Oireachtas Joint and Select Committees

Wednesday, 7 November 2012

Joint Oireachtas Committee on Transport and Communications

Postal Strategy Statement: Discussion with ComReg

9:30 am

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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I welcome the delegation from the Commission for Communications Regulation, ComReg. I welcome Mr. Alex Chisholm, commissioner and chairman, Mr. Kevin O'Brien, commissioner, Mr. Stephen Brogan and Mr. Séamas Plunkett who are with us to brief the joint committee on the commission's postal strategy statement 2012-14.

I advise that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable. I also advise them that their opening statement to the committee and the proceedings of the committee will be published on the committee's website. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I now ask Mr. Chisholm to make his opening presentation.

9:35 am

Mr. Alex Chisholm:

I am delighted to be here and thank the committee for the invitation. It is very useful for us to have the opportunity to discuss our work here. We appeared before the communications committee in its previous form in January and some of the members here today were present then. On that day we were mainly discussing electronic communications services. It is a great opportunity today to talk about post. I very much agree with the statement the Chairman issued last night that good communications with stakeholders is very important for us both in informing and in delivering on our strategy.

I am accompanied by my fellow commissioner, Mr. Kevin O'Brien, Mr. Stephen Brogan, our postal regulatory manager and Mr. Seamas Plunkett, our postal operations manager. We have a short presentation which, I hope, has been made available to the members of the committee. We will speak to that and would be delighted to take questions seeking clarifications as we go along or to have a discussion at the end.

Our mandate comes directly from legislation. We are the national regulatory authority under European law and the independent regulator under Irish communications law. Last year major new legislation, the Postal Services Act, was passed. That gave us a considerable number of new responsibilities as well as extending existing responsibilities. I believe the Act contains 66 postal sections and while I do not propose to go through them here, it is complex, demanding and important legislation and I know a number of you will have been involved in debating it.

Under the Act we have two key statutory functions: to ensure the provision of a universal postal service that meets the reasonable needs of users; and to monitor and ensure compliance by postal service providers with obligations imposed by them in the provision of postal services. We also have three statutory objectives: to promote the development of the postal sector and in particular the availability of a universal postal service within, to and from the State at an affordable price for the benefit of all the users; to promote the interests of postal service users within the community; and, subject to the first overriding objective, to facilitate the development of competition and innovation in the market for postal service provision. That is in order to ensure that postal service users derive maximum benefit in terms of choice, price and quality. It is interesting to note that there is a clear hierarchy of objectives with the first objective taking priority over the other two.

There have been important changes to the overall scheme of regulation for post both from the Act passed here and from the third EU postal directive which liberalised all postal markets across Europe. Obviously we have had to respond to that and we published our strategy in the knowledge of the overall liberalisation that has occurred. We are also very conscious of the significant changes taking place in the Irish postal market in common with all postal markets around the world. These are changes of a structural kind with in particular a very substantial move towards electronic communication. However, these structural changes have been also greatly exacerbated by the cyclical recession and the financial crisis we are experiencing. Obviously that has had a very significant impact on letter volumes, which have fallen by approximately 30% in the past five years. Furthermore this trend appears to be continuing and there is a significant threat in particular from electronic substitution, e-mail, texts, social media and so on.

The flip side of that threat is the opportunity particularly in the area of parcels that comes from the rapid growth of the fulfilment of online transactions - Internet commerce. In addition there is continued growth in advertising mail - direct mail - where the volumes in Ireland are low by comparison with international standards.

It is worth taking stock and recognising that post is one form of communication. An interesting report, published in July by the international postal corporation, the Boston Consulting Group, looked at all the different types of communication that exist. Judged by units of communication, post in 2000 accounted for 10% of the total when measured along with e-mailing, phoning and texting. According to the study, by 2010 it was just 1% of the total of all communication. That is measured by volume and not value, but nevertheless it shows that in the modern world there are many forms of communication and that presents a particular challenge to the postal sector.

The next slide has a graph that shows a strong historical linkage between overall economic activity and the volume of post, so as the economy improved the post improved with it and the same was also true on the downside. However, that linkage in Ireland and in other countries appears to have been broken in recent years largely because of technological change and e-substitution, meaning that as the economy has recovered somewhat from the worst of the crisis in 2009 and we hope will continue to recover, the extent to which postal volumes recover with that is much less. That presents a great challenge for the postal sector and puts particular pressure obviously not only on revenues but also on the need to manage cost in line with that.

When considering why postal volumes do not recover in the same way, it is important to consider that 80% of the volume of post comes from business organisations, large public organisations and charities. Most of that is one way, which is from business to consumers. When people are under pressure economically they try to manage their costs as best they can and in some cases they do that by communicating with their customers through their websites, by e-mail or text, or through social media, including Facebook and so on. Once they have invested in doing business that way, it is less likely they will revert to using the post. That is one of the reasons when people have moved away from the post it is harder to get them back. That is a significant point in considering the challenges facing the postal sector.

The next slide contains an extract from our postal strategy, a copy of which we supplied to the committee in advance. I do not propose to speak through the entire detail of that strategy because I want to have time for a proper discussion today. I will simply highlight the mission ComReg has for the postal sector. Through effective and relevant regulation, our mission is to promote the development of the postal sector, to ensure the provision and availability of an affordable, high quality universal postal service; to promote the interests of postal service users; and to facilitate the development of competition and innovation in postal service provision. We also have a number of high-level goals and I will ask Mr. O'Brien to talk about them.

Mr. Kevin O'Brien:

I again thank the members of the committee for the opportunity to appear here today. I will talk about our high-level goals, outlined on page 5. We have identified three high-level goals for the postal sector: to ensure the provision and availability of the universal postal service, which is very clear under the Act; to promote the interests of postal service users generally; and to promote the sector by facilitating competition and innovation. Pages 6 and 7 give some detail on the primary goal of ensuring the provision and availability of the universal postal service.

An Post is designated under the 2011 Act as the universal postal service provider.

What is the universal postal service? Under the legislation, this is the delivery and collection of mail every working day of the week. This requires ComReg to set out a minimum set of vital services that constitute that universal postal service. On foot of the 2011 Act, ComReg has consulted on the issue and has set out this minimum specification of services, which I will outline briefly. The universal service, as set out by ComReg following consultation on foot of the 2011 Act, includes a single piece service for letter, packets and parcels, a registered items services, an insured items service, a free single piece service for blind or partially sighted people, a bulk mail service and various other ancillary services. An Post is designed to provide these services.

