Pat Rabbitte (Dublin South West, Labour)

I move: "That the Bill be now read a Second Time."

I am pleased to present this Bill for the consideration of the House. The Communications Regulation (Postal Services) Bill is the first piece of legislation I will be introducing to the 31st Dáil and I am pleased that it is such a significant one. The Bill was passed by the Seanad last December and was introduced in this House prior to its dissolution in February. I have read with interest the contributions made by Senators and Deputies during the earlier Stages of the Bill. As befits a discussion about a service that is so important for the country both economically and socially, many Senators and Deputies spoke on the Bill and I agree with many of the sentiments that were expressed.

Although the Bill I am re-introducing today is as passed by the Seanad, I wish to advise Deputies that there are a number of very specific proposals with regard to the Bill in the programme for Government, to which I will give my full consideration before Committee Stage. These proposals include the duration of the designation of An Post as the universal postal service provider; the provision of Exchequer funding for provision of the universal postal service; and the requirement for ministerial approval for ComReg's decision on the designation of a universal service provider. My consideration of these proposals will be guided not only by my own deliberations and meetings with relevant stakeholders, but also by the discussions in the House. I look forward to listening to contributions from across the House on this important Bill. I intend that at the end of the legislative process the Bill will reflect the concerns and wishes of those who spoke and the people they represent, in so far as these correspond with the best approach for Ireland as a whole.

The postal services market has been fully open to competition since 1 January of this year under the third postal services directive, and competitors to An Post are now free to enter the letter post market. The aim of the Bill is to establish a robust regulatory framework for this newly liberalised postal sector. The economy and society at large need a strong and vibrant postal service, and a framework is needed which takes account of the significant challenges facing the sector over the coming years. The Bill incorporates mandatory provisions under the third postal services directive, such as the safeguarding of the universal postal service and the removal of the remaining area reserved to incumbent postal service providers, plus other provisions to achieve the spirit of the directive. This directive is a significant milestone for the postal sector in that it is the final step in the opening of the market.

The Bill aims to strike a balance between safeguarding the universal service, protecting consumers' interests and establishing a framework for the development of a competitive postal sector providing high quality postal services. It represents a pragmatic approach to the opening of the postal sector and the aim is for the individual consumer, the business sector and the wider economy to benefit from increased competition and a broader range of services.

That the sector is facing challenges must be acknowledged. Liberalisation and competition will pose challenges for An Post, but there are far greater and more immediate threats to An Post and its business model. The ongoing effect of the recession and the impact of electronic substitution are having a far greater impact on An Post's letter post market than will any market entry by traditional postal competitors. The migration from post to electronic communications will only accelerate and it is essential that An Post adapts to this new reality. An Post's situation, however, is not unique. Postal service providers worldwide are having to reinvent themselves. A reliance on legal protections that shield An Post from competition will not ensure it is in a position to face other challenges. In fact, ignoring or turning a blind eye to liberalisation only delays acceptance of the reality of the postal market and, as trends accelerate, will leave An Post in a weakened position and less able to compete.

As a form of communication, the postal sector worldwide has evolved. A total of 90% of letter post is now business-related and this has implications for how postal service providers, including An Post, must position themselves. It requires far greater flexibility and a focus on innovation to meet the evolving needs of users, particularly business users, and maximise the value added by post to their customers. A commercially focused An Post, offering high-quality, competitively priced services, is a must for the development of the postal sector. This was the strong message from stakeholders, including competitors and potential competitors to An Post. Everyone expects that An Post will remain an important player in the market.

An Post must look afresh at its relationships with its customers, and, indeed, its competitors, and adapt accordingly. It must actively seek to meet the needs of its users, consider ways of harnessing the potential of electronic communications and incorporating them into its product offerings and increase its business accordingly. Success in this regard will be critical in ensuring that An Post remains strong and is the postal delivery company of choice for the foreseeable future.

An Post has many genuine strengths, such as its dedicated workforce, its trusted brand and its strong, visible presence in every community in Ireland on every working day of the year — a presence that few, if any, competitors will be in a position to replicate. An Post and its staff must play to these strengths and ensure that its resources are aligned with the needs of its users. To do so will involve significant change and I understand this is under way. The adoption of such a strategy offers the most sustainable future for An Post and its workforce, given the third postal services directive is a reality. A continuation of the partnership approach, which has delivered significant benefits for An Post in recent years, is the best way for the organisation to thrive in a changed postal landscape.

