COMREG, THE communications regulator, has said the development of innovation in the postal service and the provision of better value will only be achieved if An Post's dominant position "does not foreclose" on the emergence of a fully competitive market.

The regulator's chairman, John Doherty, said in a paper on the opening of the postal market to full competition in 2011 the challenge for postal operators is to "open the door and grasp the great opportunities" that exist.

"ComReg believes that, in fostering the development of a competitive postal market, it must act as an advocate for the consumer and all those interested in providing customer-focused and efficient postal services, while also encouraging An Post to become more efficient and responsive to consumer needs," he said.

Stating that the legal obligations on postal operators must be precise and unambiguous, he said monitoring and enforcement procedures in the market must ensure compliance on a timely basis by all operators.

Mr Doherty was commenting on the forthcoming transposition into Irish law of EU directives which will facilitate the full opening of competition in the mail market. While commercial users of the postal service can use operators other than An Post, this will in theory open the market.

"The transposition process will necessitate the repeal of legislation going back 100 years or more and the introduction of new legislation which will establish the regulatory framework for the provision of postal services in Ireland for many decades to come," he said.

ComReg wants the new legislation to set out a broad definition of the scope of the universal postal service - ie the service available to all parts of the State at all times. In that context, it said that the designation of a single universal service provider may not be appropriate in a liberalised market.

"The alternatives to designation are 'market provision' and 'public procurement'. The two methods can be used in combination, with public procurement being used to fill in any gaps in market provision," the paper said. It said licencing will be important to control entry to the market and exit from it and give assurance to users of the integrity of the operators.

"The directive continues the existing requirement that the tariffs for each universal service comply with the principles of 'affordability', 'cost-orientation', 'nondiscrimination' and 'transparency'. A new requirement is that prices 'give incentives for an efficient universal service provision'," the paper said.

"A carefully designed ex ante price-cap-type of price control is therefore probably the only way of ensuring compliance with the tariff principles, while giving operators the appropriate freedom to respond to the initiatives of competitors and the incentive to improve efficiency.

"In the short term, however, this will need to be backed up by a detailed ex post review of prices and costs to ensure that such flexibility is not being used to create inappropriate cross subsidies, which might foreclose on market entry because prices in these market segments are artificially low."

The paper continued: "ComReg believes that it is appropriate, when transposing the directive, to ensure that the link between price and quality is explicitly recognised, and that quality includes issues such as consumer choice as well as transit time."