Do We Still Need the United States Postal Service?
Ruth Goldway, the chairman of the U.S. Postal Regulatory Commission, imagined such a world when the head of the U.K.’s Royal Mail International asked at an industry conference a year ago what Google would do with the Postal Service. Goldway (who hadn’t read my book) replied, “They’d give every household a computer and a printer.” (And I’d add, of course, a broadband connection.)
Goldway was just speculating. As someone who believes in the Postal Service’s universal service obligation, it makes sense that she’d wonder about universal connectivity.
Now – as is my habit – I’ll take it farther – too far – and ask: When we all are connected, do we need a Postal Service? Or what kind of Postal Service do we need? What still needs to be delivered? What are the economics of that delivery – who’s being served and who should pay? Do we still need daily (let alone Saturday) delivery? Do we need to guarantee physical delivery to every address in America? How much could we save? Can the market take over delivery of things while the net takes over delivery of information and communication? What’s the impact on publishing and advertising, on retail, on education?
These are fascinating questions I’ve been tossing back and forth with a new friend, John Callan, a high-level consultant in the delivery industry. He did read my book (and gave Goldway a copy) and came to visit me to talk about the post office in the Google age. Callan, his colleagues, and I are thinking of holding an event to explore these questions and opportunities.
The Postal Service is forecast to lose $7.8 billion in 2010. A USPS presentation here reveals the dynamics: a 17% decline in volume from ’06-’09; a forecast 37% drop in first class ’09-’20. With its universal service obligation, the USPS has to deliver to 150 million addresses a day. With its post offices, it has 36,500 retail locations, more than McDonald’s, Starbucks, Walgreens, and Wal-Mart in the U.S. combined – and it’s not allowed to close offices for economic reasons. Its retiree health benefits alone cost $5 billion a year. Dropping Saturday delivery, as has been proposed, would save $3 billion a year – but that doesn’t solve the problem. Federal Times says the USPS is “officially in a panic” (not a bad thing, I’d say) because it could lose $250 billion in a decade.
The US Postal Service as we know it is, in a word, like much of the rest of the economy disrupted (or, if you prefer, doomed). I think it’s time to ask the radical question: Do we need it?
If all of us are connected, we don’t need the USPS to deliver letters; email is precisely the reason that first class mail is already plummeting. We consumers are, in my view, subsidizing the delivery of advertising because 71% of the USPS margin available to cover its costs comes from first class, only 21% from advertising. Yet in 2009, the USPS delivered an equivalent number of ads vs letters and by 2020 it will deliver far more ads (86 billion ads vs. 53 billion letters, according to the USPS projection). Should an ad-delivery service be the province of a government-anointed entity? I don’t think so.
So let’s zero-base the Postal Services’ services: Once more, information and communication can be handled electronically. Commercial delivery should be handled commercially. There will be an increase in parcel delivery as more and more retail moves online; that’s a profitable business the market should take over. Junk mail should pay full freight – if it is still delivered once mobile becomes a better, more targeted, and more efficient delivery mechanism for coupons and such (and if do-not-mail lists threaten to cut their volume). Magazines? Sorry, but I don’t really want to subsidize their businesses – and besides, tablet triumphalists insist we’ll be using iPads before you know it. Do we need six-day-a-week delivery to every one of 150 million addresses in America then? No; delivery of things is made on an as-ordered basis. What about out-of-the-way addresses (see: Sarah Palin)? Maybe that requires some subsidy, but that would be minimal.
What about the post offices? The USPS presentation shows far lower costs if these services were run through partners (e.g., other retailers), online, and self-service machines.
What about delivery of government paperwork? Well, it’s ludicrous that we’re not given the option to fill out the census online. We are shifting our taxes online.
Mind you, I have nothing against mailmen anymore than I have anything against pressmen. It’s just that they work in antiquated industrial structures and we can find not only efficiency but improvement of service thanks to digital – if we are all connected.
That is why I wish the FCC broadband plan went farther faster (as is happening elsewhere in the world), assuring everyone a high-speed connection quickly. This examination of the Postal Service is just one example of the impact universal connectivity would have on the economy. Some of that impact is painful – lost jobs, severance cost, unused real estate, mothballed trucks. But much of that impact is positive – improved service, reduced costs, reduced environmental impact, new opportunities, new entrepreneurship, new innovation. New companies would emerge to take up the opportunities this change presents, creating new jobs and value.
That’s why I was so impressed with Chairman Goldway’s answer to the WWGD? question: Rather than trying to paddle against the flood, she was at least willing to at least wonder about going with the flow.
I’ll ask: What happens if we spend capital not on money-losing, dying institutions (repeat: $250 billion losses over a decade) but on subsidies to get every American connected? If we fully examine the opportunities that presents, it could have a profound impact on policy, budgeting, and many sectors ofsociety. Let’s model that impact on the economy.
So Callan and company and I would like to get together both incumbents and entrepreneurs to imagine the near-future world of delivery after digital ubiquity. I’d like to continue the discussion with other sectors: newspapers and media, obviously, but also education (how would it change if every child were connected and equipped?); retail; real estate (what happens when all that retail leaves its brick-and-mortar stores?); financial services (why the hell are banks still building branches?); government; and on and on. That is what should inform the policy debate over broadband policy: Let’s map out all the opportunities – for entrepreneurial innovation and growth, for savings, for improvements in life, for export value – and let that inform the resources and speed we put into universal broadband.
What do you think?
Photo by B Rosen
Also posted here on Buzzmachine.com
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