The Government is committed to a strong and vibrant An Post. Currently, it wins a significant volume of business from Government departments, both for postal services and financial services delivered through the post office network. However, while the Government will continue to strongly support An Post, a reliance on Government contracts in the future is not a valid or robust strategy for it to take to address the challenges it faces.

The Bill does not impact on issues such as the rural post office network, post office banking services and other savings services supplied by An Post. In addition, the delivery of Government and financial services through the post office network is not affected by the Bill. The strong presence of An Post throughout the country will continue, but An Post must fundamentally reinvent itself and I am confident that the management and staff are capable of this. Along with some compulsory elements of the directive, a number of decisions are left to individual member states with respect to how the directive is transposed and stakeholders have been widely and comprehensively consulted on the general approach reflected in the Bill.

The legislation sets out the high level principles underpinning the regulatory framework, striking a balance between ensuring the provision of the universal service, enabling the development of competition and putting in place provisions around consumer protection. Safeguarding the universal postal service is one of the explicit requirements of the directive and is central to this Bill. The universal postal service will ensure the collection and delivery of mail to every address in the State on every working day and it is important that this minimum, but significant, level of service is enshrined in primary legislation.

Another central theme of the directive and the Bill is the protection of the interests of users. In addition to ensuring the universal postal service throughout the country, the Bill also provides for complaints procedures to apply to all postal service providers. The introduction of a price cap will afford protection against significant price increases for those users, including individuals and small and medium enterprises, who do not have the bargaining power to negotiate a better deal for their postal services.

Market opening is a requirement of the directive and the legislation represents a sensible and pragmatic approach to facilitate this. The objective in opening any market is the promotion of effective competition and the encouragement of innovation, all with a view to improving choice and ensuring access to high quality, competitively priced and innovative products. A competitive, customer-oriented postal sector can play a key part in Ireland's recovery of its competitiveness but this will require a sharper focus on innovation and satisfying the current and future needs of consumers.

The opening of the postal sector has been signalled for a long time. Postal reform began in the EU in 1988 with a review of policy to bring the sector into line with the Single Market. In 1992, the Commission published its Green Paper on the subject and the first postal directive was published in 1997. Since then there has been a managed and gradual phasing in of competition to the sector, giving all players time to adapt to the changes and implement strategies suitable for the new environment. The final step is the transposition of this third directive and the removal of the remaining area reserved for incumbent postal service providers.

At its heart the Bill recognises the fundamental difference between An Post and other postal service providers. As the incumbent and the most significant operator, it is appropriate that An Post be subject to the greatest level of regulation. The most significant obligation to be imposed on An Post is that it will be designated as the universal postal service provider. The essential element of the universal service is the collection and delivery of mail to every address in the State on every working day. This minimum service is guaranteed by the directive, and designating An Post offers certainty to that organisation, postal service users, the market and the EU that the universal service obligation will be met.

This designation does not prevent the development of competition. An Post's legal monopoly on the final reserved area — the letter post market — has been removed and other postal service providers have been free to enter this market segment since January. The Bill charges the Commission for Communications Regulation, ComReg, with the objective of enabling the development of competition and innovation in postal services, which should also bring benefits to consumers.

An Post has to date met the costs of providing the universal service from its own resources. It is my strong expectation that the organisation will continue to meet this from its commercial revenues. However, in line with the options permitted by the directive, the Bill contains a provision whereby costs that arise in meeting this obligation which are found to be an unfair burden will be met by the postal industry through a sharing mechanism. It is right and appropriate that those postal service providers competing with An Post within the universal service contribute where the Regulator verifies that an unfair burden exists. This mitigates the impact of potential cherry-picking on the universal service provider. Other member states have also made provision for sharing mechanisms.

Exchequer funding of the universal service is not an option currently provided for in the legislation. However, the programme for Government contains a proposal to provide for Exchequer funding and I will consider this in the context of introducing amendments on Committee Stage. The framework being put in place has many similarities to that for the communications sector and other regulated sectors. It contains no new legal or regulatory principles and it does not attempt to break new legal ground.

