Ireland’s Commission for Communications Regulation (ComReg) has today (7 December) published its research report on postal users’ needs.
The report, which was prepared by the economic consulting firm Frontier Economics, noted that “most mail is sent by a small number of large businesses, namely large consumer facing businesses (e.g. utilities, financial services, State)”.
Consequently, added the report: “An Post’s ability to continue to deliver a sustainable and affordable universal postal service will be in large part determined by the future mailings of these large mailers”.
The report also found that the large mailers are “very price sensitive” and “An Post’s annual price increases have created a general discontent amongst many large mailers, who indicated that they expect future price increases”.
“As a result and in anticipation,” claimed the report, “these mailers are exploring ways to reduce their dependence on post.”
In assessing the implications for the future of the universal postal service in Ireland, the report said: “The research shows that large mailers have already switched significant mail volumes to non-USO services, electronic alternatives and away from post altogether.
“These mail volumes are likely to have been permanently lost to An Post.
“This trend is expected to continue, and will likely be exacerbated by further postal price increases.
“Therefore, Frontier Economics notes that it is reasonable to infer that An Post’s future mail volumes are under threat, especially if there are significant price increases to compensate for the significant volume declines.
“If volumes continue to decline then the current scope of the universal postal service may need to be reviewed to allow An Post to reduce its costs, and therefore maintain an affordable and sustainable universal postal service.
“In particular, there is potential to revisit the universal postal service next day delivery requirement as most mail currently sent on An Post’s network is not next day delivery and it appears that users would not be overly inconvenienced.”
As previously reported, Ireland’s Minister for Communications, Climate Action and the Environment Denis Naughten is seeking Government approval to introduce legislation to remove the current price cap on An Post’s stamps.
Naughten has said that the price increase was necessary if An Post were to maintain the five-days-a-week postal delivery service.
In a notice posted on its website yesterday (6 December), An Post said that it “welcomed” the Minister’s statement.
However, Naughten’s proposal to raise the price of postage seems to run counter the advice offered in the ComReg report – which favours a policy of keeping postage prices low and reducing costs by “revisiting” the next day delivery requirement.