Keep the crown in Crown corporation

Here in Canada we hear a lot about postal transformation, but we’ve also been largely sheltered from the sort of changes that are taking place around the world.

Take Europe, for example. Today’s Europe is a confusing place, with a European Union that seems able to make the most incredible economic decisions that are binding on its members. If you had asked me, I would have thought that mail is an essential service, and so it is a national responsibility to manage it in any way the elected officials deem correct. Somehow, in the Eurozone, that is not the case. An organization that has carried centralized planning to extremes has somehow determined that state run postal monopolies are a bad thing. As a result, we have seen the Royal Mail lose its monopoly, get privatized, and have to honour a universal service obligation while competing with the private sector for business. The universal service obligation is that requirement placed on postal services to provide mail service to all of its citizens, at the same price.

Obviously it is tempered by common sense and practicality, so someone living in a remote area may have to travel a bit to get to a post office.

From what I have been reading, the Royal Mail is facing declining lettermail volumes, while at the same time losing business in the parcel business. For them, the high-volume urban business is going to the lowest bidder, while they are saddled with low-volume rural business.

That lettermail monopoly, once rather lucrative in urban areas, was considered essential to be able to meet the universal service obligation. As we have been hearing for years, it is only a matter of time until declining volumes turn that bargain into a liability.

For today’s postal services, parcel delivery is the light at the end of the tunnel. The Royal Mail’s inability to cash in on parcel delivery may be a local problem, but it may also be a warning that other services, including Canada Post, need to keep their pencils sharp.

Under the legislation which privatized the Royal Mail, the corporation has to provide universal service until 2021. After that, since it is mostly owned by private sector shareholders, it is entirely possible that rural residents will face service cuts or big rate increases. That’s bad enough in a small country, but could spell disaster to residents of remote districts.

It is a warning for us. Canada Post should remain government-owned, and should be prepared to support the universal service obligation. Unless, of course, you like the idea of paying extra to send a letter to your cousin in northern Saskatchewan.

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