from the "IPC Regulatory Flash" (A publication of the International Post Corporation)

The true meaning of universal service in an enduring mail system

By Gene Del Polito
Association for Postal Commerce

The Association for Postal Commerce is a US association of businesses and organizations that use or support the use of mail as a medium for business communication and commerce. Its President, Gene Del Polito, is a well-known and highly regarded personality within the postal community. He kindly offered his perspective on the universal service.

What is meant by “universal service”? Does it mean, as the American postmaster general chose to describe it, delivering to “everyone, everywhere, six days a week”? Or does it mean conjuring up whatever definition is required to continue sustaining the viability of outdated postal models?

Actually, “universal service” means neither of those things. Rather, it means providing a level and quality of service sufficient to fulfil a nation’s needs as defined at any time and place. In some nations and places, this might mean mail delivery six days a week, in others, five, in others, even less. In some places, universal service might mean delivery of all postal products daily. In others, it might mean delivering bills, payments, and statements five days a week, while delivering advertising mail less frequently.

The idea is for a postal system to fulfill its role as part of a nation’s economic infrastructure, that is to function in the most transparent way possible while satisfying a public need. To some around the world, the idea of universal service is nothing more than an umbrella under which some seek refuge from the full force of free-market competition at significant public cost. The irony is that if many of these Postal operators were to disappear tomorrow, someone—undoubtedly within the private sector—would have to reinvent some form of universal mail delivery system simply to satisfy an enduring market need. Again, “universal” means simply that which is sufficient to meet a nation's economic and communication needs.

The real challenge that faces many Postal operators is to figure out how to add even greater value to distributing printed materials through the post rather than by way of some alternative method. It is not to figure a way to perpetuate the benefits they derived from a marketing and regulatory reality that has long since passed. Postal operators will have to learn to relate to customers and their needs in ways that are different from those of the past. Customers no longer want to hear “here is what I have, what do you want to buy?" Rather, they expect those who compete for their business to ask “what do you need, and may I build it for you?"

For mail to function in the Internet age, it must take on some of the more desirable characteristics of its electronic competitors. This does not necessarily mean that the speed of mail delivery must equal the speed of something like electronic mail. It does mean that the consistency and value of doing business through the mail must begin to approach the consistency and value of doing business via newspapers, the telephone, the Internet, radio, broadcast, cable, and satellite television. If a business needs to have a message reach an audience on Tuesday by 12 noon, then the post must be able to ensure that the message will be delivered by the appointed day and time—and it must do so reliably.

One of the advantages on which postal competitors such as United Parcel Service and FedEx have been able to capitalize is their ability to tell the customer exactly where a piece of expedited mail, or a package, is at any moment in time. This track and trace ability provides the message sender and parcel shipper with the knowledge and faith that a message or package will reach its intended destination at a known moment in time.

The irony is that this track and trace ability was not actually created to make the customer more at ease with himself. Rather, it was created to provide UPS and FedEx with information they needed about how their systems were functioning, the times when they where not functioning, and how problems needed to be rectified. Both companies were smart enough though to take this vital internal management tool and transform it into a real marketplace advantage.

Many of the world’s Postal operators still lack this kind of information technology infrastructure. They not only lack the tools that are necessary to give customers the comfort of certainty, they do not even have the tools necessary for better internal management of their own business systems. Consequently, despite the time, money and effort that has been devoted to postal transformation, most Postal operators still find themselves ill-equipped to deal adequately with their hard-goods delivery competition, let alone the competition they face from alternative communication media.

Rather than focusing on ways to improve their core postal services, many Postal operators seem more intent on emulating their parcel and express competitors. More time is spent discussing how to move from the lettermail arena into the parcel sector, or how to transform a “stodgy” Postal operator into a full-service logistics services provider, than on improving the quality and value of communicating and doing business by mail. Instead of focusing more intently on how to satisfy better the nation’s needs from the postal infrastructure, postal executives seem more intent on finding ways to get out of the business of moving and delivering mail.

What many forget is that UPS and FedEx got to be the strong competitors they are through their unrelenting drive to control more precisely the basic elements of their operations. Rather than conjuring up excuses for getting into the last-mile lettermail delivery business, these companies focused on improving their core competencies of delivering a reliable, cost-efficient, and customer valued delivery service based on the kind of information that could provide the best means for controlling costs and improving customer satisfaction.

People are astounded to learn that UPS can identify the costs associated with every single element of its operations. Not even the US Postal Service, which has one of the most detailed costing analysis schemes in the postal world, can match UPS with that.

The question is not whether there is a continuing need for universal service (the answer is yes). Rather, the question is whether the world’s Postal operators are willing to do what is necessary to understand the costs of their systems with sufficient specificity to ensure the continued viability of a reliable, cost-competitive universal mail service.

Take a look around the world. Postal costs are defined variously as “attributable”, “institutional” and “fully-allocated”, terms derived largely from the legislative and regulatory frameworks from which these Postal operators have sprung. Most cannot even agree on how to define their costs, let alone use costs as the basis for a rational method of pricing. How can the European community ever hope to harmonize pan-European postal services while each of Europe's Postal operators continues to insist on defining the measurement of postal costs in its own way? Indeed, the same question can be asked of Africa's and Asia's Postal operators as well.

While there are more alternatives than ever to doing business via the mail, the value and utility of doing business by mail is far from fully played out. There is a great deal more value that can be added to mail to make it a truly enduring communication and business transactional medium. The only question is: “Are the world's Postal operators willing to do what this takes?”