million items a year. Such systems would have to provide not only proof of posting, and detailed monitoring of the progress of each and every item through the post to point of delivery but also proof of delivery.

The introduction of detailed tracing systems would add enormously to the cost of processing mails, reflecting itself in much higher prices to the consumer and the delays involved at acceptance point and each point of handling would be such as to make them unacceptable from the customer's point of view.

The registered service for inland mail, generally speaking, provides the type of protection for the customer which the Sale of Goods and Supply of Services Act, 1980, seeks to impose on the service as a whole. The pricing implications for the customer of imposing the same duty of care in relation to non-registered items would make the cost of posting a letter prohibitive in relation to other forms of communication which are available.

In general section 39 of the Act would impose a very heavy unreasonable burden on the company, add substantially to the cost of the service ultimately to the detriment of customers and impose delays in delivery, which would be totally unacceptable to customers effecting the transaction of business and commerce.

Both companies are exempted from section 39 of the 1980 Act in regard to international services because under conventions of the Universal Postal Union and the International Telecommunications Union, of which Ireland is a member, postal and telecommunications administrations do not accept liability towards users of international services except, in the case of postal services, for certain registered or insured services. Application of section 39 of the 1980 Act to international services is therefore impossible.

Application of section 39 to internal telecommunications services would pose serious difficulties for Telecom Éireann. By its very nature the service would be exposed to much contentious litigation. I do not have to spell out how difficult it would be to determine the extent of damage which might be caused through failure on the company's part in the provision of service if the provisions in the Deputy's Bill were to be adopted.

On the question of contracts, I note that the Bill would require An Post to enter into contracts for all charges to be made by it, the terms and conditions to be applicable to its services and the prohibition of transmission of objectionable matter. Assuming that An Post serves every household and business enterprise in the State, whether for internal or international services, or both, I would have serious reservations about the practicability of this requirement.

I have no difficulty about having regard to the performance of the company's services, before agreeing to an increase in charges. As I have already indicated, I monitor the performance on a continual basis.

So far as individual contracts for telephone subscribers are concerned all of Telecom Éireann's customers have agreements with the company. To enter into 750,000 contracts, which require amendment as each service or service charge is revised, would stultify the commercial activities of the organisation.

The charges for the services provided can be varied from time to time without the need to alter the agreements. This arrangement is commercially workable. A requirement to replace the agreements by contracts would appear to be much more expensive and an inconvenient way for Telecom Éireann to go about its business.

The Bill proposes an extension of the Ombudsman's powers by giving him a role in the drawing up of codes of practice and in the adjudication of disputes with customers. This would represent a major change in the Ombudsman's powers, as the existing legislation merely empowers him to investigate complaints and his final sanction in law involves reporting the results thereof to the Oireachtas. Accordingly, any proposals for changes in the functions of the Ombudsman would be more appropriate for consideration in the context of amending the legislation dealing specifically with his Office.

I have adverted only to my principal objections to the Bill. These cover points of substance affecting the policy under which these two major State companies operate. There are many technical points which I have not touched on but I think I have said enough to convince the House that this measure is not appropriate or opportune. Neither is it likely to aid the companies or their customers in any significant measure. I have given examples where the Bill could work to the disadvantage of the customers.

I accept that the Deputy's legitimate intention was to improve the whole level of responsiveness of Bord Telecom and An Post to their customers' needs and the constraints and to extend the public accountability of both companies. I think I have given enough examples where the Bill could work to the disadvantage of the customers rather than the intention of the Bill. Accordingly, I ask the proposer to reconsider the motion for a Second Reading of the Bill.

I welcome this Bill which seeks to give a better deal to the consumers of postal and telecommunications services as provided by An Post and Bord Telecom Éireann. The objective of the Bill is to ensure that both these companies would improve their responsiveness to customer needs and complaints and their level of service and charges would be brought more into line with the best standards prevailing in the EC. These are very desirable objectives and the Bill seems to be going the right way in trying to address these problems that undoubtedly exist in both companies.