We have designated this minimum specification in the public interest to ensure these necessary services are available to organisations, businesses and individuals throughout the country. We do this in a way that minimises the regulatory burden on An Post. Our three priorities for achieving this goal are identified on slide 6, namely, to ensure the universal postal service provider complies with its obligations, to ensure the appropriate incentives are in place in order that delivery of that service is efficient and, hence, sustainable, and to bring regulatory certainty to the environment in which the service is delivered.

It is important to acknowledge that on foot of the 2011 Act, An Post, as the universal service provider, has certain obligations and needs to operate within a particular framework, one which emphasises cost control, appropriate pricing and quality of service by the universal postal service provider. It is vital that An Post operates with a view to a sustainable universal postal service on this basis. There is an interesting quotation from the directive at the bottom of page 7, which in some ways melds the traditional and modern while identifying that postal services are vital for social and territorial cohesion and equally recognising that in the modern world the postal service is often the final leg of an e-commerce transaction, with, as stated by Mr. Chisholm, e-fulfilment being the final stage, namely, the delivery of a parcel in the post on foot of an online purchase. While mail volume has declined, the importance of the postal sector in the new world remains.

Our second priority is the promotion of the interests of postal service users. This applies to all postal services and not only universal postal services. As mentioned, postal services are vital for business and, in Ireland's case, particularly for small and medium-sized businesses, which depend significantly on the postal service to contact customers and receive payment. In this regard, reliability and affordability for the SME sector remain vital. In empowering the postal user, ComReg focuses on appropriate and transparent information and on ensuring all operators have appropriate complaint procedures in place. We pursue operators to ensure they uphold their obligations in this regard.

Our third priority, as set out on page 9, is the promotion of the sector through the facilitation of competition and innovation. Under the Act the promotion of competition is specifically subsequent to the primary obligation of preserving the universal postal service. Our focus is on providing certainty to all operators, on facilitating entry into the market and on competition in the market. The market has been fully liberalised since 2011 across all postal products. It is worth mentioning that we do not have competition law powers in relation to the postal sector. Those powers rest with the Competition Authority. We have a limited dispute resolution role in relation to access to the An Post network by other operators. We place a lot of value on promoting the sector and on carrying out and making available research on the full range of postal activity in Ireland. I will now hand over to Mr. Chisholm who will give a brief summary of our actions going forward.

9:45 am

Mr. Alex Chisholm:

The actions which we are taking are published as part of our postal strategy. We will continue to update in the months ahead. We believe in transparency and accountability for our actions as public servants. As such, we believe it is important there is clarity around what we have done and will do.

The first action is monitoring compliance of the universal postal service with all obligations under the Act, which relate in the main to tariff requirements, accounting and quality of service and access to infrastructure, including access points. The second action, which took up a great deal of our time earlier in the year, was the setting of the new regulatory framework in terms of the scope of regulation and the precise definitions of what services need to be provided under the universal postal service. This is a key building block for our work, on the back of which we are able to take forward much else of what we are doing.

In October, we consulted on and finalised the procedures for our involvement in any disputes that arise for access by postal service providers to the postal network. We also finalised this postal strategy statement following public consultation. We are grateful for the submissions we received in this regard from a number of interested parties in the industry. Those submissions have also been published. Members may be aware that in October we also published an update on the review of An Post's price application, in respect of which much of the work was done by ComReg, with some work being done by an expert economic agency called Frontier Economics. In the interests of transparency, that report has been published. We expect to receive shortly An Post's finalised application for a price increase. As stated, we will progress this matter as a priority.

We also intend to publish before the end of the year a consultation on An Post's price application for certain of its postal services. Once we have received the fully valid and complete application, we will consult on the matter. We would expect our response to this to be published in the first quarter of 2013. We also hope to approve or amend terms and conditions for the universal postal service subject to receipt of the proposed terms and conditions from An Post. These needed to be varied following the decision we made on the scope of regulation published in July.

In 2013, we will continue to monitor activities on compliance. As I stated, we also hope to publish our response to the price application during the first quarter of 2013. We also have to review all of the postal service providers' codes of practice from the point of view of ensuring they provide proper protections to users, as required by the legislation. We also need to set dispute resolution procedures for postal service users in terms of complaints, compensation and so on. Under the Act, An Post, as the universal service provider, has the right to apply, where it believes it has cause, for funding in this regard. To facilitate this, we propose to publish a draft methodology and to consult on this in the first quarter of 2013. We hope to have this in place in the second quarter of the year. There is also to be a price cap on the universal service provider.

It is a requirement of legislation. It is a complex measure to put in place. It is in the form of allowing for consumer price inflation increases minus X, where X is a factor to do with the provision of suitable efficiency incentives under the Act. We must devise this, calculate it and consult on it. We will do this and put it in place again next year. If a net cost arises and we receive an application for a net cost from An Post we need to determine whether it is an unfair burden and, if so, how it should be shared between potential funders. There are also the surveys which, subject to resource availability, we wish to commission.

Postal services are tremendously important and have a vital economic and social role in the country. We should not lose sight of this even with all the pressures and changes taking place in the wider communications marketplace. The centrepiece of the postal sector is the universal service; therefore, it is also the key to our work. It is just over a year since the introduction of major legislation. We are busy working through and implementing its requirements and we will continue to do so to the best of our ability. We will be guided at all times by the statutory requirements and our desire to ensure postal service providers meet the needs of all users and provide for sufficient value, quality and choice. We welcome any questions committee members may have.

9:55 am

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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I thank the witnesses for their presentation. I have no doubt it will lead to many questions. We are aware of ComReg's letter to the committee regarding the court case. Members have stated their intention to bring their interest in the future of An Post to the witnesses. They need clarification on many issues so we will proceed along these lines. We will speak about the future of services and the future of An Post. Given the huge challenges faced by An Post, from the recession to the increasing use of e-mail and the various other ways people can do business, what does An Post need to do to address the problems and issues it faces as an organisation and as a company?

Mr. Alex Chisholm:

That is a wide question, and given An Post's central role in the postal service, it relates crucially to the future of post in the country. Given the wide changes taking place, our expectation - which is also the expectation of An Post - is that there will be a further reduction in the volume of mail it processes, An Post's relatively small net margins and its sensitivity to scale, it is vital that, like any other business facing a big reduction in its revenues, it is able to manage its costs in line with this. This is a critical factor. ComReg is responsible for ensuring An Post has appropriate incentives for efficiency with regard to the price cap and any assessment of the universal service burden, which is also under European law. A second factor is that An Post may need to consider price increases with regard to the formerly reserved area of the core letter business and other areas. There were a number of price increases in the early part of the year. As I stated earlier, we are in the process of dealing with a price application for core letters. From our point of view, appropriate price increases that are in line with the requirements of the 2011 Act will form part of the overall response to the situation in which the company finds itself.

