When Will Postal Operators Begin Charging for Receiving Paper Mail?

By Ron Wiener, CEO & Postmaster General, Earth Class Mail

With the advent of Trusted Postal Email approaching, several industry analysts have asked us recently when posts might start charging recipients to continue having postal mail delivered in paper form. That’s an excellent question, with plenty of comparables to examine. Some banks charge higher per-use teller fees to customers who aren’t willing or able to use cheaper ATMs for their transactions. Cell-phone companies charge recipients to receive phone calls, in addition to the caller being charged for the same number of minutes.

As many national posts struggle with a worsening fiscal deficit due to declining volumes coupled with ever-increasing operating costs, they first scrutinize the most expensive customers they must serve: rural residents. In the United States, where the USPS already owes the federal government $7B in deficit-covering loans, and has experienced a volume decrease of 9 billion mail pieces in 2007, millions of rural customers are already forced to take free PO Boxes and make a long, expensive drive to get their mail.

Despite this, delivering the mail to the nearest post office in places like Nome, Alaska, costs a great deal more than is recovered from the 42-cent stamps on the letters or the bulk-rate postage on those thick catalogs. Many rural customers have high-bandwidth Internet connections and could be receiving the majority of their postal letter mail via an online postal-mail service like Earth Class Mail™ (ECM) – and they could get their mail faster, and more securely, than by having the USPS rural-delivery contractor place their mail in a specially marked trash can.

A significant milestone occurred at the 24th Congress of the Universal Postal Union (part of the United Nations), which was held in Geneva, Switzerland, in July and August, 2008. A resolution was passed that “governments shall encourage postal operators to undertake activities aimed at increasing the use of ICT for modernization of postal processes and use ICT to fulfill universal service obligations.” (“ICT” is commonly known as “IT” – or Information Technology – to our American readers.)

We’ve spoken with several countries’ national postal operators who have expressed an interest in providing ECM accounts to rural residents for free – instead of free PO Boxes – as it would save them a tremendous amount of fuel and labor to deliver the letter mail digitally rather than physically.

Though it’s not certain when the first post will offer ECM service in satisfaction of its Universal Service Obligation (USO), this scenario is not far from becoming a reality, especially in some of the northernmost European countries that have 85%-95% Internet connectivity and a lot of snow to trudge through in the process of making the daily rounds.

As postal volumes decline, the economically-derived perimeter boundary of what a postal operator might consider urban versus rural will theoretically contract inwards. As it does, posts will be compelled to place Internet kiosks in rural post offices to serve those who do not have a high-bandwidth Internet connection. Earth Class Mail vice president Cameron Powell was asked to testify on this concept, among others, before a 2008 Postal Regulatory Commission hearing in preparation for the PRC’s report to Congress that’s due next month.

A follow-on question that must be asked: “How long will it be before posts can no longer afford to deliver paper mail to rural customers without some postage-sharing by the recipients?” Some highly respected academic experts on state-sanctioned monopolies believe that the postal USO should be revised to allow for other means besides truck and airplane to deliver postal mail to customers who have Internet connectivity. In Nepal, for example, the national post set up satellite links and fax machines for mail to be faxed to their recipients, to avoid a several-day hike for a carrier to deliver just one letter to a remote rural village in the mountains.

As paper-mail volumes decline and operating costs continue to rise, the material that’s mailed will increasingly be comprised of high-value parcels and less of regular envelopes. Low-value paper documents will be too expensive to mail by post. Because postage must remain universally priced according to national law in most countries, one way to thwart the inevitability of a $10 postage stamp would be to defray some of the delivery cost by asking rural recipients to pay a share of it if they insist on getting their mail in paper form. Rural residents (especially in Alaska) are already accustomed to paying more than their urban cousins for food, package delivery, and other necessities. It is part of their trade-off versus the city life in the lower 48.

Many creative business models can be devised for national posts that more fairly distribute the operating costs without overly taxing mail senders with complex and unsustainable postage prices. The technology is already here to do this. With a satellite-based Internet connection, there is no need for remote, rural residents to have their mail delivered to a specially marked trash can or be forced to take a two-mile ocean journey just to pick up their mail.

November 24, 2008 | Filed Under Earth Class Mail, The Postal Future 

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