SINGAPORE POST LIMITED SUBMISSION TO THE MINISTRY OF INFORMATION, COMMUNICATIONS AND THE ARTS ( MICA )

Transcription

1 SINGAPORE POST LIMITED SUBMISSION TO THE MINISTRY OF INFORMATION, COMMUNICATIONS AND THE ARTS ( MICA ) PUBLIC CONSULTATION ON DRAFT POSTAL SERVICES (AMENDMENT) BILL ISSUED ON 23 MARCH APRIL 2007

2 SUBMISSION BY SINGAPORE POST LIMITED IN RESPONSE TO THE PUBLIC CONSULTATION ON DRAFT POSTAL SERVICES (AMENDMENT) BILL ISSUED ON 23 MARCH 2007 BY THE MINISTRY OF INFORMATION, COMMUNICATIONS AND THE ARTS EXECUTIVE SUMMARY 1 Singapore Post Limited ( SingPost ) welcomes the opportunity to respond to the Public Consultation on Draft Postal Services (Amendment) Bill ( Draft Bill ) issued on 23 March 2007 by the Ministry of Information, Communications and the Arts ( MICA ). 2 In its announcement on the liberalisation of the Basic Mail Services ( BMS ) market on 5 February 2007, MICA acknowledged concerns on mail integrity and security and the need to preserve high user confidence in the public postal system. These two aspects mail quality, and mail integrity and security form, among others, the underlying basis of the principles that the Infocomm Development Authority of Singapore ( IDA ) has rightly indicated it will adopt in the liberalisation of the BMS market. 3 SingPost shares these same concerns and supports these fundamental principles. Accordingly, SingPost strongly submits that the proposed Postal Services Act ( proposed PSA ), which incorporates the changes proposed in the Draft Bill, must address and protect these major issues. 4 Mail quality, i.e. quality in the provision of postal services, it is submitted, is and has always been the cornerstone of any postal service. Any compromise in the quality of postal services could potentially result in the erosion of public trust and confidence, which is potentially irreversible. 5 Similarly, mail integrity and security, especially in the present operating environment of the Postal Authority and the postal licensees, is a very current and equally fundamental concern. See SECTION 5 MAIL INTEGRITY AND SECURITY below, for details. 2

3 6 While IDA s Decision and Explanatory Memorandum on the Framework for Further Liberalisation of the Postal Services Sector in Singapore issued on 5 February 2007 ( IDA s Decision Paper ) has detailed the importance of these issues, we feel that the proposed PSA needs to be calibrated to ensure that the principles of liberalisation adopted by IDA are accurately enshrined. Clarity of the proposed PSA would in turn contribute to the promotion of transparency, certainty and fair competition within the postal industry. It would also avoid wasteful administrative and compliance costs occasioned by a lack of understanding of what is permissible under the regime of the proposed PSA. This is particularly and especially important in respect of the scope of licensing. See SECTION 3 SCOPE OF LICENSING below, for details. 7 In addition, Singapore, being a signatory to the Universal Postal Union ( UPU ), is subject to its framework. Hence, the postal and related terminology in the proposed PSA should be aligned with those currently adopted and used universally pursuant to the UPU. Singapore s obligations arising from the Acts of the UPU ( UPU Acts ) must be unambiguously spelt out in the proposed PSA and properly delegated to the Postal Authority and its designated public postal licensee ( designated PPL ). This is to ensure that the designated PPL carries out these obligations in the manner expected of Singapore. See SECTION 2 DUTIES AND FUNCTIONS OF THE POSTAL AUTHORITY and SECTION 4 CATEGORIES OF LICENCES FOR THE PROVISION OF BASIC MAIL SERVICES below, for details. 8 This is also to prevent the Postal Authority from being burdened with requests from other licensees to access selected UPU privileges but probably not the corresponding obligations. Unless it is enshrined in the proposed PSA that UPU privileges and obligations are exclusive to the designated official operator (i.e. the designated PPL) appointed by the postal administration (i.e. the Postal Authority) of each country, it is not clear on which licensee the obligations of Singapore under the UPU Acts would be imposed. See SECTION 4 CATEGORIES OF LICENCES FOR THE PROVISION OF BASIC MAIL SERVICES below, for more details. 9 In addition to the fundamental issues such as quality and security of the public postal system, SingPost also highlights its views on the issue of control of postal licensees. Proper control of licensees is a key feature of any regulatory regime. However, it is submitted that the control framework proposed to be set in place by the proposed PSA appears excessive in relation to the objectives and, in certain respects, ambiguous to its scope. In summary, SingPost is of the view that the definition of 3