However, one of the complaints I have about the Bill is that it is too confining. It provides for consumer protection and reduction of charges in only two of our commercial State-sponsored bodies. I would like to see the provisions of this Bill extended to other commercial State-sponsored bodies who have a monopoly also in terms of the services they provide, such as the ESB and the VHI board. Consumers of these services also need redress in relation to complaints and charges but they are not getting a fair deal because in a monopoly position which provides services that people need the consumer has no choice but to use those services even though he can be very dissatisfied with the level of service he is getting. For example, the ESB are required to break even on an annual basis and, of course, that is an easy thing to do if you can pass on all your costs to the consumer. They are not required to publish a report of performance on key indicators of quality of service to the consumer, including comparisons with charges for electricity in other countries, and there is no target for getting their charges down within a specified time frame. That is why it is a pity the scope of this Bill does not extend to other commercial State-sponsored bodies like the ESB.

An Post and Bord Telecom Éireann have achieved a great deal in the last few years and the structural change from the Civil Service to a commercial entity has undoubtedly led to a better standard of performance and an improvement in the level of service to the public. Bord Telecom Éireann since 1984 have cut their losses from £100 million to a virtual break even in 1987. The automation of the telephone network has been completed, the fault rate has been reduced and prices have not been increased over the last two years. However, the main priorities of Bord Telecom Éireann must be to reduce their prices in line with those prevailing in other European countries and they must give urgent attention to the whole area of customer relations now that other aspects of their operations have been put on a better footing.

The Bill proposes to establish a new code of practice for both BTE and An Phost for dealing with complaints. This code of practice would be drawn up after consultation with each of the companies, the Director of Consumer Affairs and the Ombudsman. I also note in the Bill it is proposed that the Ombudsman should be given responsibility for monitoring the operation of the consumer code of practice and that he should be paid a fee by both companies to cover his costs in relation to that function. I have no doubt that the Ombudsman would not object to that proposal, particularly as far as Bord Telecom are concerned because, as he highlights in his 1987 report, the number of valid complaints against Bord Telecom exceeded the number of complaints he received against the whole Civil Service.

The number of complaints about An Post also increased in the year ending 1987. In the same report, the Ombudsman drew attention to the very serious handicap he has vis-à-vis the cutbacks which have affected staffing levels and, consequently, the processing of complaints which have had to be delayed. That is a very unsatisfactory development as far as the consumer is concerned.

In the case of Bord Telecom, the Ombudsman reported a number of cases where the company failed to detect faults until extensive investigations had been conducted at his request. In two of these cases rebates of £1,600 and £1,700 were allowed by Bord Telecom. I accept that some complaints can be vexatious and that it is not possible to investigate every complaint, but the Ombudsman highlighted the need for a change in the company's procedures to enable them to be more effective in detecting faults and dealing with complaints in a reasonable time. The measures in the Bill will assist greatly in that whole area.

One of the main complaints regarding Bord Telecom service is the matter of telephone accounts and billing. Detailed information is not available on these at the moment and it is extremely difficult to get information and to have your complaints redressed. A high percentage of complaints about overcharging have been proved, on examination, to be correct after the Ombudsman had investigated them and it has been shown that the consumer has very great difficulty in trying to establish that he has a just complaint.

The chairman of Bord Telecom confirmed in evidence to the Oireachtas Joint Committee on Commercial State-Sponsored Bodies recently that the company are installing a call logging system which will alleviate the problems in this area and the Minister referred to this in his contribution. The system costs approximately £20 million and it is expected to be fully operational later this year. Any customer will be able to get a printout which will give details of a bill, including the duration, destination and time of call and a charge of £4 will be made for providing this service. The chairman of the board confirms that this was an investment which he personally did not want to make but, eventually, the company had to yield to pressure which was building up in relation to dissatisfied customers who were querying their charges. The chairman's view was that £20 million could have been better spent by Bord Telecom but, because of pressure from consumers in relation to bill queries, he felt the company had no option but to go ahead and install this system.