Outside ComReg's area, undoubtedly An Post will need to develop other streams of revenue and make the most it possibly can of the considerable assets it has, not least its reputation and reach throughout the country. These are outside the areas of regulation.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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The role of ComReg is that of a watchdog on behalf of the taxpayer and consumer. We have heard fine language, talk and discussion, but ultimately, ComReg is charged by the State, the Minister and the Oireachtas to look after the best interests of the people and ensure the country has a postal service. The issue of competition from electronic media has existed for some time. As we enter a deregulated postal market there is huge concern, particularly in areas with smaller volumes of mail in rural communities, about the sustainability of a rural service. ComReg is charged with ensuring universal delivery. What discussions is ComReg having in this regard? Recently ComReg levied a fine on An Post. Ordinary punters are very concerned to see one arm of the State fining another arm of the State.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Somebody's mobile phone is on and it is disrupting the audio equipment. I have already requested that people switch off their mobile phones.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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ComReg recently fined An Post €12 million. How did ComReg arrive at this figure? It is baffling to the ordinary punter. One would want an advanced degree in technical English to understand much of the documentation from ComReg. It behoves ComReg to ensure any discussions or documents are made available in plain and simple language for ordinary punters. Some of ComReg's recent documentation could in all honesty be referred to as gobbledygook rather than readable English. Everybody, whether young or old and whether in urban or rural Ireland, holds very dear the delivery of a letter and An Post's service. Will ComReg examine its overall strategy? What is ComReg's vision to ensure that not only densely populated areas but also rural areas are serviced by An Post in a deregulated market?

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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I run a small post office down the country. While I do not presume to know all the workings of An Post, even in the mail sector, I would like to put this on the record. My post office is approximately 240 miles from Dublin, so it is at the challenging end of the universal postal service obligation with regard to achieving deliveries. An Post is the designate for the public service obligation. How many other service providers are there throughout the country? In facilitating competition under the Acts, how many disputes have been brought to the attention of ComReg, and how many of these have been resolved with regard to An Post facilitating competition from other service providers in the use of its facilities?

I understand An Post has made an application for a price increase on some of the basic items and services it provides, including a rise in the cost of stamps. Can the delegates indicate when a decision is due to be taken in that regard?

In regard to the hierarchy of ComReg's objectives and priorities, as set out on page 2 of its submission, there is a suggestion that different weightings were applied, which is rather curious. Will the delegates clarify whether different weightings are applied and, if so, what their effect is in terms of prioritising objectives? I do not recall any discussion of weightings when we debated the legislation. Is this an initiative ComReg has implemented off its own bat?

I might be nit-picking here, but the graph Mr. Chisholm pointed out includes no information on volumes, even though he himself made reference to volumes several times in the course of his presentation. The graph does include information on GDP and GNP, which is interesting. While we all accept that volumes have reduced, it would be useful to have those data clearly set out.

On the quality-of-service indications, I am aware that ComReg has always placed great emphasis on An Post achieving the 94% next-day delivery standard. We are always hearing about plus and minus percentages and attainment levels in the mid to late 80s. I come from a challenging part of the country in terms of the next-day delivery obligation. In my local office, however, the entirety of the mail we accept is either delivered or there is an attempted delivery, one or the other. It would be interesting to know the locations of the blockages that were identified by the external consultants engaged by ComReg to assess the quality of service. Are they arising in the main sorting offices, for example, or in either rural or urban post offices? Are the blockages arising at the transport end, because of problems with the rail or road network? After all the years of gathering that information - which is paid for by the service providers, as I understand it - ComReg must surely have identified where the problem lies. We have not been able to find it out.

When we have put ComReg's complaints regarding the quality-of-service level to An Post management and operators, we are told that there is no co-ordination in terms of how those measurements are derived, the methodology used and so on. Will the delegates confirm whether that is the case? Part of ComReg's mandate under the legislation is to engage with service providers in a co-ordinated and co-operative way.

10:05 am

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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I remind Deputy Harrington that each speaker has only three minutes and other members wish to contribute.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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I have one final point, Chairman. Mr. O'Brien placed a great deal of emphasis on sustainability. It is hardly a sustainable scenario that ComReg might know where the logjam is arising but will not share that information in a co-operative and sustainable fashion.

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I thank the delegates for their presentation. However, like Deputy Noel Harrington, I am still unclear on several fairly basic points. I do not know, for example, how many people are employed by ComReg and what its annual budget is. I understand its costs are met by service providers. How many providers are there and what is the range of contributions received? How much has ComReg spent on external expertise in 2012?

I do not know whether the problem is with ComReg itself or with the regulations, but it is extraordinary that nowhere in its mandate for the regulation of postal services does it talk about value for money for taxpayers. There is reference to value for money for customers but not for taxpayers. In respect of ComReg's function to facilitate competition within the market, what is the line between facilitation and promotion? Given that the performance indicators ComReg uses to monitor postal services are key to any future decisions impacting those services, will the delegates elaborate on them? I understand PricewaterhouseCoopers does an annual performance review of An Post and that its indicators are consistently 3% higher than those shown by ComReg. We need to know what indicators the regulator is using and whether they are made known to all of the postal agencies.

I am particularly interested in ComReg's recent decision to appeal a judgment of the High Court to the Supreme Court. As I understand it, An Post and not ComReg will have to bear the legal costs associated with this matter. In a context where An Post is set to lose €27 million in 2012, I find it difficult to understand how this decision of the regulator, having already fined An Post €12 million, will help the company to fulfil its remit of delivering post to customers within this island and beyond. If the High Court found that the office I ran was working beyond its mandate and straying into an area in which I had no expertise, I would only run to the Supreme Court if, as in this instance, I knew I would not have to meet the ensuing costs myself. It is extraordinary that ComReg has made the decision to appeal this matter instead of finding some way, through mediation, discussion and negotiation, to resolve it without jeopardising the very industry the office was established to protect and promote.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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I welcome the delegates from ComReg and thank them for their comprehensive presentation. As Deputy Michael Colreavy pointed out, there are several fundamental issues that must be clarified regarding ComReg's role, activities and mandate. I was taken aback at the letter members of the committee received yesterday advising us - Members of the Oireachtas and legislators - that we are not permitted to ask certain questions, these being on matters which are of public interest. That is completely unacceptable. We should not leave the room until we get to the bottom of these important issues.

