Ireland’s postal regulator indicated yesterday that it intended to limit the ability ofstate-owned An Post to raise its postal prices in order to ensure their affordability for
customers, a strategy that An Post has reportedly branded “simplistic”.The Commission for Communications Regulation (Comreg) yesterday published a statement outliningits strategy for overseeing the postal service between now and 2014, warning that all postal pricesmust be affordable in order to ensure that all customers can use the service. It also said chargeshad to reflect the actual cost of providing the service and needed to be transparent.
ComReg’s Postal Strategy Statement for 2012 to 2014 stresses the importance of cost reductions.It said: “Declining letter mail volumes are in danger of producing an uncontrollable spiral ofrising unit costs leading to higher prices and hence even greater decline. Consequently, with adeclining letter mail volume there is a need to also reduce the cost base in order to have asustainable business model.”
Chairperson Alex Chisholm said: “For postal services to stay competitive as a medium ofcommunication, postal service providers must be cost effective, innovative, and continuallyaligning and re-aligning their postal services to postal users’ needs.”
The regulator acknowledged that this had been recognised by An Post, although it appeared tosuggest that An Post’s cuts were not going deep enough. The report continued: “An Post has statedit has implemented and continues to implement change programmes to reduce its cost base. To date,An Post’s programmes have mainly concerned more efficient working arrangements and automation.However, automation systems require volume to remain viable and this needs constant review by AnPost.”
An Post recently asked Comreg to allow it increase the price of stamps, reportedly to €0.65 fromtheir current level of €0.55. Comreg has yet to rule on An Post’s request.
However, independent advisors working on behalf of ComReg are reported to have questioned AnPost’s predictions for mail volumes, and asked An Post to revise its pricing request as a result.ComReg also emphasised the opportunities that e-commerce offered to compensate for the decline inmail volumes, but An Post is understood to believe it is unrealistic to expect parcel growth toreplace the loss of revenue from its letter business, because of the greater competition within theparcel and packet markets.
