Denis Naughten (Roscommon-Galway, Independent) | Oireachtas source

Section 28(1) of the Communications Regulation (Postal Services) Act 2011 sets out the principles with which the universal postal service provider's tariffs must comply. These principles are enshrined in Article 12 of EU Directive 97/67/EC, as amended by EU Directive 2008/6/EC, and provide that the tariffs must be,inter alia, affordable and cost orientated. These directives are transposed into Irish law by the 2011 Act.

Article 12 of the directive provides that member states will ensure that the tariffs for each of the services forming part of the universal service comply with the tariff principles. The requirements are clearly intended to apply only to the universal postal service, and it was on this basis that the Act was drafted. It appears that the intent of the proposed amendment to section 28(1) of the Act is to widen the scope of the tariff principles beyond the universal postal service. Such action would represent a significant change in policy and require detailed consideration and analysis as well as consultation with stakeholders.

I advise the House that an identical amendment was tabled on Committee and Report Stages in the Dáil. It was argued that the extension of regulatory measures in this manner and without detailed consideration of its impacts was not appropriate. On that basis, the amendment was withdrawn. The position remains unchanged.

Regulatory measures are generally introduced to address issues arising in a particular market and should be introduced where necessary and only in line with the principle of proportionality. There has been no signal from the market of the need for regulatory measures in terms of tariffs outside the universal postal service. Indeed, the level of competition in the packets and parcels market has already been highlighted by ComReg. In addition, real competition in the form of alternative delivery solutions can be observed in the significant decline in mail experienced by An Post as a result of e-substitution where some large customers are moving to electronic alternatives.

The main non-universal service obligation services are parcels, publicity post, PostAim and Express Post. There is competition in these areas from private operators such as DHL, FedEx, Nightline, Fastway, CityPOST, Lettershop and the Leaflet Company, to name a few.

For the reasons outlined, I cannot accept the amendment proposed by Senators Boyhan and McDowell to section 28(1) of the 2011 Act.Turning to the amendments proposed by the Senator to section 28(5) of the 2011 Act, I must first address the inclusion of the term "may fail". While I understand the wish to see the powers of the regulator strengthened, widening the scope of the powers to include a determination the universal service provider may fail is too subjective. It is difficult to see how ComReg should judge that a universal service provider may fail in its obligations to comply with the tariff principles. In considering this amendment I consulted ComReg, which agrees with this assessment. I understand and am cognisant of the impact this measure might have on consumers and the SME sector. In this regard I have issued a policy direction to An Post instructing that the price increases introduced following the repeal of the price cap mechanism must be subject to prior consultation with ComReg and have due regard to the tariff principles set out in section 28 of the 2011 Act, as well as the interests of personal users of postal services and SMEs. I have reiterated this in person to the chair and chief executive of An Post.

With regard to the substitution of the word "shall" for "may" I do not believe it is appropriate to make obligatory the issuing of a direction. A direction referred to in section 28(5) is an enforcement mechanism which may be used by ComReg, and detailed procedures around the issuing of such directions are provided for in section 51 of the 2011 Act. There may be some instances under section 28(5) where a formal direction of this nature may not be appropriate or necessary and, therefore, it is important that ComReg retains the discretion provided for at present. For the reasons I have outlined I am unable to accept the amendments as they have been proposed.