4 control is potentially overreaching as it captures borderline scenarios where the Postal Authority s jurisdiction may not be intended to cover. The practical effect of such imprecisions in definitions is an increase in compliance costs. See SECTION 9 CONTROL OVER DESIGNATED POSTAL LICENSEES below, for elaboration. 10 To be clear, SingPost is not advocating that all of IDA s principles be covered in the proposed PSA. Certain principles and regulatory details may be adequately covered in subsidiary legislation or even guidelines. These would relate to operational or mutable matters. However, principles to ensure and maintain fundamental ideals such as mail quality, and mail integrity and security, national obligations such as UPU obligations and important conceptual frameworks such as licensing and licensee control are more fittingly addressed in primary legislation. Codifying fundamental principles and frameworks in primary legislation demonstrates their relative importance in the postal regulatory regime, as changes to Acts require parliamentary approval. A. SCOPE OF BMS THAT WILL BE SUBJECT TO LICENSING UNDER THE NEW LIBERALISED REGIME 11 We agree with IDA that the current high level of user confidence in the public postal system is one of the critical success factors of the postal services provided in Singapore today. 12 To ensure that confidence in mail quality is preserved, it is crucial that the activities of licensees by which quality is customarily assessed must be within the regulatory ambit of the regulator. 13 The regulatory parameters for licensing and regulation by IDA can be set by properly defining both the scope of the licensed services and its related definitions. See SECTION 3 SCOPE OF LICENSING below. 14 In addition, the proposed PSA should take into account the extent to which UPU definitions are tracked. Uniformity in terminology avoids possible confusion in the international arena. It also signals the seriousness of purpose with which Singapore treats its obligations under the UPU Acts. 4

5 15 Among related definitions that need to be clarified are letter and direct mail. It is submitted that the proposed definitions in the proposed PSA are imprecise and could give rise to different interpretations. This has two possible motivations and effects. The first is that treatment of a mail as direct mail would place it outside of the jurisdiction of the regulator. The second and related motivation is that the standard quality of services associated with letters (the delivery of which is licensable) may be bypassed by classifying mail as direct mail. 16 Allowing industry players to compete and compromise on quality without the concomitant obligation of quality assurance (associated with letters the delivery of which is licensable) will inadvertently result in a race to the bottom which SingPost understands is not the intent behind the liberalisation. 17 It is equally critical that the privileges relating to the printing and issuing of postage stamps bearing the word Singapore and national symbols, as well as the privileges arising from representing Singapore in the international arena, which are accorded to the PPL designated as the postal administration of Singapore be clarified. See SECTION 7 PRIVILEGES OF A DESIGNATED PUBLIC POSTAL LICENSEE below. 18 There is a need for Quality of Service ( QoS ) and legitimate expectations of stakeholders not to be derogated from when access to the PPL's downstream delivery network is provided to other postal licensees in order to maintain the consistently high delivery standards expected of the designated PPL by recipient end-users. See SECTION 8 ACCESS TO POSTAL INFRASTRUCTURE AND NETWORK. 19 To this extent, it is necessary to point out that postal services are unique in that there are customarily three (instead of traditionally two) parties involved in the service provision: the postal services provider, the sender and the recipient of the mail. In most industries, the test for confidence and quality is to be measured against the expectations of the consumer. In the case of the postal services industry, however, there are two parties other than the service provider: the end-user (or the recipient) and the consumer (or the sender). Accordingly, quality in the postal services industry is more appropriately measured against the expectations of the end-user/recipient, rather than the consumer/sender. Yet, the interests of the sender and the recipient 5

6 are not always aligned. The sender aspires to, among other things, lower costs (possibly at the expense of timeliness and integrity) whereas the recipient legitimately expects consistent standards in terms of both timeliness and integrity. 20 The potential disconnect in expectations can in part be circumvented by precise definitions of associated terms such as letters, direct mail and other definitions of postal terminology, such as letter box these are elaborated on more fully in SECTION 3 SCOPE OF LICENSING AND SECTION 6 DEFINITION OF LETTERBOX AND REDIRECTION OF MAIL, below. B. FRAMEWORK OF THE DIFFERENT TYPES OF LICENCES WHICH WILL BE ISSUED BY THE POSTAL AUTORITY 21 In tandem with the need to ensure quality, the framework of licensing should be spelt out in the proposed PSA. SingPost believes it is essential that the proposed PSA captures the framework for the different types of licences which will be issued by the Postal Authority and thereby avoids any preventable lobbying to the Postal Authority and the Minister for access. If licence categories are enshrined in the proposed PSA, then this can only be amended with parliamentary approval. Hence, the industry will realise that exceptions to the licensing regime are a matter of legislative will of Parliament and not the routine discretion of the Postal Authority or the Minister. Setting out the distinction between a designated PPL and other types of licensees has an added advantage in that it defines a designated PPL with universal service obligations. 22 A comprehensive and clear framework therefore provides invaluable clarity to the potential entrants to the market. This is detailed in SECTION 3 SCOPE OF LICENSING AND SECTION 7 PRIVILEGES OF A DESIGNATED PUBLIC POSTAL LICENSEE, below. 6