The Bill sets out the high level regulatory principles for the sector and provides that the detail of the regulation will be the responsibility of ComReg, the Regulator of the postal sector. ComReg has a critical role to play in the overall development of the sector. It will be charged with ensuring the provision of the universal postal service, ensuring compliance by postal service providers with their obligations and will be required to review the designation of An Post. Currently, provision is made in the Bill for other postal service providers to be designated in regard to universal services after the seven-year designation has expired or for no designation to be made, as the case may be. The duration of An Post's designation is something I will also consider in the context of the programme for Government proposals.

As regards ComReg's role, I am confident that the many lessons learned in the regulation of the communications and postal sectors to date will be put to good use when regulating this new framework. A regulator, independent of postal service providers, is an explicit requirement of the directive and, where member states retain ownership or control of postal service providers, effective structural separation of regulatory functions from activities associated with ownership or control is also required. I understand that an issue that was aired during the debate on the legislation in the Seanad was a perception that there was a lack of accountability of ComReg to the Houses of the Oireachtas. I assure Deputies that the Communications Regulation Act 2002, which established ComReg as an independent statutory body to regulate and to take key decisions in regard to the electronic communications and postal sectors, also provides that ComReg is accountable to the Oireachtas on the performance of its duties. In addition, where it is necessary from a strategic perspective, the 2002 Act allows the Minister for Communications, Energy and Natural Resources to issue strategic policy directions to the regulator. We must keep under review whether these checks and balances are satisfactory and in the context of the programme for Government, I will give consideration to a role for the Minister for Communications, Energy and Natural Resources in the designation process. The Bill contains a basic provision to enable the State to establish a national postcode system.

I turn to the text of the Bill, as passed by the Seanad. A detailed explanatory memorandum on the Bill was published, and I will highlight the main provisions, including those agreed to on Committee Stage in the Seanad. The Bill is divided into three parts. Part 1 contains standard preliminary provisions and amendments to other enactments. The main part of the Bill, the regulation of postal services is set out in Part 2. This part addresses ComReg's role and powers, defines a universal postal service and provides for the designation of a universal postal service provider; price regulation; authorisation procedures and conditions; and the regulation of the terms and conditions around the provision of free postage to electoral candidates. It also addresses enforcement issues and offences with regard to postal services.

Part 3 enables the Minister for Communications, Energy and Natural Resources to establish, maintain and operate a national postcode system. This Bill shall, when enacted, be cited collectively with the Communications Regulation Acts 2002 to 2010 and these Acts shall be read together as one Act.

The intention is for this Bill to come into operation as soon as possible, with the exception as the case may be, of section 43, which relates to the referral of postal packets to the Revenue Commissioners, and is dependent on the progress of the draft customs Bill. Some key items of existing postal legislation have been updated by this Bill so that they are compatible with a liberalised market. Some of this legislation predates the founding of the State and repeals and revocations are provided for in Part 1.

Part 2 is the essence of the directive. ComReg is designated as the national regulatory authority for the purposes of the directive and its functions, objectives and powers as set out in the principal Act of 2002 are amended accordingly. ComReg is charged with ensuring the provision of the universal postal service, promoting competition and innovation, and ensuring compliance by postal service providers with their obligations. Part 2 addresses ComReg's enforcement and information gathering powers in respect of postal operators — mainly in Chapters 1, 2, 3, 9 and some of Chapter 10. It is important that the design of the enforcement element of the postal framework is proportionate. In this regard, the power to summon witnesses and examine them under oath, which represents a very strong enforcement option, is not appropriate for the postal sector at this time and consequently is now being removed. Similarly, I am confident that the powers available to ComReg such as the direction making powers, and those concerning information gathering, pricing and access will allow it to discharge its competition functions and therefore co-competition powers are not being extended to ComReg for the postal sector.

ComReg's enhanced powers will result in improved services and more choice for the consumer, safeguard the provision of the universal postal service and provide the regulatory certainty to encourage more players to enter the market. The individual consumer, the business sector and the wider economy will benefit from increased competition and a broader range of services, which is the ultimate aim of this important Bill.

