Ryan rejects threat to postal service

Minister for Communications Eamon Ryan has rejected a Fine Gael claim that there will be a problem in "ensuring that people in the Beara Peninsula, and in Connemara and northwest Donegal get the same level of postal service that people in Dublin 4 get", in a liberalised postal market.

During heated exchanges in his first Question Time as Minister, Mr Ryan insisted that there should be "no blanket assumption" that the provision of a universal postal service would lead to extra cost with new competitors cherry-picking in the market.

He was challenged by Fine Gael spokesman Simon Coveney, who said there would be a problem in ensuring that people in rural areas "get the same level of postal service that people in Dublin 4 get".

Mr Coveney said "there isn't going to be a problem with competition in busy cities and urban areas where An Post is accepting that they will have to compete with companies coming into Ireland to cherry-pick profitable areas within the postal sector.

"And the reality is that you cannot expect An Post to compete on a head-to-head basis with other companies in competitive areas and at the same time have to cross-subsidise loss-making in areas where they have to serve out their universal service obligations."

The Minister, however, asked Mr Coveney "how is he so certain that there will be cost involved. Far from the assertion that it will undoubtedly require compensation, the experience internationally where Sweden, Finland and the UK have already liberalised, is that they haven't put in a compensation scheme because there hasn't been a discernible cost implied".

The State could charge a levy to new entrants to the market or through An Post, bear any extra cost to ensure a postal delivery to every household in the State no fewer than five days a week.

Mr Ryan said no decision had been made and he would have a full public consultation on the issue, once Brussels had finalised the third directive on the postal sector to ensure full liberalisation by January 1st, 2011.

The Minister added that he just wanted to highlight that "we do not enter into absolute blanket assumption that's going to be the case when the experience elsewhere" was different.

Mr Coveney, however, rejected the UK as an example and said that there was major lobbying in Britain for "zonal pricing", that the further the distance, the higher the charge to the customer.

Mr Ryan said that "no decision has been made yet as to how the cost, if any, of the universal service obligation shall be met", but he wanted to highlight international experience where there was no discernible cost involved.

Once there was a final outcome from Brussels, he would fully consult the public and the sector.