7 C. MAIL INTEGRITY AND SECURITY 23 As duly highlighted in IDA s Decision Paper, mail integrity and security are of utmost importance in the mail conveyance business. To safeguard the security of the nation and the postal system, it is critical that the proposed PSA covers aspects dealing with national emergency and security, and mail integrity. 24 National emergency and security The proposed PSA provides powers to the Postal Authority to deal with events after they occur but does not prescribe pre-emptive powers for the purpose of mail security. While it is not possible to pre-empt every possible mode of sabotage, safeguards that are put in place in the postal system should be clearly and unequivocally spelt out to protect the public and citizens of Singapore. These include powers to the Postal Authority to act in this regard. Subsection A of SECTION 5 MAIL INTEGRITY AND SECURITY below elaborates on the necessity for preemptive powers and guidelines. 25 Integrity of the postal system In the interest of protecting mail integrity in the postal system and safeguarding consumer interest, IDA stated in its Decision Paper that it would not allow access by multiple operators to letterbox masterdoor keys. It also recognised that recipients/end-users have a right to keep their apertures locked to prevent junk mail. The concept of the letterbox masterdoors and the issues relating thereto are peculiar to Singapore and it stands to reason that any decision in relation to such access is without precedent. Yet, instead of setting the precedent, section 16(5) of the proposed PSA seems to derogate from both these principles integrity and consumer protection. Subsection B of SECTION 5 MAIL INTEGRITY AND SECURITY below suggests some changes to protect these principles. D. ARBITRAGE AND ACCESS TO INFRASTRUCTURE 26 Finally, it is important not to lose sight of the fundamental economic benefit of liberalisation lower costs and a better choice of services for consumers. Yet, both these benefits would be in danger if arbitrage opportunities are not managed. IDA 7

8 has recognised that opportunities for international and domestic arbitrage encourage the risk of rising prices for domestic consumers without any corresponding economic benefit to them. SECTION 8 ACCESS TO POSTAL INFRASTRUCTURE AND NETWORK and SECTION 10 INTERNATIONAL MAIL below provide some suggestions to tackle the problem. E. CONCLUSION 27 Principles to ensure and maintain fundamental ideals such as mail quality, and mail integrity and security, national obligations such as UPU obligations and important conceptual frameworks such as licensing and licensee control are fundamental to the liberalised postal system. Their relative importance makes them inappropriate for inclusion in subsidiary legislation. The comparable ease and flexibility with which subsidiary legislation and guidelines can be amended and changed are due, in part, to the fact that they relate principally to operational matters. SingPost recognises that there are regulatory details more adequately covered in subsidiary legislation or guidelines but, likewise, it is necessary to recognise the matters that warrant inclusion at the statutory level. SingPost believes that matters set out in this submission should be enshrined in the proposed PSA as they relate to fundamental principles and concerns that are key to the effectiveness of the liberalisation framework and also that the proposed PSA should provide clarity and certainty to the industry players and end-users in this liberalisation exercise. 8

9 SECTION 1 INTRODUCTION: REGULATORY PRINCIPLES IN THE LIBERALISED BMS MARKET 1 In keeping with the Singapore Government s commitment towards building an open economy and cultivating Singapore into a regional business hub, the BMS market, which entails the conveyance from one place to another letters and postcards, and performing all incidental services of receiving, collecting, sorting, sending, despatching and delivering of letters and postcards, is liberalised from 1 April However, it is not intended, by the further liberalisation of the postal services industry, that entrants seeking to provide BMS would have a free reign in the provision of such services. In this regard, IDA, being the Postal Authority, continues to exercise regulatory supervision of the industry. 2 In formulating the licensing and regulatory framework for the liberalised industry, IDA has pledged that it remains guided by the policy objectives of maximising consumer welfare, while developing the industry to ensure its continued contribution to the growth of the Singapore economy. 1 3 Recognising that significant changes have to be implemented for the transition of the BMS market to a liberalised market, not least in the area of licensing, IDA has further stated that it will adopt the following regulatory principles in liberalising the BMS market: (a) to provide adequate safeguards to ensure continuity in the provision of postal services in Singapore; (b) to safeguard mail integrity so as to maintain public confidence in the public postal systems and ensure reliability of the postal services provided in Singapore; (c) to minimise confusion for mail senders when choosing services provided by different service providers; (d) to ensure a seamless and transparent experience for mail recipients; (e) to provide certainty to industry and end-users on what needs to be licensed; 1 See paragraphs 6 and 33 of IDA s Decision Paper. 9

10 (f) to minimise impact on traditionally unlicensed areas; and (g) to ensure fair competition in the liberalised markets. 2 4 IDA is conscious that the shift to a multi-operator licensing framework would require the institutionalisation of a careful framework design 3 to ensure mail integrity and service reliability, which IDA recognises as the cornerstones of the liberalised industry because the mail conveyance business remains essentially the human handling of personal and corporate mail items 4. SingPost agrees with IDA that the current high level of user confidence in the public postal system is one of the critical success factors of the postal services provided in Singapore today such that the liberalisation of the Basic Mail Services market must not be made at the expense of mail integrity and security. 5 5 The attempt to reorganise the industry to host a multi-operator postal system should not compromise the overarching objectives of maintaining mail security and public confidence in the quality of postal services. This is also consistent with Singapore s obligations under the Universal Postal Convention concluded at Vienna on 10 July 1964 ( UPC ). 5.1 Article 3(3) of the UPC provides that member countries shall ensure that the offers of postal services and quality standards will be achieved by the operators responsible for providing the universal postal service. 5.2 To improve and maintain quality postal services, the UPC recognises that postal security activities are an essential part of postal operations. In particular, Article 9 obliges all member countries to adopt and implement a proactive security strategy at all levels of postal operations to maintain and enhance the confidence of the general public in the postal services, in the interests of all officials involved. (Emphasis in bold) 2 See paragraph 35 of IDA s Decision Paper. 3 See paragraph 3 of IDA s Decision Paper. 4 See paragraph 8 of IDA s Decision Paper. 5 Ibid 10

