In his significant and timely paper, Dr. Lee conveys considerable good information. However, the recommendations may be able to be expanded upon with a slightly broader perspective which may provide additional alternatives.

The Issues

As presented by Dr. Lee, the main issues identified were as follows:

1. The Canadian Postal Corporation (CPC) has been struggling with the evolution of the Internet, technological advances, and competition from electronic alternatives;
2. The plummeting use of letter mail fueled by adoption of the Internet will soon reach universality in Canada;
3. Total decline in mail deliver per address from 2007 to 2013 has been 30.0%;
4. Approximately 71 percent of CPC’s total annual revenue is from the two sources (transactional mail and ad mail) and these two sources of revenue are facing brutal competition from electronic substitutes.
5. The volumes of transactional mail and ad mail are trending down (declining roughly 5% per year);
6. Even with increasing postage prices, nominal revenues are stagnant because of the declining volume of transactional mail and ad mail;
7. CPC will not be able to rely on transactional mail and ad mail revenues much longer.
8. Parcel mail volumes are overtaking letter mail volumes
9. The increase in parcel post volume and revenue will only partially offset the lost revenue from transactional mail and ad mail volumes:
10. CPC has an expensive and aging work force. Labour (including benefits) represents about 70 percent of total costs.
11. The majority of CPC employees are over the age of 50
12. In 2013, the government announced the phasing out of door-to-door delivery for the 32 percent of households that still receive it.

As recognized by Dr. Lee, it is essential to review and consider the purpose and objectives to be achieved through the institution of a National Postal Service, the Canada Postal Corporation.

What is the purpose of the CPC?

In his paper Dr. Lee presented the following founding principles and priorities for a national postal service.

1. A fundamental principle of one price regardless of geographical distance;
2. A national postal service has been a key element in nation building
3. The Universal Service Obligation (USO) set out in 1840.
   • a single uniform price regardless of the (domestic) distance between sender and recipient; and
   • that the sender pays the postage, contrary to the practice at the time
4. The principle of postal monopoly is 400 years old and was based in a need for national security;
5. The Universal Postal Union (UPU) (1874)
   • 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.
   • With this aim in view, member countries shall set forth, within the framework of their national postal legislation or by other customary means, the scope of the postal services offered and the requirement for quality and affordable prices, taking into account both the needs of the population and their national conditions.
   • 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.
   • Member countries shall ensure that the universal postal service is provided on a viable basis, thus guaranteeing its sustainability. (Universal Postal Union 2013)

 

In addition, Dr. Lee presented that the priorities for Canada and Canadians have been reiterated as follows:

1997 Principles set forth for the CPC (Minister Marlieau):

1. Affordable, universal postal service is essential for Canadians;
2. Canada post is a valuable institution. Canadians have invested in it, and the government must protect this value;
3. Canada Post will remain a Crown corporation and not be privatized as long as it continues to fill a public policy role; and
4. Canadians should not be asked to return to an environment in which the government must subsidize letter mail.

2008: Strategic Review documented the following:

1. That email was re-placing the traditional letter; that consumers were increasingly paying their bills online; and that pay cheques and government pension and assistance cheques were increasingly being deposited electronically;
2. That more than 200,000 delivery points were being added each year. That the increase in delivery points with reduced postal volumes would reduce revenues and increase costs. Furthermore, revenues from other sources such as addressed and unaddressed direct market mail (“junk mail”) that might have replaced those from letter mail were much lower. It would take almost two pieces of addressed advertising mail or seven pieces of unaddressed advertising mail to replace the revenue from one letter (CPC 2014).
3. Advertising was also going digital as big box retailers were offering electronic flyers to customers. In addition, newspapers were being increasingly aggressive in seeking the advertising flyer business to combat their own declining revenues as advertisers moved to digital advertising.

Conference Board of Canada 2013 Report proposed the following:

1. Moving from door-to-door delivery to community mailboxes
2. Raising prices for letter mail;
3. Expanding convenience through postal franchises;
4. Streamlining operations;
5. Addressing the high cost of labour.

Dr. Lee’s Recommendations

Dr. Lee put forward the following recommendations:

1. Do not privatize Canada Post Corporation
   1. the decline in letter mail and ad mail combined with USO obligations make the postal service a terrible business model. Privatizing parcel delivery, which is growing with the popularity of e-commerce, is possible but would remove a stream of revenue badly needed to manage the decline in the rest of CPC’s operations.
2. Eliminate the postal monopoly or exclusive privilege to deliver letters

1. Critics may argue that the postal monopoly needs to be maintained to better allow CPC to serve its USO, even in a declining market. They argue that opening up the remaining lucrative parts of the business amounts to “cherry-picking” from entrants and will make funding the USO even more challenging. However, this critique simply ignores that the USO is already being cherry-picked by the adoption of electronic communications technologies.
2. Maintaining the monopoly is like closing the barn door after the horse has bolted.

3. Replace all door-to-door mail delivery with community mailboxes

1. Community mailboxes cost less than half the price of door-to-door delivery.
2. CPC itself decided to end door-to-door delivery in 2013.