The chairman is also of the opinion that you cannot win when dealing with the public on the provision of a telephone service because, originally, the complaint was that the service was wrong. If you get that right, the complaint is that the billing system is wrong and, now that they intend to sort this out, he guaranteed that complaints will still come from people who will not believe the evidence detailed on the printout and who will deny that they ever made the calls. I do not accept that. He is being too cynical about the attitudes of people in relation to this matter. Consumers have a right to determine whether they are being overcharged and I am certain that the vast majority of complaints, after this logging system is operational, will be justified.

The other major area of complaint by telephone subscribers is the delay in having reported telephone faults repaired. The faults report system does not give a person information as to the nature of the fault or when he or she can expect their telephone to be back in action. You are left hoping that somebody will do something about getting your telephone repaired. It is right, as proposed in the Bill, that people should have redress when their telephone is out of service for some time, particularly in view of the high rental charges. Compensation should be paid if a telephone is out of service for more than a few days.

An Post have performed well since they were put on a commercial footing in 1984. They are moving from the legacy of inadequacy they inherited from the days when they were part of the Civil Service. The company made a profit of almost £3 million in 1987 but, of course, the major part of this was attributable to the fees they earned under the national lottery. It is important that there should be more transparency in the company's accounting system to highlight whether there is cross-subsidisation or loss making services.

Irish postal charges remain high in European terms and they constitute a cost penalty to consumers, particularly companies who rely heavily on the postal service for transacting business. There is, undoubtedly, dissatisfaction with many aspects of the postal service, especially in relation to delivery times. For example, while the company believe they are meeting their targets of 90 per cent of internal letters delivered the following day — the Minister confirmed that that is the position — independent research by the consumers' association has put this at 81 per cent. This unreliability of delivery has led to the growth of the private courier service in recent years.

Even though An Post are supposed to have a monopoly on the carriage of postal packets in the State under the Postal and Telecommunications Services Act, 1983, whether these courier services operate legally is not the point at issue. It is obvious that An Post must improve their service to the consumer by becoming more efficient in their delivery times and more cost effective in their overall operations. The annual targets set out in the Bill are very worthwhile in that regard.

By European standards, Irish postal charges are still high. At 28p — the price of a stamp for an inland letter — it is the fourth highest in 19 countries. The Department of Industry and Commerce review of industrial performance in 1986 noted that postal charges facing Irish industry were 36 per cent higher than the European Community average. This is a disincentive to new companies to locate in Ireland. In particular, it could hinder the effort to attract new service companies in sectors such as finance and mail order.

Apart from late delivery and high charges, another area of the services of An Post giving rise to concern is the withdrawal in many locations of counter services where sub-post offices have been closed. I accept that we have a higher ratio of post offices per head of population than other European countries, including Britain, but Ireland's relatively low population density must be taken into account.

Many of the users of counter services are elderly people or social welfare recipients who attend the local post office for payment of their social welfare benefits. It would be imposing hardship on many of these people if they had to travel a distance and, in many cases, the bus fare would be a major expenditure. I am particularly concerned about the closure of some sub-post offices in suburban areas which has been brought about by persistent robberies. An Post take the view that they can no longer afford to have a sub-post office in such areas but this is capitulating to the criminal. If we are going to deprive people of a service in an area because the State is unable to tackle the level of crime, that is a very sad comment on the state of affairs here.

There is another very important aspect of consumers' rights in relation to the services provided by Bord Telecom and An Post that I wish to raise and that relates to the interception of mail and telecommunications messages, which includes telephone tapping and the bugging of phone calls. At present the practice is that a warrant to intercept mail or place a listening device on a subscriber's telephone line is issued by the Minister for Justice on the advice of the Garda Commissioner or the Chief of Staff. The practice has been that such interceptions are not authorised by the Minister for Justice except in cases where it can be clearly established that it would be likely to provide information relevant to serious crime investigations or where the security of the State is being threatened.

However, this practice has not always been followed by the Minister of the day and, in fact, arising out of a court action some years ago the State had to pay substantial compensation to two journalists whose telephones had been tapped on foot of a warrant issued by the then Minister for Justice. The purpose of the telephone tapping on that occasion was apparently to listen in for information that might be coming from Government sources to journalists in the normal course of their work. The telephone tapping on that occasion was found to be unlawful and an invasion of the citizen's right to privacy under the Constitution.