Only days after representatives of ComReg met this committee last January, they publicly announced their intention to pursue An Post through the courts, which is likely to result in a €12 million fine for An Post. I do not understand how the delegates could have attended that meeting and failed to advise the committee of its imminent intention in this regard.

I would like to know what the ComReg delegates think about informing the members of the joint comment of their actions in respect of a matter of significant public interest. If the ComReg delegates are not prepared to speak to the committee and share that information with members, will they tell me about sharing information with An Post? What communications strategy does ComReg have for its dealings on a day to day level with An Post?

A person from my background tries to fix problems before I pursue a significant public liability. We, the public, own An Post. We are the shareholder. Essentially, Mr. Alex Chisholm, the chairman of ComReg and his fellow commissioners have burdened me and the people I represent with a liability of €12 million. If whatDeputy Michael Colreavy states is true - if An Post has to pay the costs incurred by ComReg in its pursuit of An Post as well as its own costs in defending itself - there is a double liability for the State. If it is the situation that ComReg secures its revenue from An Post activity and at the same time pursues a legal case against An Post, that means An Post is paying on the double. The only people who seem to be coming out well on the other side are those in the Four Courts. They must rub their hands when they see the sight of ComReg. They see the open chequebook from An Post.

On the question of quality, I want the ComReg commissioners to share the benchmark they use in reaching a decision on a breach in the quality of service provided by An Post. By that I mean that the commissioners must have had some objective measure to establish the standard and I want them to share in public the precise measure they use vis-à-visother regulatory authorities across Europe.

There is another issue, which is a matter of public record. There was an article in the Irish Examiner on 12 October 2012, written by Aodhan O'Faolain. It outlines a case that the commissioners took on behalf of a citizen of this State with respect to a postal address. I suppose Mr. O'Brien is the responsible commissioner.

10:15 am

Mr. Kevin O'Brien:

I am a member of the commission.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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I cannot understand the incomprehensible folly, as I consider it, that Mr. O'Brien took in exposing the State to this liability. He needs to demonstrate here today the objectivity vis-à-vis the core principle of the organisation, which is to ensure a universal postal service provider complies to protect the stability of the universal service provision and to provide regulatory authority.

An Post is likely to lose a significant amount of money this year because of this sort of relationship, which we need to explore. I am asking the delegates to put on record the objectivity of the measure that they used with respect to arriving at the point made by Deputy Colreavy. How did ComReg arrive at the figure of €12 million? What objective criteria were used? That needs to be measured either in this market against the competitors. What competitors are being measured? What rule of thumb was used? We need to bring this into the public domain as soon as possible.

Mr. Alex Chisholm:

I thank members for their questions. I appreciate the views of members on the two matters that are before the courts. The first concerns the addressing case and the second relates to quality of service. Unfortunately, as members may be aware, I cannot comment on matters that are sub judice. Members will also be aware that the guidance we received from the committee is to avoid any comments on an issue that is currently before a court of law or about which court proceedings are imminent. We will respect and note the view expressed to us.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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With the permission of the Chair, may I intervene? Will the clerk to the joint committee make a reference to Standing Order 57, as we are giving evidence in a public committee? We are legislators. There is no point in somebody telling a legislator about the Standing Orders of the Houses of the Oireachtas. There is a standing order that provides that in the public interest we can ask any question, irrespective of whether matter is sub judice.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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We should allow the witnesses to respond in their own way to the questions that have been asked. We can return to the point the Deputy has made.

Mr. Alex Chisholm:

I will respond to the comments made by Deputy Michael Moynihan. I thank him for his summary of the role that we try to perform. I agree generally that we try to be a watchdog for the consumer, to uphold the public interest and to ensure the development of the postal sector. We are not a watchdog for the taxpayer. We see that as a role for the Ministers for Communications, Energy and Natural Resources and Finance, who are the shareholders in An Post. It is also the role of the Comptroller and Auditor General and other such bodies. We do not represent the taxpayer but we certainly represent the consumer and the user of the postal sector. We were asked for our view of the sustainability of the postal services in rural areas. Our view is that the universal postal service must be maintained and that provides for the collection and delivery every day of the working week. It is essential. In order to make that economically viable, as I tried to indicate in my opening remarks, it is very dependent on postal volumes being maintained. It will depend on the postal service providers to provide a high quality, efficient and valuable service to their customers.

From our point of view we want to give encouragement and incentives to provide an efficient service that provides quality and choice. We will also undoubtedly work on the quality of written communication. I apologise to the Deputy that he finds some of our expressions gobbledegook and we will work harder at that. I totally agree that all interested parties, including ordinary members of the public, should be able to read, understand and comprehend what we produce. We endeavour to reach that standard. We will try harder in future.

Deputy Harrington also spoke on the postal matter at our hearing in January 2012. I will try to answer his questions directly. In response to his question on service providers, we have received five authorisation applications and notifications. The answer to his question on the number of disputes that have arisen is zero. I should, however, note that the procedures were only finalised in October 2012, which is a relatively short time for disputes to have arisen. The Deputy also asked about the price application. We expect to have a finalised application in the next few weeks if not days and we will publish a consultation on that before the end of the year. We expect to have our response in the first quarter of next year.

Deputy Harrington expressed some surprise at the different hierarchies that we have under the legislation. The legislation makes it very clear that the primary objective of ComReg is to preserve the universal postal service and that takes priority over the other two objectives. Deputy Harrington noted that we included in our presentation a chart that shows that the historic link between postal service revenues and overall activity in the economy appears to have been weakened, if not broken.

There is more information on letter volumes, and that information is included in the report published in October. I have made a note to send Deputies a copy of that so they will have all the information we have available in the public domain about trends in letter volumes.

With regard to quality of service, we are bound under the legislation to set quality standards, monitor and ensure compliance. We have not fined anybody and the level of a fine is a matter for a court, as well as all considerations and evidence for that. We were asked where are the blockages. Our role is to set targets for quality and this is done by reference to international standards. Deputy Keaveney asked about benchmarking and we do that by reference to international standards in all other European markets. The role of An Post as the universal service provider is to identify where are the blockages in order to be able to hit targets. We should be clear about the different roles and we do not seek to manage the business.