11 6 SingPost supports IDA s approach of setting out principles which will form the foundation of the liberalisation exercise. This is important because each liberalisation process takes place under different operating environments. The responsibility in identifying the underlying principles involves recognising those features which are the cornerstone of any postal service (and therefore should not change in any liberalisation) and those features which must be added, enhanced or diminished (recognising the change in the operating environment at the time a particular liberalisation takes place). 7 What remains the cornerstone of any postal service is consumer confidence in mail quality. Competition and opening of markets should involve aspirations to quality in service and greater choice of services, promoting further innovations in the local postal industry with the aim of cultivating markets. It should not involve aspirations in rolling-out low-cost services at the expense of quality. IDA recognises this at paragraph 22 on page 9 of its Decision Paper: Competition will also promote further innovations in the local postal industry and will increase the incumbent s incentive to improve its service quality and efficiencies. Liberalisation of the Basic Mail Services market will also see spill-over benefits into the growing printed paper segment, and other segments of the economy such as enhancing Singapore s position as a regional printing hub. 8 IDA, as the Postal Authority, is the regulator. If the proposed PSA is not the gatekeeper of mail quality by putting in place safeguards as to the quality of BMS, creative new entrants may find it rewarding to substitute quality with low pricing. If so, this will potentially lead to a race to the bottom among the licensees and fail to incentivise the incumbent to improve its service quality and efficiencies. 9 Postal services are unique. Unlike other comparable markets, the proper barometer of confidence and quality is not so much what the customer for postal services is willing to pay (as a priority at this level, especially for business users, is lower costs) but how the end-user or recipient perceives the services to be. 10 On the other hand, what makes this liberalisation different is that the importance of mail security and integrity has been enhanced. The world is a different place from what it was three years ago. One thing that is clear three years on is that it is not possible to pre-empt every possible mode of public sabotage. Therefore, safeguards that are put in place in the postal system must be clear and unequivocal. 11

12 11 Accordingly, the safeguards to ensure the maintenance of mail security and public confidence in the quality of BMS in Singapore should be enshrined in the proposed PSA, and not be relegated to subsidiary legislation. The comparable ease and flexibility with which subsidiary legislation can be amended are due, in part, to the fact that it covers principally operational, as opposed to fundamental, matters. Relegating to subsidiary legislation the provision for such measures therefore undermines the cornerstone of the BMS industry which the proposed PSA should be a protector of. Summary of Comments and/or Proposals IDA is conscious that the shift to a multi-operator licensing framework would require the institutionalisation of a regulatory framework that ensures mail integrity, service reliability and security, which IDA recognises as the cornerstones of the liberalised industry. Therefore, SingPost proposes that the safeguards meant to ensure the maintenance of mail security and public confidence in the quality of BMS in Singapore should be enshrined in the proposed PSA, and not be relegated to subsidiary legislation. 12

13 SECTION 2 - DUTIES AND FUNCTIONS OF THE POSTAL AUTHORITY 12 Section 3A of the proposed PSA provides a list of the functions and duties of the Postal Authority. The express statement of these obligations is to be welcomed as it provides a guide on how the Postal Authority will exercise its discretion. However, SingPost has two concerns which it highlights below. A. The Duty to Provide a Universal Postal Service should be clearly expressed 13 First, it appears that the most important duty, the duty to provide a universal postal service is not clearly defined in the proposed PSA. 14 There is a difference in approach between the UK and Singapore in defining the powers of the Postal Authority. In the Singapore legislation, section 3A of the proposed PSA provides a list of duties and functions for the Postal Authority. In contrast, the UK Postal Services Act 2000 refers to one broad function at section 3(1): The Commission shall exercise its functions in the manner which it considers is best calculated to ensure the provision of a universal postal service. 15 The obligation to provide a universal postal service is an important one because it originates from Article 3(1) of the UPC, which Singapore is bound by: In order to support the concept of the single postal territory of the Union, member countries shall ensure that all users/ customers enjoy the right to a universal postal service involving the permanent provision of quality basic postal services at all points in their territory, at affordable prices. 16 Since the functions of the Postal Authority are defined by statute, and the provision of a universal postal service which continues to be safe, efficient and reliable would be one of the objectives of the liberalisation exercise, SingPost submits that the following provision be adopted as an additional function in the list in section 3A: 13