4. Reduce daily delivery to residential (not business) customers
5. Franchise all corporately-owned post offices
6. Consolidate mail processing plants
7. implement the industry Canada rural Broadband Strategy by 2020
8. Deregulate CPC pricing for letter mail
9. Revise the Canadian Postal Service Charter and the USO

 

Additional information not included in Dr. Lee’s paper

The CPC is currently in the business of offering Digital Services, and the service is marketed under the banner of epost. The following services are offered under the epost banner:

• FREE epost digital mailbox
• According to the CPC, the epost service is free and the vault service has the pricing packages displayed below. (Note: Even though online storage is offered there is no offering of a uniquely, secure, all Canadian, email address.)
• all-in-one-place convenience for bills and statements like cable, phone, utilities, credit cards, property taxes and more with a single Log in. Store your bills and statements electronically for up to seven years. View them any time, from anywhere, online
• epost has partnered with over 100 companies, referred to as “Mailers” from all across Canada to send you bills and statements through the epost digital mailbox. Search for your mailers below then sign up and add them to your account.
• In just minutes, you’ll be able to add bills and statements to your epost account and avoid the hassle of dealing with multiple websites’ usernames and passwords.
• View and manage your payments with a simplified layout in one secure digital mailbox you can access from anywhere.
• epost keeps your bills and notices well organized and in colour coded folders, directly from your Inbox. For greater control, you can easily setup a folder in your Filing Cabinet.
• Storage in one secure location — for up to 7 years!
  • Your bills and statements will be stored within your digital mailbox for up to seven years. The Canada Revenue Agency recommends keeping any supporting documents for six years — epost houses your documentation to support your claims in case you are selected for review.
• Sign in to your online banking site and look for their bill presentment service — from there, sign in to your epost digital mailbox!
• epost is the only company integrated into the online banking websites of all 6 major banks.
  • All data resides in Canada. No data is replicated across the border or subject to foreign privacy laws.
• Store all your important documents, photos and videos.
• The difference between this one and a physical vault at your bank is that you can securely share the keys with anyone you want, when you want.
• Guarantees all sensitive and confidential information you send is protected with bank-grade encryption

Vault Storage Packages

Figure 1 Pricing

Two discussion points included in Dr. Lee’s paper that deserve further consideration and discussion:

1. The number of households (delivery points and thus costs) will continue to increase. More than 15 million delivery points across Canada;
2. As the number of delivery points is increasing, volumes are declining steadily.

With respect to these points, it is possibly wrong not to recognize that in addition to the number of delivery points increasing the density of the delivery points is also increasing. Many rural delivery points are being replaced by urban delivery points and that results in higher density. In addition, in many urban centers, a few delivery points that may have represented a few detached single family units may be replaced by a high-rise development that would result in those few addresses (delivery points) at one geographic location being replace by upwards of 100 delivery points at the same geographical location. Higher densities result in a significant increase in delivery efficiency.

In addition, and as indicated, the number of delivery points serviced does not in itself translate into an increase in the number of units delivered. As the number of delivery points has been increasing the number of units delivered has been decreasing. The number of units to be delivered needs to be rationalized over the number of delivery points and the density of those delivery points as well as other factors that are in the process of changing, or could easily be changed, such as the actual method of delivery.

In this context, if 200 units per day are currently being delivered across 400 delivery points, in the future 200 units per day may be able to be delivered across 1000 delivery points. It is not necessarily rational to suggest that daily delivery needs to be discontinued because volumes are declining. When rationalizing delivery scenarios, the rationalization needs to include consideration for decreasing volumes, increasing delivery points, increased density, improved transportation infrastructure, alternative innovative delivery methods, and rationalizing the business to possibly exclude some types of business.

In this context, physical delivery of a letter may become such a rare event there will be little or nothing to be gained from community mail boxes. In fact, the scenario of a community mail box may make it difficult for the recipient to actually know when the rare event (receiving a letter) has occurred. In the future, the physical delivery of a letter may occur with a frequency similar to that of a telegram today. It would not be reasonable or rational to deliver a telegram to a community mail box.

With respect to parcel delivery, it was pointed out that this type of business is increasing with the increasing prominence of online shopping. If the CPC is going to be in the business of parcel delivery it will need to compete with courier services. There are currently no courier services that are busy promoting delivery of parcels to community mail boxes. In fact, in competing with courier services door-to-door delivery is pretty much an essential feature of this type of business.

Other USO countries are facing the same challenges as Canada. It is common to look at what other countries are doing with respect to the same types of challenges. Dr. Lee has included this information in his paper, but as mentioned by Dr. Lee  ”… it is important not to draw too many parallels between Canada and Europe due to profound differences in geography and population density. In 2013, Canada had only four persons per square kilometer versus 265 persons per square kilometer in the UK (the world bank 2014).”