We were also asked about the level of transparency in our quality of service targets. We publish them quarterly and they come with relevant supporting detail about the different services available. For example, there is detail of services within Dublin as opposed to between Dublin and the country areas. Deputy Colreavy asked about the resources available, including how many people are employed. We have four dedicated staff in the postal area and we are able to support those people through the work of the technical staff in ComReg. He also asked about the amount spent on external advisers. The last available published accounts, for 2010, have that amount at €522,000, and much of that is accounted for by the quality of service monitor which we are required to commission and execute on an independent basis. It is necessarily done by an independent research agency. The total spend in that year was €1.3 million.

The Deputy asked if this represented value for money. The €1.3 million sum is considerable but not large compared to an industry with turnover approaching €1 billion. ComReg has experienced the pay cuts, pension levies and other economies, including restraints on employment numbers, which have applied across the public sector. We have been able to reduce our costs for each of the past two years.

With reference to international comparisons, a report was done for the European Commission by an agency called WIK-Consult, and it considered the appropriate level of resourcing for postal regulators across Europe. It recommended a minimum of nine to ten people, so in that regard four people is rather less than what is advisable at the European level. We also had dialogue on the matter in preparing our strategy, and we received a submission suggesting that we should compare ourselves with the UK. Postcomm was the regulator in the UK and it had a staff of over 50 people; Ofcom has now taken on the role and its budget last year was approximately £8 million, or over €9 million.

I have said what I wished to about the court cases but Deputy Keaveney also asked about the communications strategy and working out matters in a practical way. He quoted from the Irish Examinerwith regard to a case taken relating to an ordinary citizen. In trying to resolve matters, we spent many months trying to find resolution at a staff level and a practical working basis with An Post. The case was brought before the courts by An Post.

We will hold consultations on how the levy funds our costs. It is provided for under legislation but we will consult interested parties to gather their views. With regard to benchmarking our performance as regulators, we pay much attention to best practice across the EU's 27 members. We are members of the European regulators group for postal services. In examining aspects of our work like accounting, quality of service, price caps or universal service funding, there is much detailed work at the European level and we take all due account of the best practice guidance available through that forum.

10:25 am

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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I thank the representatives of ComReg for the presentation and coming before the committee. It is disappointing that the witnesses are using the excuse of matters being sub judice in not answering certain questions. A High Court decision has been made and nothing that would be said here or elsewhere will change that, even if the matter goes to the Supreme Court. We will not give ammunition to anybody else, taking into account what has already been said. It is crucial for us to find out what methodology can be used by ComReg in judging performance and how it came to a stage where a fine will be imposed. The fine is a massive amount of money. Has any other company faced a fine of that nature? The company in question would not be as rich as many others and the fine seems to be very excessive. Perhaps the witnesses can tell me if any other company faced a bigger fine than this?

Are complaints from customers used in the measurement process, bringing an action against a company or imposing a fine? An Post has one way of measuring its performance and ComReg has a different method; they do not meet in the middle as there is a slight difference between them. Surely there should be a common way of judging the performance of a company. I do not know why there are two different methods, as it does not seem to make sense. As far as I can gather, in other European countries there is a common methodology that is widely recognised. Mr. Chisholm mentioned the use of consultancy firms, giving the figure of €1.3 million. I presume there are consultancies in dealing with companies other than An Post. There must massive amounts of money in question if this is only to deal with An Post. I would like a flavour of the range and costs in using outside advisers, consultancy firms, etc.

As far as I am aware, An Post has one of the lowest postal rates in Europe, although Mr. Chisholm may tell me if it has not. I do not recall an increase being imposed for many years. This can be contrasted with ESB and Bord Gáis, which are making millions of euro. I cannot fathom how those increases are justified. When the privatisation leading to the current ESB and Bord Gáis began, many areas were fattened up in order to sell to private concerns.

The price increases were unnecessary. The cost of Ireland's electricity was one of the lowest in Europe at the time. Now we seem to be paying much more while the companies in question are making significant profits. What is the justification? It does not make sense.

How does the Commission for Communications Regulation, ComReg, work with the Northern Ireland Authority for Utility Regulation, NIAUR? Is there constant communication and regular meetings to monitor how well everything is working North and South?

10:35 am

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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I will not be able to stay until the end of the meeting because I must attend another meeting, but it is important to ask my questions. Without referring to individual cases or what might be before the courts, I have a simple and fair question for ComReg. As a publicly funded regulator set up by a statute of the Oireachtas and answerable to the Houses, does it recognise the legitimacy of the High Court and accept judgments of same? It seems that ComReg does not. As a wing of the country's governance, that a statutory regulator would take an à la carte approach to the High Court is concerning. The Government will need to reflect on this serious issue.

I will not refer to a particular case, but this smacks of the good old days of 2008 when people in Ireland's public services believed that there was an endless train of money and that they could swan up to the "Four Goldmines" at the drop of a hat because someone else was paying for it. Someone is paying in this instance as well.

It was mentioned that ComReg is not meant to be a watchdog for the taxpayer. That ComReg is not a watchdog is perfectly clear. It is not a watchdog for anyone bar itself. ComReg seems to be putting on a front for the High Court while making it clear that, come hell or high water, ComReg's legitimacy and purpose to exist will not be challenged. This is remarkable.

An Post is effectively operating on its own in a regulated market. In some instances, ComReg expects next-day delivery services to include the likes of Good Friday. Since Job was a boy, everyone has known that little occurs in Ireland on Good Friday. Deputy Harrington is correct, in that costs have been placed on An Post time and again for years. ComReg seems to believe that An Post is a hopeless case that cannot deliver post on time, yet the regulator cannot identify where the gaps are.

ComReg will disregard a judgment of the High Court and appeal to the Supreme Court because An Post rather than ComReg pays for it. The penny needs to drop. There is no difference between the consumer and the taxpayer in this instance. They are one and the same. The Government must reflect on what the regulator is being allowed to do at a significant cost to the taxpayer. At a time when the country is bankrupt, going to the Four Courts at the drop of a hat, incurring significant costs and showing affront to the High Court is immoral for any wing of Ireland's governance.

Mr. Alex Chisholm:

I respect and take note of the opinions given. Regarding appeals to the Supreme Court and the extent to which we respect the High Court-----

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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To clarify, who is actually paying the costs? I am unclear as to whether it is ComReg or An Post. This issue is important to the debate.

