FG fears cherry-picking of postal service by private firms

FINE GAEL has warned that badly-managed and poorly-regulated competition in the postal services could see private sector companies “cherry-picking” parts of the service, leaving An Post as a loss-making entity.

Leo Varadkar, the party’s communications spokesman, was speaking during a Dáil debate on the Communications Regulation Bill 2011 which would allow for the first time, private sector postal service providers to process and deliver ordinary letters and items of mail weighing less than 50g.

“Well-managed and regulated competition in the postal service market will be beneficial,” Mr Varadkar said. “It will provide real choice and new services for consumers, it will keep prices down and will incentivise An Post to innovate, become more efficient and improve and diversify the services it provides. However, badly managed and poorly regulated competition will be a disaster.

He pointed out An Post has never needed state support in the past and competition is not in the interest of taxpayers if it transforms a solvent, profitable state asset into a loss-making one.

“I am also concerned about the future of five-day-a-week postal deliveries in rural areas,” he said. “This Bill imposes a requirement on An Post, to provide a five-day-a-week delivery to every home and business in Ireland. However, Section 17 of Bill allows the Communications Regulator, ComReg, to remove this requirement without ministerial approval. If this requirement is lifted at some point in the future, it would allow An Post to curtail costly five-day-a-week deliveries in rural areas to, perhaps, three days a week.”

He said he could see ComReg lifting the requirement and the minister of the day washing his or her hands of the decision and blaming the regulator under the guise that the minister is powerless to act.

Mr Varadkar however welcomed the provision made in the bill for a five-year freeze on the price of a stamp and for the minister to establish a postcode system.

Irish Rural Link, the national network of community and voluntary organisations in rural areas, said the bill fails to protect rural services and has done little to safeguard Universal Service Obligations (USO) which should ensure that essential services are available to all persons, even in remote areas at no extra cost. IRL chief executive Seamus Boland said the bill is vague leaving huge discretion to the regulator to allow exceptions to the five-day clearance and delivery rule.

“The bill states that the regulator can decide what circumstances or geographical conditions will result in reduced services,” he said. He also warned that liberalisation facilitates competitors, rather than protecting those who rely on the service. This may result in new operators “cherry-picking.”