14 to exercise its functions in the manner which it considers best calculated to ensure the provision of a universal postal service. 17 The phrase universal postal service should also be defined. One suggestion is to adopt the definition used in Article 1.1 of the UPC: the permanent provision of quality basic postal services at all points in a member country s territory, for all customers, at affordable prices. 18 It is clearly in the interest of both consumers and Singapore s international obligations to ensure that it is a duty of the Postal Authority to provide a universal postal service. B. The Limits to the Duties of the Postal Authority 19 Second, some of the duties imposed on the Postal Authority are stated very broadly. Whilst SingPost accepts that the Postal Authority would like to have broad powers within which it can exercise its regulatory functions, duties imposed by statute do not confer flexibility but rather impose obligations which need to be fulfilled. Section 3A of the proposed PSA may have imposed on the Postal Authority duties and functions which are wider in the scope than what was intended. 20 Section 3A prescribes very wide duties for the IDA. However, based on IDA s Decision Paper, it appears that IDA intends to perform a regulatory function which is not as extensive in scope as that prescribed by the section. 21 One example relates to the extent of liberalisation. These are excerpts from the section 3A of the proposed PSA: 3A. (1) It shall be the function and duty of the Postal Authority - (d) to promote and maintain fair and efficient market conduct between persons engaged in commercial activities connected with the operation and provision of postal systems and postal services for the conveyance of letters in Singapore; (e) to promote the effective participation of all sectors of the Singapore postal industry in markets, whether in Singapore or elsewhere 14

15 (f) to exercise licensing and regulatory functions in respect of postal systems and postal services in Singapore; 22 This section is drafted broadly, suggesting that the IDA has a duty that extends to all sectors of the postal industry and also includes commercial activities connected with the postal systems. The broad drafting makes no distinction between the different sectors and the degree to which the IDA wishes to assume responsibility for regulating them. 23 In IDA s Decision Paper, however, IDA was clear that it was only liberalising BMS. Paragraph 1 of IDA s Decision Paper states: On 1 April 1992, Singapore Post Ltd ( SingPost ) was granted an exclusive right to collect and deliver ordinary letters and postcards within, into and out of Singapore ( Basic Mail Services ) for 15 years, from 1 April 1992 until 31 March With the impending expiry of SingPost s monopoly to provide Basic Mail Services on 31 March 2007, IDA reviewed the issue of whether SingPost s monopoly should be extended or whether the Basic Mail Services market should be liberalised from 1 April IDA also narrowed the definition of BMS at paragraph 16 of IDA s Decision Paper: IDA will redefine the licensing scope for providing Basic Mail Services to cover the conveyance of addressed letters weighing 500g and below. With this redefinition, addressed letters will exclude books, catalogues, newspapers and periodicals. The conveyance of addressed direct mail will also be exempted from licensing. 25 Notwithstanding the above, section 3A of the proposed PSA is drafted widely in that it states that the Postal Authority would exercise licensing and regulations functions in respect of postal systems and postal services in Singapore. 26 IDA s Decision Paper suggests that IDA only intends to regulate the delivery of letters. It does not intend to regulate the delivery of items that are currently not regulated, such as the delivery of parcels. However, section 3A of the proposed PSA may be construed to mean that the IDA has a duty to regulate all portions or sectors of the postal services sector. 27 SingPost would suggest that the scope of the duties in section 3A of the proposed PSA be defined clearly in accordance with the responsibilities assumed by the IDA. It appears that IDA intends only to regulate the delivery of letters. If this is so, it is 15

16 suggested that IDA confines its duties under section 3A of the proposed PSA to dealing only with the delivery of letters, lest a wider duty is imposed. This would be more consistent with IDA's decision as stated in IDA s Decision Paper. Summary of Comments and/or Proposals A function to provide a universal postal service should be enshrined along with IDA s other duties in order to comply with Singapore s UPU obligations and to ensure the needs of customers are met. The suggested provision could read: to exercise its functions in the manner which it considers best calculated to ensure the provision of a universal postal service. The definition of universal postal service may be adopted from the UPC: the permanent provision of quality basic postal services at all points in a member country s territory, for all customers, at affordable prices. The Postal Authority may wish to confine its duties under Section 3A of the proposed PSA to dealing with the regulation of letters, as it intends in its Decision Paper. Otherwise, IDA may find itself saddled with the obligation of regulating a much broader spectrum of the market, including previously unregulated activities, such as the delivery of parcels and printed papers. 16

17 SECTION 3 SCOPE OF LICENSING A. Section 5(1) of the proposed PSA 28 The proposed amendments preserve the legislative framework of the proposed PSA. The exclusive privilege with respect to the conveyance of letters and the performance of all incidental services of receiving, collecting, sorting, sending, despatching and delivering letters is granted to the Postal Authority under section 4(1) of the proposed PSA. Therefore, anyone other than the Postal Authority, its employees and agents, requires a licence in order to convey any letter from one place to another or perform such incidental services of receiving, collecting, sorting, sending, despatching and delivering letters: section 4(2) of the proposed PSA. 29 The proposed amended section 5(1) then promulgates that this exclusive privilege would not be infringed by the following categories of conveyance: The privilege conferred by section 4 shall not be infringed by (a) letters not exceeding 3 in number sent by a person for delivery by the person to another without hire, reward or other profit for receiving, carrying or delivering the letters; (b) any letter solely concerning the affairs of either correspondent by an employee of either correspondent; (c) the conveyance of any letter solely concerning any goods or other property which is to be delivered with the letter without hire, reward or other profit for receiving, carrying or delivering the letter, if the letter is open to inspection and has thereon the words Consignee s letter or other words to the same effect; (d) the conveyance from one place to another of - (i) any letter which weighs more than 500 grams; (ii) any direct mail; (iii) any letter by the sender personally; or (iv) any document in respect of which a method of service other than post is required or authorised by written law. 17