Mr. Alex Chisholm:

From ComReg's point of view, we represent the public interest. The way in which we are funded in the postal area is by means of a levy, which has been in place for a long time. A new levy will be required under the new legislation. Historically, the levy has been paid by all members of the postal industry. The basis on which it will be calculated in future is a matter on which we will consult in the first part of next year.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Who will get the bill?

Mr. Alex Chisholm:

It depends on the consultation.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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No. For clarification, who will get the bill?

Mr. Alex Chisholm:

It depends on that matter.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Simply tell me to whom the bill will be posted.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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That is a fair question. The public wants to know who will pay for it.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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To whom will the bill be posted? It is a simple question. I have tried to be fair, but something has come across glaringly. Mr. Chisholm is evading a question. Who will get the bill?

Mr. Alex Chisholm:

I am not evading questions.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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You are. I want to know to whom the bill will be posted.

Mr. Alex Chisholm:

First, it depends on who wins the legal case, which is a vital matter.

(Interruptions).

Mr. Alex Chisholm:

There have been no invoices and no bills have been presented for this to date.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Who will be presented with them?

(Interruptions).

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Deputies, please.

Mr. Alex Chisholm:

We will not-----

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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On a point of order.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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May I seek clarification?

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Deputy Keaveney has raised a point of order.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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I am beginning to understand that ComReg gets its resources and money for current expenditure from a levy on the industry. My point of order is that the Chairman has been given his answer - the industry is paying. ComReg gets its money from three private operators and the public operator. Essentially, the people of this country are paying for this action.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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May I ask something?

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Is it on a point of order?

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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No, a point of information. Forget about the court case in question. ComReg has taken other cases in respect of postal services. Who has paid for them?

Mr. Alex Chisholm:

I am happy to reply. Under the Communications Regulations Act, we are bound to uphold the law and ensure compliance. Members will appreciate that this sometimes means we must resort to the courts. We follow the procedure laid down by the statute, the Oireachtas's legislation, for doing that. When bringing those cases, we have every regard to economy.

Members have asked what costs we have had to bear. In all of our court cases in the past five years, we have never paid any other party's costs. In many cases, our costs have been paid by the other side because we have had good outcomes.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Some costs were paid by An Post.

Mr. Alex Chisholm:

Not from An Post.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Who else?

Mr. Alex Chisholm:

I am referring to the entire communications sector. In the past year, we brought a number of compliance cases. Not only were our costs paid, but substantial financial penalties were paid. Deputy Ellis asked a question in this regard. We have had payments of €500,000 and €1 million from the sector. In other jurisdictions, larger postal fines have been applied. We have had regard to those types of amounts.

From the point of view of the proper management of our expenses, one of our three core functions is to ensure compliance with the regulations. One cannot ensure compliance just by asking people nicely. We try to do so and to work with people, as Deputy Keaveney suggested, to reach good solutions, but if people do not comply, we must adhere to the procedure laid down by statute, which the Oireachtas adopted last year following Government proposals. I hope that I have answered the question as clearly as possible.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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Will Mr. Chisholm answer-----

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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One second, please. Allow Mr. Chisholm to continue.

Mr. Alex Chisholm:

I thank the Chairman. Deputies Ellis and O'Donovan asked further questions. I have mentioned the fines and other payments following compliance actions in the electronic communications sector.

I would also like to speak about the system we put in place with Eircom in regard to its own quality of service performance. It, too, has targets and has struggled at times to meet its targets. We put in place a performance improvement programme with a €10 million bond four years ago. Every year since then considerable improvements have been made in quality of service under these financial incentives. Payments have had to be paid where they have fallen due. The system is working well and delivering terrific benefits and savings for the consumers who I am sure this committee would like to represent.

In regard to the questions on the ESB and Bord Gáis and their profits and the actions of the Northern Ireland regulator, I suggest those questions are best put to the Commission for Energy Regulation. We have no responsibility for energy. We only deal with the communications sector.

In regard to postal prices and rates and comparisons there, I agree it is the case that in respect of the core letter post, what used to be the reserved area, there have been no increases in prices for the past five years. Indeed, there have been no applications for such until this year. However, there were a number of increases in the non-reserved area. If one is trying to make comparisons between postal prices paid here and in other jurisdictions in Europe, the European and OECD guidance say that one should not make direct comparisons, or overly precise ones, because there are differences in the postal schemes in place, most particularly, a number of countries have a two-tier service and we only have a one-tier service.

Putting that all to one side, it is the case that ordinary letter prices here are relatively low, which is obviously a consideration we will take fully into account in considering the price application from An Post, and that there has not been any increase, even for the consumer price index, in recent years. The legislation, where it refers to the postal price cap, suggests that a CPI allowance should be made, so again that is a consideration we will have to take fully into account.

10:45 am

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick, Fine Gael)
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I asked a simple, straightforward question, which I will ask again. Does ComReg recognise the legitimacy of the High Court in making a determination in regard to matters brought before it?

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Mr. Chisholm omitted to-----

Mr. Alex Chisholm:

My apologises. I did not answer that question but I had intended to. The Deputy asked a straightforward question. Without question, we fully recognise the validity of the High Court. The only reason we have for bringing appeals against decisions of the High Court is when we think it is absolutely merited on questions of law. We brought an appeal in regard to the premium rate services sector earlier this year where a stay had been granted to protect certain operators in that sector from the full effects of a consumer protection code we had put in place. A judicial review was also made against that decision. We had to appeal the decision of the judge in that matter because we thought it merited the appeal. Following that appeal to the Supreme Court, the judicial review was dropped and the code is now fully in effect. We had to take that action in that case. Incidentally, this has been at no cost to the taxpayer as our costs in that matter have been fully recognised by the other party. We take action extremely sparingly and where it is essential.

Section 52(9) of the postal legislation states that a determination of the High Court on the hearing of an appeal under this section, which is what happened in this case in that it was a judicial review and an appeal, is final except that by leave of the High Court an appeal on a specified question of law shall lie to the Supreme Court. Getting heard by the Supreme Court is not automatic and it must be determined whether or not it will take the case. That is the legislative provision we are acting under in bringing an appeal. It does not show a lack of respect for the High Court, which we respect entirely.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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In regard to the budget for ComReg, is it possible to state how much it costs to run the office each year? How many staff does it have? Are bonuses paid to executives? How much has ComReg spent so far in taking the legal case against An Post? What are the anticipated costs associated with this case when it goes to the Supreme Court? Why is ComReg not agreeing a level measurement of service with An Post? Why is there no accountability as to how it comes up with its measurement system? Why is there complete duplication, with An Post having to pay on the double? It is paying for its own measurement system and it is paying through the levy which ComReg charges it. Why can that not be agreed on? When does ComReg expect it will make a decision on the price increase request An Post has made? Why does the process seem to take so long to go through?

