Will there be a postal service in Ireland in five years time and if there is will there be competition for it? The answer, in both cases, is yes. The service will be better than today, with simple compensation procedures should the service be below target quality and a quality of service for single piece mail with about a 90 per cent satisfaction rating.

Not only that but the service will encompass nearly twice the volume of post it does today and will offer new business-oriented products. To cap it all, An Post will be a highly profitable company. If you are wondering how this can be so, then here's how.

There is no doubt that the volume of transactional mail between businesses, which accounts for about 20 per cent of global mail volumes, will decrease as this stream goes electronic but other mail streams will more than compensate and will increase.

The rise will come about because Irish postal volumes are low by European standards. If you look at the table of number of pieces of mail delivered per €1,000 GPD per head of population, Ireland languishes at the bottom end of the EU 25 country table of mail items delivered, with just 5.2 mail items compared to the EU average of 9.25.

So Irish mail volume really has nowhere to go, but up. When this happens, An Post volumes will increase by nearly 80 per cent. Since An Post's cost base is more or less fixed and does not increase proportionately with extra volume, An Post is facing a happy future as a very profitable company when this volume arrives.

So what about competition? Well, competition to An Post will exist but not in the end-to-end service. The reason for this is because the postal business is different to all others. In post, the most economical number of postal delivery workers to deliver a single mail item to a single address in a single day is one.

So to be as economical as possible last mile postal delivery has to be a monopoly service and so An Post will ignore the possibility of other postal operators competing with them end-to-end, knowing they will still need the same number of staff in 2010 as they do now.

If anyone disagrees with this assertion, let them set up an alternate end-to-end postal delivery network to compete with the An Post brand and their reliable service. Then let them live in fear of the day that full liberalisation occurs, because when that day comes An Post can drop their prices at any time to kill their competitors because ComReg will no longer have the power to regulate An Post's prices.

As of January this year, independent operators are allowed to collect and deliver postal items weighing over 50g, down from the previous threshold of 100g which was introduced three years ago. Any independent operator who wishes to deliver items weighing less than 50g door-to-door must charge 2.5 times the An Post tariff.

Complete market liberalisation is due by January 2009 in line with the EU postal directive. Several private firms currently compete with An Post in the delivery of larger items door-to-door. An Post claims that about 40 per cent of its mail volumes are open to competition and UK firm DX Ireland is considering entering the door-to-door market.

So what will the competitor operators do if not deliver? How can they work with An Post symbiotically? The answer is that An Post will introduce 'downstream access' products, where mail is collected and sorted by a competitor operator and handed to An Post as close to the final An Post delivery person as possible. The price charged by An Post will reflect the work sharing done by the competitor operator.

How can a link between the operators be made so that all operators can work as flexibly and as independently as possible? It will be to have a postcode system not dependent on any one operator and maintained independently of An Post. So all operators in location based businesses can use them without having to follow An Post's routing needs.

The postcode will also be one which will have a high take-up among the public in general. It will be one which will become part of their everyday life whether they are ordering a pizza, a taxi, requesting a medical service, registering for a vote, opening a bank, electricity or telephone account and so on.

The postcode will be one which recognises the modern technology of globally positioned satellites and the ability to identify a location anywhere on the planet just by being there with a Galileo/GPS enabled mobile phone in one's pocket.

The by-product of this postcode for marketers then will be the ability to dedupe and cross sell to their databases, producing less 'wasted' mail and realising the full potential of the customer base. Without doubt, the future for those involved in An Post, in postal services and in mail marketing is rosy.

Alex Pigot is managing director of TICo Group