18 30 However, although section 6(7) of the proposed PSA states that Anything done under and in accordance with a licence under subsection (1) shall not constitute an infringement of the privilege conferred by section 4, it is not clear that the provision of any of the services in the proposed section 5(1)(a) to (d) of the proposed PSA would not infringe the licence issued by the Postal Authority under section 6. The proposed section 5(1) of the proposed PSA only states that the privilege conferred by section 4 shall not be infringed by - without stating also that the privilege conferred upon licensees under section 6 of the proposed PSA will not be infringed by the performance of any of the services specified in section 5(1)(a) to (d). Thus, for the avoidance of doubt, SingPost proposes that section 5(1) of the proposed PSA be amended as such: The privilege conferred by section 4 and the licence granted under section 6 shall not be infringed by - (Amendments underlined) B. The Proposed Insertion of Section 5(2) in the proposed PSA 31 The proposed PSA proposes that a new subsection, section 5(2), which provides as follows, be inserted into the proposed PSA: The Minister may, after consulting the Postal Authority, by order published in the Gazette, delete, vary or add to the exceptions in subsection (1). 32 While this gives the regulators the flexibility to meet future changes in the BMS industry, we humbly submit that it militates against the regulatory principle of providing certainty to industry and end-users on what needs to be licensed because the scope of licensable BMS can now vary according to the decisions made by the Minister (after consultation with the Postal Authority). 33 While any decision of the Minister as regards the scope of licensable BMS most affects licensees, the proposed PSA does not allow for market players to be consulted beforehand. In this regard, the UK Postal Services Act 2000 gives licensees greater assurances against such expectedness and uncertainties. The UK Postal Services Act 2000 counteracts the power of the Secretary of State to modify the scope of licensable services by providing that no order shall be made except on the recommendation of the Postal Services Commission, and the Postal Services Commission shall consult licence holders before making any such recommendation. For ease of reference, the relevant section of the UK Postal Services Act 2000, namely section 8, is reproduced below: 8. - (1) The Secretary of State may by order modify section 7. 18

19 (2) No such order shall be made except on the recommendation of the Commission. (3) Before making such recommendation, the Commission shall consult - (a) the Council, (b) licence holders, and (c) such other persons as the Commission considers appropriate. (4) Where the Commission makes such a recommendation but the Secretary of State decides not to make an order under this section, the Secretary of State shall lay before each House of Parliament a report containing the reasons for his decision. (Emphasis in bold.) 34 To put the UK provisions in context, section 7 of the UK Postal Services Act 2000 sets out the categories of BMS, the provision of which will not infringe the scope of licensable BMS. Council refers to the Consumer Council for Postal Services, which is independent of the Crown. 35 Therefore, for certainty to the industry and end-users on what needs to be licensed, SingPost proposes that the proposed section 5(2) of the proposed PSA should provide for consultation with licensees as per section 8 of the UK Postal Services Act C. Terms Not Defined 36 Integral to any BMS industry is the understanding of the word letter. IDA has decided to drop the previous definition of letter on the basis that a definition based on the nature of the correspondence is neither practical nor sustainable in a multioperator environment because it is increasingly difficult to tell what type of mail constitutes a communication in the nature of current and personal correspondence. IDA is also concerned that the previous definition of letter would also make the enforcement of the new licensing regime difficult. 37 Therefore, IDA decided to adopt a definition of letter which is similar to that adopted in the UK Postal Service Act 2000, and in the Postal Services Directive by the European Commission. Thus, the proposed definition of letter in the proposed PSA is: any communication in written form on any kind of physical medium to be conveyed and delivered (otherwise than electronically) to a particular addressee or address indicated by the sender on the letter itself or on its wrapping, and includes a 19