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I have found this morning frustrating. My job is to represent the people who pay taxes and I find I am unable to get the answers I need to do my job properly. The High Court decided that ComReg cannot micro-manage the postal delivery network and I think that is the reason ComReg has taken the case to the Supreme Court. Whatever the reason or the rationale, one thing is for sure: the costs associated with this will not improve postal services in this country. There be will damage done to postal services, people working in An Post and the taxpayers of this country.

We need to bring the Minister before the committee to look again at ComReg's mandate because if it is too loose or cannot be explained in simple English to the members of this committee and to the public, then it needs to be reviewed. I make a formal proposal that the Minister is brought before the committee.

Photo of Tom FlemingTom Fleming (Kerry South, Independent)
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I second that.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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We can discuss that in private session when we are planning ahead.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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The people demand a universal postal service. That is being provided for and ComReg oversees that, which is part of the remit we have given ComReg. That is accepted and what should happen.

I asked a question on the objectives of the regulation of the services. Mr. Chisholm answered it by outlining the function of ComReg. He said the first objective was to promote the development of the postal sector and, in particular, the availability of the universal postal service and so on. That means specifically dealing with An Post and no other operator. An Post is the universal service obligated company. An Post has said that ComReg does not interact with it to improve the mail quality. It arrives at a figure of non-compliance. An Post has said it cannot get any information from ComReg on how it is arrived at or the detailed information which its consultants have in arriving at that figure.

Looking at its primary objective in regard to the postal service, I would have thought ComReg would be more forthcoming with that information. Does ComReg provide An Post with the most detailed information it has in regard to the quality of service and delays in delivery times? If not, why not? That is a fundamental question. We need to have trust that An Post does what it is supposed to do with the obligation, and we need to have trust in ComReg. If those figures are available, ComReg should make them available to An Post or to this committee.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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If the quality of engagement which has taken place today is the type of engagement which has taken place with An Post, I would be incredibly concerned by the degree of clarity and accountability.

I agree fundamentally that we need to get the Minister in to determine what amendments are required to the legislation to ensure accountability, particularly by people who are hiding behind mandates. I want to know how the figure of €12 million was arrived at. Who made that decision? I want the scientific measure that determined where the systems failed in An Post, warranting a fine of the scale of €12 million, to be put in front of the committee today. What consultation took place with the management of An Post to ensure An Post was absolutely clear where its systems were failing vis-à-visthe matters that resulted in the €12 million fine? The €12 million came out of a hat a number of weeks after the last presentation by ComReg. In view of the detailed communication that happened at our last meeting, if that is the level of communication that took place with An Post, I am not leaving here until I have an answer on how we got to the quantum of €12 million. I want to see the documentation - the consultants' report that points out where An Post failed on service delivery that warranted a fine of €12 million. I am not leaving the committee until that information is provided. There is to be no waffle on it. I ask for the information.

10:55 am

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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It is over to Mr. Chisholm.

Mr. Alex Chisholm:

I wish to inform Deputy Flanagan that we tried to answer those questions previously but I am delighted to provide the answers again for his benefit. We have four staff members dedicated to the postal sector. They are assisted by other staff of ComReg in respect of some of the more technical work.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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What is the total number of staff in the office?

Mr. Alex Chisholm:

There are 122 people.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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It took a long time to get that information. From 104 to 122. That question was asked three times this morning.

Mr. Alex Chisholm:

I was not asked a question about the total number of staff.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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That is the quality of the answers we are getting.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Please allow Mr. Chisholm to respond. Deputy Flanagan is getting the response.

Mr. Alex Chisholm:

I understood the previous question was how many resources we had in the postal sector, because we are talking about postal services today. The answer is that we have four staff. The budget in 2010 - the last accounts available - was €1.3 million. The legal costs have not been estimated or forecast. Once the case has been decided, it has to be determined who has to pay them. That is then subject to agreement for taxation and when these matters are settled we will account for them, as we do for all of our expenditure, to the Comptroller and Auditor General.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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Is it possible to know how much is caught up in legal fees at this time?

Mr. Alex Chisholm:

Unfortunately not, because the ordinary process when cases go before trial is that at the end of the trial - it has been agreed that this is normally the case - the costs go according to the person who wins the case. In this situation, since the case has gone to appeal, that has been held over until that matter has been resolved. Until then, it is not clear to whom the costs will fall. Also, both parties must do an estimate of their costs which they share with the other party. Sometimes there is negotiation around that and sometimes it goes direct to external taxation. It would not be possible for us, during an interim stage, to give an estimate of the costs for those reasons. I apologise for that. I understand the question fully and would like to be in a position to answer more fully. In regard to performance quality, the Deputy asked if we could agree the standards with An Post.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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To be more transparent.

Mr. Alex Chisholm:

Yes, to be more transparent. As it also relates to the question from Deputy Harrington, I will try to deal with both of those. As to whether we agree it, obviously - since we have a statutory function to set, on an independent basis, what the correct target should be - initially it is not an agreed target but one on which we consulted. We received views and representations from An Post and other parties but we did not exactly agree it with An Post. It is the same for any other regulated activity. If one were to ask Eircom or any other regulated business what kind of arrangement or target would suit it or what it would like, that would be an agreed target, but it would not necessarily be the most appropriate target having regard to the public interest and the desire to improve the standards of quality in the interests of users and consumers. We set it. It was also the case that An Post accepted that target once we had set it and worked towards it, making considerable progress up until 2010. Then, unfortunately, that progress stopped and left our estimate 10 percentage points short. That is not to say it is agreed with An Post, but the position of the company, as many have stated in public, is that quality of service is of paramount importance and vital to its ability to sustain the universal service and to satisfy its customers. On that we agree with An Post.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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Is it fully transparent, so that it may know what it is being measured against?

Mr. Alex Chisholm:

It is absolutely transparent and is in line with the CEN standard. I apologise for using jargon. The CEN standard is the standard set at European Union level. An independent research organisation is required to undertake the monitoring. That is done to a very high standard by a suitably qualified independent research organisation which is chosen following a competitive tender and is subject to further independent audit with regard to the way it goes about its work. To the extent that we can - that is, to the extent that it is compatible with the integrity and independence of the research - we do share the results with An Post.