As presented in Dr. Lee’s paper, the following are typical reforms proposed by other USO countries:

1. The elimination of the monopoly or “reserved areas” exclusive to the post office;
2. Revisions to the USO delivery standard (for example; five days a week versus three days a week), the method of delivery (for example; to the door versus community mailboxes), and method of service (for example; franchising); and
3. privatization of the entire postal administration

Regardless of the proposals most commonly put forward, further analysis of the information presented by Dr. Lee Indicates that the reforms that appear to have actually been implement most often by USO countries are:

1. To reducing the allowable size for parcels; and
2. To discontinue bulk service and direct mail

The components of the mail that have thus far not been mentioned are catalogs and magazines. The volumes of these items have been reduced by digital alternative leaving a significantly diminished number of units of these types of items. However, the nature and use of these items–they are tactile items that are physically appealing and more attractive as advertising, promotion, amusement and entertainment items. This suggests that catalogs and magazines may have a lingering appeal and there may be a lingering need to deliver these items. Possibly these items should be treated as parcel post and handled by a courier type service, or possibly they could be dealt with by the delivery services similar to newspaper and flyer delivery services.

Alternatives to be considered beyond the recommendations put forward by Dr. Lee:

Perhaps the CPC should be embracing the era of digital technology and become a provider of a uniquely national email service. This would be accomplished by the addition of an email service to their existing epost service.

Consider benefit to Canadian Citizens:

1. An email address that doesn’t need to change every time you sign up with a different Internet Service Provider (ISP);
2. A truly Canadian system similar to gmail and yahoo (which are American entities) that would provide a strictly Canadian email server; a service with premium security parameters; a service that provides access with a web client or a PC or mobile based email client. That would not effectively prevent or eliminate the use of other third party email clients.
3. An email provider that doesn’t utilize your email address and or your email data to lock you into their service or email client; Where your data can easily be moved to facilities offered by another service provider.
4. A service that would provide integral and liberal access to your email data; contact information; and calendar information—allowing access on the web or via a PC, laptop, tablet or other mobile device. Allowing downloading and uploading of complete current and historical information;
5. A service that would allow the users the choice of storing their data locally, in the cloud, or both;
6. An email provider that could offer the best in spam protection, phishing protection, spoofing protection with the added benefit of having a close association with postal legislation, providing for significant penalties for offences under the Postal act. Consider the impact of invoke federal postal legislation on some of the transgression currently popular in existing email services:

• Mail fraud is the attempt to commit some type of fraud (deceit, concealment, or trickery) by using the postal service;
• Opening mail – Every person commits an offence who, except where expressly authorized by or under this Act, the Customs Act or the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, knowingly opens, keeps, secretes, delays or detains, or permits to be opened, kept, secreted, delayed or detained, any mail bag or mail or any receptacle or device authorized by the Corporation for the posting of mail. (R.S., 1985, c. C-10, s. 48; R.S., 1985, c. 1 (2nd Supp.), s. 172; 2000, c. 17, s. 88; 2001, c. 41, s. 79.)
• Abandonment of mail – 49 Every person commits an offence who unlawfully and knowingly abandons, misdirects, obstructs, delays or detains the progress of any mail or mail conveyance. (1980-81-82-83, c. 54, s. 43.)

7. Would provide for international Agreements and treaties for the clean transfer of legitimate mail/email between countries, and the establishment of rules, regulations, and penalties governing the treatment of persons that commit or may attempt to commit offences under international mail/email treaties.

Embracing and stepping into email as a national entity may place the CPC in a position where they could work to accelerate the conversion from physical mail to digital mail sent and delivered from a postal station, a personal residence, or a business.

It is possible and relatively inexpensive to have digital mail delivered directly to a printer located in the living room of a residence (for example), and then to respond to that mail or initiate new mail, including writing a cheque or a letter or both, and then have them scanned and sent immediately with the push of a button to the intended recipient. It is possible to implement this type of service over existing telephone lines, cable infrastructure, cellular technology, and even satellite technology (which though not extremely conducive to good voice communication is quite adequate for email service). It is possible to deliver mail to the living room faster and cheaper than it can be delivered to the door (or community mail box). A device that automates the process of receiving, printing, scanning and sending, can be exceptionally simple, inexpensive, and does not require knowledge of the underlying technology or an exceptional learning curve in order to learning how to use. In fact, using a system like this could be much like using a fax machine. Learning how to use this type of system would be much simpler than learning how to use a computer, and may be as simple as using a vending machine.

If the CPC adopted this type of service offering in its business model, it could actually work to speed up the process of effectively eliminating the physical mail delivery and replacing it with a digitized service supported either by computer technology or by a simple printing/scanning device.

A primary requirement for this type of system/service would be that the underlying service would need to be extremely secure in order to protect those citizens that do not or would not have the where-with-all to protect themselves in the digital world. Such a service offering would be an improvement over existing email service offerings.

This alternative does not entail the suggestion that CPC should get into the ISP business. This service offering would work over existing internet service offerings. This type of service offering would be in conjunction with the presence of third party email offerings and private email systems.

Expanding the CPC epost offering to include email service would contribute to the embodiment of the following principles inside a National Postal Service:

1. A single uniform price regardless of the (domestic) distance between sender and recipient;
2. Ensure the sender pays the postage;
3. Further Nation Building; and
4. It may contribute to improving National security.