20 postal article containing such communication, but excludes any book, catalogue, newspaper or periodical. 38 In its Decision Paper, IDA interpreted book, catalogue, newspaper and periodical. 6 IDA proposed to adopt the following interpretations for book, catalogue, newspaper and periodical : (i) (ii) (iii) (iv) book refers to a written or printed work with pages bound along one side including (but not limited to) a work intended for publication and a bound set of blank sheets for writing or drawing in; catalogue refers to a catalogue of goods, services or other items; newspaper includes a newspaper as defined in the Newspaper and Printing Presses Act. The Newspaper and Printing Presses Act (Cap. 206) defines newspaper as any publication containing news, intelligence, reports of occurrences, or any remarks, observations or comments, in relation to such news, intelligences, reports of occurrences, or to any other matter of public interest, printed in any language and published for sale or free distribution at regular intervals or otherwise, but does not include any publication published by or for the Government ; and periodical refers to a magazine or similar periodical published at regular intervals. 39 However, the interpretations of the 4 exclusionary items in the definition of letter" were not reflected in the proposed PSA. Considering that these four exclusionary items circumscribe the definition of letter, if the 4 items are instead defined or interpreted in the subsidiary legislation or Codes, the scope of licensable BMS will change as and when the Minister amends the subsidiary legislation or Codes. This may not augur well for certainty to postal licensees and non-licensees. Therefore, SingPost suggests that the 4 items be defined in the proposed PSA as well. It would assist in clarifying the scope of licensing if the definition of letter, the 4 exclusionary items of book, catalogue, newspaper and periodical as well as the exceptions in section 5 are all encapsulated in the proposed PSA. D. Direct mail 40 IDA has decided to confine the licensing scope for providing BMS as services to convey letters weighing 500 grams and below. The definition of letter in the proposed PSA, together with the exclusions in the proposed amendments to section 6 See paragraph 68 of IDA s Decision Paper. 20

21 5(1) of the proposed PSA, will set the boundaries for what will be the subject of licensing in the new regime. 41 One of the major exclusions sets out in the proposed section 5 of the proposed PSA is direct mail 7, in order to carve out from the proposed wider definition of letter all those addressed direct mails, the conveyance of which does not require a licence. The proposed definition direct mail is as follows: a letter consisting solely of advertising, marketing or publicity material and comprising an identical message (except for the addressee s name, address and identifying number and other modifications which do not alter the nature of the message) which is sent to more than one addressee, to be conveyed and delivered at the address indicated by the sender on the letter itself or on its wrapping 42 However, the proposed definition of direct mail could potentially be abused, as the definition may be broader than necessary. 43 To use an example, the proposed definition of direct mail would capture invitations from credit card companies to their customers to use their overdraft facilities, subject to the overdraft limit assigned to the customers. The level of the overdraft limit depends on the customer s characteristics, such as annual income and purchasing power. For the convenience of the customers, most credit card companies today would enclose a cheque in such mail. If a customer decides to take up the credit facility offer, the customer can start enjoying the convenience of the credit facility by using the pre-provided cheque. In this day and age where competition for the consumer dollar is increasingly intensified, credit card companies would want to reach out to their customers as soon as possible with whatever kinds of messages that they have for their customers. Yet, given the ambiguity and broadness of the definition of direct mail, such mail can be construed as direct mails, whether by SingPost or any competitor. Such mails will therefore not be delivered the next working day, which is a standard of efficiency and speed achieved by the incumbent operator under QoS standards. The administrative costs associated with seeking clarification from the IDA on what needs to be licensed can be avoided if the proposed PSA clearly sets out what direct mail is. 44 The credit card company mail sender could very well have a prior agreement with the postal licensee to request that the mail be delivered within the next working day, thereby relieving the postal licensee from the task of deciding whether a mail from the mail sender could be considered as a direct mail or a letter, in which case it should be delivered by the next working day as per QoS standards. From the mail sender s perspective, it does not matter whether a mail is classified as direct mail if the mail sender does not require the mail to reach the mail recipient quickly, such as by the next working day. Such mail senders can negotiate with the service provider 7 See the proposed section 5(1)(d)(ii) of the proposed PSA. 21

22 that the mail should reach the mail recipient no later than, for example, 5 days. However, where most mails are expected to be delivered by the next working day, this should still be the default standard such that mail senders should not need to negotiate with their service providers that the mail should reach the intended mail recipients by the next working day. 45 Therefore, the definition of direct mail could be tightened to enable market players to identify what a direct mail is. It is critical that the definitions of letters and direct mail be clear to prevent confusion and ambiguity. This is also consistent with the regulatory principle that there be certainty to industry and end-users on what needs to be licensed. Imprecise definitions lead to mail items being classified as direct mail when they are in fact letters, which require a licence to convey. Such a classification would place it beyond the regulation of the Postal Authority. 46 It is important that the scope of direct mail not be prescribed too widely, lest what is properly classified as a letter (which will in turn be delivered by SingPost by the next working day) be wrongly treated as direct mail. This can potentially lead to an erosion in service standards which the public has hitherto been used to. 47 Another consequence of the hazy interface between what a letter is and what a direct mail is would be the extenuation of the concomitant quality assurance that a mail classified as a letter (the conveyance of which requires a licence) gives to mail senders and mail recipients. Regardless of whether providers delivering direct mail also endeavour to deliver direct mail by the next working day, their quality of service is not supervised by the Postal Authority, which gives customers the additional avenue of redress if they are dissatisfied with the service of such providers. 48 A more adverse consequence may also result where providers of direct mail choose to generate profits from engaging in low-cost competition and high volume turnover. Capitalising on the imprecise definition of direct mail, such providers would try to argue that many types of letters could actually be classified as direct mail so long as the letter in question consists solely of advertising, marketing or publicity material and comprises an identical message sent to more than one addressee. In this case, allowing industry players to compete and compromise on quality without the concomitant obligation of quality assurance associated with the delivery of letters that require a licence may inadvertently result in a race to the bottom. SingPost understands that this is not the intent behind the liberalisation. 49 Furthermore, a precise definition of direct mail helps to circumvent the potential disconnect in expectations that may occur between senders and addressees. Postal services are unique in that there are customarily three (instead of traditionally two) parties involved: the postal services provider, the mail sender and the mail recipient. In most industries, the test for consumer confidence and quality of service is usually measured against the expectations of the end-user. In the case of the BMS industry, the end-users of the BMS provided by the postal services provider are the mail 22