I am surprised that Fine Gael have not brought forward proposals in the Bill to deal with the matter as they made great political capital out of the unlawful actions of the then Minister for Justice. The Coalition Government published a Bill to regulate this area of activity but it fell with the change of Government last year and the Government have not put the Bill, or a similar measure, back on the Order Paper. In order to eliminate abuses of the established practice and in order to ensure that similar breaches of ministerial powers do not occur in the future, my party will be tabling an amendment to the Bill, if it reaches Committee Stage, to ensure that a proper statutory basis exists governing the conditions under which any Minister for Justice has the power to issue warrants for telephone tapping or mail interception.

The Bill before us provided an opportunity for incorporation of up-to-date legislation on this matter and I regret it has not been included in it.

Is that not the function of the Department of Justice? Previous legislation was sponsored by that Department.

In my view the Bill before us is the appropriate piece of legislation to incorporate the measures I spoke about and I regret it does not do so. The ordinary law-abiding citizen is entitled to have legislation in place which protects his right to privacy and, if he believes that his communications have been improperly intercepted, he should have a statutory procedure available to him to enable his complaint to be investigated speedily. If his complaint is upheld, then the warrant should be quashed and he should be automatically entitled to a specified amount of compensation.

The Bill is useful in that it critically looks at what is wrong with the services that An Post and Telecom Éireann are providing. It requires them to make quarterly reports detailing the frequency of faults that arise in their services and also the level of charges which they are making. Undoubtedly, it would give the consumer better protection. We will be supporting it but we will be tabling amendments on Committee Stage to put its shortcomings right, if it reaches Committee Stage.

The intention of the Bill is to improve the responsiveness of Telecom Éireann and An Post to their customers. It deals with complaints and seeks to extend the public accountability of both companies. The Minister told us tonight he does not hold any objection to that. There is general agreement that the two companies have performed excellently since their formation but I wonder if the provisions of the Bill will improve the services they provide to their customers?

One should look at the performance of the two companies since their formation.

An Post was formed against a background of what one might call a difficult economic environment but within a short period of three years the company turned a loss into a modest profit in 1986. They improved their position in 1987. There have been many notable achievements by the company since 1984. The mail traffic volume is now 14 per cent higher than when the company was formed. We all must agree that the quality of the service remains high, with about 90 per cent of letters being delivered on the working day after posting. I am satisfied that An Post is doing a good job and providing a high quality and reliable service. I should like to express my appreciation to everybody involved in the success of An Post since its formation.

Since vesting day in 1984 An Post has displayed great energy, resourcefulness, and lots of imagination. From the outset the company presented a vigorous and vibrant image and adopted a number of initiatives. There are many examples such as the St. Patrick's Day cards, Valentine's Day stamps and the introduction of bureau de change facilities. The development of express mail service is being given a high priority by An Post. In a world where speed and reliability is becoming the norm a first-class express mail delivery is of great importance.

I am sure most Members were disappointed with the report for 1986-87 in that it stated there was an increase in the number of work days lost through various disruptions. However, it is important to state that there has been co-operation between management, the recognised unions and staff associations in the company. They looked at the procedures with the objective of keeping losses and disruptions to the minimum. Management changes in regard to decentralisation and the devolution of responsibility for day-to-day industrial relations matters have meant that problems when they arise are dealt with quickly.

The staff of all companies are concerned about the standard of their accommodation at work. In this regard An Post are doing remarkably well. From their own resources they are providing good quality staff accommodation and are engaged in a major building programme, including the provision of new delivery and sorting offices and the extension and refurbishment of existing post office premises. Between 1984 and 1986 An Post spent £7.67 million on building works and refurbishment schemes at 18 offices. In its formative years An Post needed Exchequer assistance and in 1984-85 received £9 million. This had to change because of the state of the public finances and the company had to be resourceful.

Debate adjourned.
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