The essential element of the universal postal service is the collection and delivery of mail to every home and premises in every corner of the State on every working day. This is enshrined in Chapter 3. Chapter 4 designates An Post as the universal postal service provider for a period of seven years. ComReg is to review this designation before the end of this period and may designate An Post again, or designate another postal service provider or decide that no such designation is required. ComReg is also required to ensure that the reasonable needs of users are met, and will specify by regulation the services to be provided by a universal postal service provider.

Chapter 4 also provides for oversight by ComReg of a universal postal service provider's terms and conditions. This replaces An Post's power to set out its terms and conditions in schemes under the Postal and Telecommunications Services Act 1983, the Act under which An Post was established, and is more appropriate for a liberalised and multi-operator market.

ComReg will also have a role in price regulation. In the interests of protecting consumers in those products or market segments where An Post, as the dominant postal service provider, is not likely to face competition at least in the immediate term, the Bill requires ComReg to impose a price cap, providing certainty to both An Post and its customers.

A central theme of the directive is the protection of the interests of users. In this regard, the Bill sets out in section 23 the tariff principles with which a universal postal service provider's services must comply, including affordability and cost orientation. Section 27 provides for the setting and monitoring by ComReg of quality of service targets for the designated universal postal service provider or providers, while section 37 provides that prior notice be given to users where a postal service provider intends withdrawing a postal service that is within the scope of the universal postal service. Section 38 requires every postal service provider to draw up and implement a code of practice dealing with complaints from postal service users. ComReg will be charged with resolving disputes that remain unresolved after the procedures in the code of practice have been followed.

The Bill sets out clearly in Chapter 6 the obligations with which postal service providers must comply — distinguishing, as the directive does, between postal service providers depending on whether they offer services within or outside the scope of the universal service. All postal service providers are required to register with ComReg and section 32 requires ComReg to publish guidelines to enable providers to declare whether the postal services they supply are within or outside the scope of universal service. This distinction is fundamental to the regulation of postal services.

Section 40 extends protection for whistleblowers who disclose appropriate information on the postal sector to ComReg. Chapters 7 and 8 set out a series of technical provisions associated with the provision of postal services, while Chapter 9 deals with enforcement issues. Chapter 9 also includes a new section, section 47, introduced on Committee Stage in the Seanad, which provides for an appeals mechanism allowing persons affected by decisions made by ComReg to appeal those decisions to the High Court. This provision is in addition to the right to judicial review.

Chapter 10 provides for offences, including offences relating to the opening of postal packets and mail bags, the sending of certain items by mail, the obstruction of a universal postal service provider, malicious interference with a post box and the secretion of postal packets. This chapter also includes a new section, section 49, which was introduced on Committee Stage in the Seanad. Section 49 enables the Minister for Communications, Energy and Natural Resources to issue directions to all postal service providers on the interception of postal packets carried by those postal service providers. This power had previously been confined to packets carried by An Post only. The Department of Justice and Law Reform has advised my Department that it is essential from a law enforcement and security perspective to ensure that all postal service providers in the market are subject to directions to comply with interception authorisations.

Chapter 11 amends the regulation of the provision of free postage to electoral candidates. Electoral candidates' entitlement to free postage under electoral legislation remains unaltered by the Bill. However, the provisions set out in chapter 11 reflect the fact that An Post will no longer make statutory schemes under which its terms and conditions are set, and in keeping with the spirit of the directive and liberalisation, provision is made for the Minister for Finance to designate An Post, or another postal service provider, to provide free election post.

Finally, Part 3 of the Bill provides that the Minister for Communications, Energy and Natural Resources may establish, maintain and operate a national postcodes system. In addition to the provisions I have just set out, I will bring forward a number of amendments to the Bill on Committee Stage. In the main, these amendments are of a technical nature and seek to clarify certain provisions in the Bill. I will also give consideration to the proposals in the programme for Government which relate to the Bill, which may result in more substantive amendments.

I look forward to hearing the views of Members on this important piece of legislation. I also look forward to the assistance of Members in facilitating the Bill's early passage into law as the transposition date for the 3rd Postal Services Directive has now passed. In the interests of providing certainty to all market players, enabling the development of fair competition and enhancing the protection of postal users, it is important that the most appropriate regulatory framework to oversee this newly liberalised and valuable market is put in place swiftly. I commend the Bill to the House.

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