23 recipients. From the perspective of the mail senders, most generally aspire to lower costs (possibly at the expense of timeliness and integrity). Yet, the interests of the mail recipients may not be aligned with that of the mail senders. Generally, mail recipients legitimately expect quality in terms of both timeliness and integrity. 50 Accordingly, SingPost proposes the definition of direct mail be amended to mean: a letter consisting solely of advertising, marketing or publicity material, and comprising an identical message, and is not private, confidential or personal to the addressee (except for the addressee s name, address and identifying number and other modifications which do not alter the nature of the message) which is sent to more than one addressee, to be conveyed and delivered at the address indicated by the sender on the letter itself or on its wrapping (Amendments underlined) 51 This proposed definition of direct mail builds on the contemporary understanding of the words private, confidential and personal in respect of letters. Such a definition will make clear that the invitation by the credit card company in the example above is not wrongly classified as direct mail. The common understanding of private, confidential and personal coincides with their dictionary meanings: 51.1 private means what is not to be shared or revealed or are for belonging to one particular person or group only; 51.2 confidential means that which is meant to be kept secret and should not be disclosed; and 51.3 personal means that which affects or belongs to a particular person. The above dictionary definitions are consistent with the dictionary definitions extracted from the Oxford English Dictionary. 52 Direct mail is a new term coined in the proposed PSA. By building on what mail senders and mail recipients already understand letters to be and/or expect of letters, continuity in the QoS standards is ensured in the liberalised market. 53 In respect of the phrase and other modifications which do not alter the nature of the message (the Modification ), this also renders the definition of direct mail ambiguous. There are two uncertainties arising from such a phrase: 23

24 53.1 it is not clear what constitutes other modifications, as this has not been clearly identified; and 53.2 the threshold before which such modifications would alter the nature of the message is similarly uncertain. The proposed definition does not cast light on whether the nature of the message would be considered altered once it is no longer of an advertising, marketing or publicity nature, or only when it can be considered personal. 54 SingPost suggests that the Modification be excluded for certainty as to the exact scope that would be exempted from licensing. Alternatively, guidance should be provided in respect of the ambit of the Modification. Summary of Comments and/or Proposals Section 5(1) of the proposed PSA sets out the categories of BMS, the provision of which will not infringe the scope of licensable BMS. In its current formulation, it is unclear that the provision of any of the services in section 5(1)(a) to (d) could not amount to an infringement of the licence issued by the Postal Authority under section 6. Therefore, for the avoidance of doubt, section 5(1) could be amended as follows: The privilege conferred by section 4 and the licence granted under section 6 shall not be infringed by - The current proposed section 5(2) of the proposed PSA gives the Minister the unilateral power, subject only to consultation with the Postal Authority, to vary the scope of BMS as indirectly set out in section 5(1) of the proposed PSA. As the categories of BMS set out in section 5(1) of the proposed PSA negatively defines the scope of licensable BMS, section 5(2) should provide for the Minister to consult with the Postal Authority and licensees (whose interests are most affected) as per section 8 of the UK Postal Services Act This would ensure certainty to market players on what needs to be licensed. The 4 exclusionary items of book, catalogue, newspaper and periodical should be encapsulated in the proposed PSA so that the scope of BMS is defined clearly. It is important that the scope of direct mail not be prescribed too widely, lest what is properly classified as a letter (which will in turn be delivered by SingPost by the next working day) be wrongly treated as direct mail. This can potentially lead to an erosion in service standards which the public has hitherto been used to. 24

25 The definition of direct mail should be tightened, and one proposed definition is as follows: a letter consisting solely of advertising, marketing or publicity material, and comprising an identical message, and is not private, confidential or personal to the addressee (except for the addressee s name, address and identifying number and other modifications which do not alter the nature of the message) which is sent to more than one addressee, to be conveyed and delivered at the address indicated by the sender on the letter itself or on its wrapping The contemporary understanding of private, confidential and personal could be capitalised, as this coincides with the expectations of consumers and endusers on what does not need to be delivered by the next working day. Therefore, - Private means what is not to be shared or revealed, or are for belonging to one particular person or group only. - Confidential means that which is meant to be kept secret and should not be disclosed. - Personal means that which affects or belongs to a particular person. The definition of direct mail is also vague because of the inclusion of and other modifications which do not alter the nature of the message, since it is not clear what constitutes other modifications and what the threshold is before which such modifications alter the nature of the message. SingPost suggests that the phrase and other modifications which do not alter the nature of the message be excluded from the definition of direct mail for certainty as to the scope of licensing. Alternatively, guidance should be provided in the proposed PSA as to what constitutes and other modifications which do not alter the nature of the message. 25