The Deputy also asked about the price application and its status. As mentioned earlier, we had an application at the end of last year. Some information which was missing took a while to collect from An Post. Once we had it all together we made an assessment of it and when we shared that assessment with An Post it said it would amend its price application. That happened last month. Having regard to all of the detailed assessment we have done, we are in the late stages of finalising that amended price application with An Post. When we have it we will publish it and consult publicly during the next few weeks. We hope to have a response to that price application in the first quarter of next year.

With regard to the mandate for ComReg, that is, as the Deputy rightly said, a matter for the Minister and the legislation passed last year. I take issue with Deputy Keaveney's contention that we are hiding behind our mandate. We are certainly not hiding behind it. We are working strenuously to fulfil it.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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I take grave issue with Mr. Chisholm's refusal to account for matters of public record. He wrote to the committee yesterday implying that matters were sub judice. I take issue with the fact that he has tried to pave the way for the type of question to be put in a public setting. I would like a frank response to the questions. Mr. Chisholm may take issue with whatever he wants. I want a frank response with respect to the particular questions. May I have the name of the auditors used? We should invite the auditors to appear before the committee if the questions are not answered here. If public money is being spent, I want to know why.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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I asked a question in regard to the information gleaned from the CEN process. Is there a reason the information - not the results - achieved through that process is not shared?

Mr. Alex Chisholm:

Perhaps there is a misunderstanding, which I can clarify. The work done by the independent research agency is not to try to identify the blockages as advised to An Post. It simply monitors the results, using a panel of people all over the country. In this way it can make sure it gives us good information, which we publish, on the quality of service under the different standards - day plus one, day plus three, etc. - over the course of the year.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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This-----

Mr. Alex Chisholm:

It does not try to identify the causes. That is the responsibility of An Post. I understand it uses consultants from PricewaterhouseCoopers to do that work. That has nothing to do with us; it is work done for An Post to meet its needs in terms of hitting the target.

11:05 am

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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There is an issue with regard to this being sub judice.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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No, this is about the process. ComReg has that information, which is, ultimately, paid for by An Post levies. An Post has said ComReg does not share the information gained in its quality of service measurement or does not assist An Post to improve its service. It is fine if ComReg has taken the decision that is not what it wants to do. ComReg has stated it does not seek to manage An Post. Its statutory objective gives its primary weighting to promoting the development of the postal sector and, in particular, the availability of a universal postal service, within and to and from the State, at an affordable price. Can Mr. Chisholm give me a logical reason ComReg cannot share the information with An Post that would help it identify the issues ComReg has raised in regard to compliance? How can the decision not to share it be married with the objective to promote the development of the postal sector? For example, is it not in ComReg's interest to ensure this does not torpedo An Post under the waterline?

Mr. Alex Chisholm:

I will ask Mr. Plunkett, the manager in this area, to deal with this in a moment. Perhaps he will be able to provide a more detailed understanding of what we do. Before that - the Deputy referred to correspondence which suggested we have not had much interaction with An Post - I want to emphasise that we have had significant interaction with An Post over the past several years, including in regard to the quality of service.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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May I have the dates and times, prior to the €12 million being levied, of where corrective action was proposed by ComReg to avoid the levy being imposed? I want to see the paperwork. Who did ComReg speak to in An Post? I want Mr. Chisholm to inform the committee for the public record what action ComReg took to provide the information to which Deputy Harrington has referred and to tell me from where or how it decided on a levy of €12 million. Why €12 million? Why not €1,200?

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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Can Mr. Chisholm answer that?

Mr. Alex Chisholm:

The most important public notification to An Post from ComReg about its deficiencies in meeting the quality of service target and the corrective action it needed to take was issued to it in 2009. I would be delighted to forward the information published at the time, which gave An Post a clear deadline by when it had to improve the quality of service to meet the necessary target.

I am conscious that Deputy Harrington has asked a number of times about the quality of service monitor. Obviously, we cannot speak about anything that relates to the court case, in line with the Chairman's guidance to the committee. However, I will ask Mr. Plunkett to provide a little more detail to help committee members understand the function of the quality of service independent monitor, how it is operates and what we can and cannot share with other parties.

Mr. Seamas Plunkett:

It is an end to end monitor rather than a transponder monitor. Therefore, the monitor itself cannot identify where the errors are in the end to end process. It merely measures the performance from end to end. That is simply what it does. It is not a transponder system.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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Is that the recognised, valid, technical monitoring system throughout Europe, an end to end monitor, no transponder and no tracking rate? That technology is widely available. It seems a lot of money to pay for an end to end monitor. A university class project could come up with something better than that.

Mr. Seamas Plunkett:

I understand An Post has a number of monitors itself that identifies issues.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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It says something different.

Mr. Alex Chisholm:

Our role is to set the target and to monitor performance against that target. Therefore, it is the result that counts for us. The contributing factors to that result and how to resolve them are a matter for An Post. That is our view of the distinction between the different roles we have.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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What Mr. Chisholm is saying, therefore, is that ComReg does not have the information An Post seeks.

Mr. Alex Chisholm:

An Post certainly has a huge amount of information, because it has to hit the target.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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That is the point I am making. An Post has information and it is saying it has a result. ComReg will say that of course An Post will say its information is better. ComReg seems to be saying that An Post is looking for information ComReg simply does not have. Is that correct?

Mr. Alex Chisholm:

We publish all the results of the monitor. We do not hide that information from anybody.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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I want an answer with regard to the €12 million. How was that constructed? Who made the decision? What scientific measure was used to justify it? I want an answer on that before I leave this meeting.

Mr. Alex Chisholm:

I have given an answer on that, not once or twice, but three times. It is that following the advice of this committee's requirements, we must avoid any comments about an issue that is currently before a court of law or about which court proceedings are imminent.

Photo of Colm KeaveneyColm Keaveney (Galway East, Labour)
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We will deal with this again.

Photo of Tom HayesTom Hayes (Tipperary South, Fine Gael)
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We will wrap up. I thank the witnesses for coming before the committee. We have a big problem on our hands. We have set up as a committee to examine the future of An Post and we and the public are very concerned about it. We are at odds now with regard to where we are going. Our concern is the future of the post office network. We live in a changing Ireland and issues must be addressed. We have a big problem here that needs to be addressed. We need to bring in the Minister, An Post and everybody else involved. We will certainly need to invite ComReg back, because there is a significant gap between what it is saying and what the public wants. That is it for today. I thank the witnesses for attending.