What the post office could be


July 24, 2012

What if instead of closing post offices, cutting window hours, getting rid of career postmasters, and selling off post office buildings, the Postal Service had a different vision?  What if brick-and-mortar post offices were seen as vital community hubs with a lot of potential for bringing in new sources of revenue?  What if the Postal Service stopped pushing customers to use alternatives like the Internet and postal counters in big box stores, and instead began diversifying business at the post office?   

That's the subject of a new report by the USPS Office of Inspector General entitled “21st Century Post Office: Non-Postal Products and Services.”  It presents an excellent summary of some of the things that the Postal Service could do to bring in new revenue and revitalize brick-and-mortar post offices. You can read the entire report here.

The OIG looked at foreign postal systems, took suggestions from postmasters, and reviewed its own previously published reports on the subject.  The new OIG report is packed with interesting possibilities.  Here’s a list of just some of them, in no particular order (and elaborated slightly):

  • Public internet access services (like wi-fi and computer kiosks)
  • Government services on behalf of federal agencies
  • Government services on behalf of state and local agencies, like paying traffic fines, acquiring fishing & hunting licenses, etc.
  • Banking services, such as savings accounts, check cashing, foreign money orders, electronic money transfers, and prepaid cards
  • Other financial services, like retirement planning, insurance, etc.
  • E-bill paying for utility, medical, credit card, etc.
  • Job services
  • Sell packing materials and offer packing services
  • Cell phone products and services
  • Fax and photocopy services
  • Notary services                               
  • Greeting cards, toys, calendars, stationary, etc.
  • Automated teller machines (ATMs)                    

The OIG also mentions having the Postal Service get into leasing and warehouse services.  Rather than "shedding excess capacity," as the Postal Service puts it, why not do something with the space?  Many of the post offices being closed and sold are right in the middle of busy downtowns.  The space in the back where the carriers used to work (they've been relocated to an annex on the outskirts) could be rented out to all sorts of retail businesses, offices for professionals, and government and social services agencies.  Some could be turned into wi-fi equipped cafes, the way bookstores have done — and the way the post offices do it in Uganda!

The post office could also play a key role, notes the OIG, in bridging the digital divide by assisting the National Broadband Infrastructure initiative through partnerships with commercial Internet service providers.  

That, by the way, is a recommendation that was on the table back when the Internet was just getting started.  In the early 1980s, there was talk of the Postal Service extending the “universal service obligation” into the digital realm by providing email service to the entire country.  As an APWU executive warned at the time, if the private sector had complete control over the new technology, the country would end up divided into “two classes, those with and those without access to electronic message systems.”  Too bad that warning wasn't heeded.

The Postal Service has tried out many other innovations like those mentioned in the new OIG report.  For example, in 2000, the Postal Service introduced an electronic bill presentment and payment service called eBillPay.  It also developed certified electronic mail and on-line greeting cards, and it has explored offering Internet-based tax services and money transfers.

Most of the innovative ideas in the OIG report come from postal systems in Europe and Asia, where they have been getting into diversification for years.  Many foreign posts are so diversified that they bring in more revenue from non-mail sources than they do from the mail.  The most extreme example is Japan, which takes in 91% of its revenues from non-mail sources.  Germany takes in 87% and Italy, 78%, while the US Postal Service brings in only 13% of its revenues from non-mail related sources.

 

So what's the problem?

Given all the possibilities, what’s holding things back?  Congress and private corporations, of course.  For decades, the private sector has lobbied Congress, complained to the PRC, and done everything it could to make sure the post office didn't cut into its profits.  

In the mid-1970s, for example, trade associations representing office equipment stores successfully forced the Postal Service to remove copying machines from post offices.  Customers complained, the machines were returned, but a new policy was put into place — customers were told that if they needed to make more than a few copies, they should go to a commercial establishment.

in 1994, the Postal Service started a "Pack and Send" service like they have at private shippers.  For a small fee, they packed your parcel right at the post office.   The Mailboxes Etc. chain (later acquired by UPS) and other private packers complained to the PRC, testified before Congress, and succeeded in getting the service stopped.  

The Postal Service also developed an e-mail service called PosteCS, and in 1998 UPS, which was developing its own secure e-mail service, filed a complaint with the PRC.  “This is another example of how the Postal Service is illegally competing with the private sector,” said an UPS spokesman at the time (quoted from Preserving the People’s Post Office, p. 127). 

In 2003, a commission on postal reform established by President Bush issued a report entitled “Embracing the Future: Making the Tough Choice to Preserve Universal Mail Service.”  The commission explicitly discouraged the Postal Service from developing products and services.  The report reviewed a few of the Postal Service's previous efforts at diversification and came to this conclusion:

“These ventures have produced largely disappointing results.  Also of concern, each of these markets is served by private companies who do not have the backing of the U.S. government and a national postal monopoly.  These efforts also have drained time and resources that could have been spent improving traditional postal services.  For this reason, the Commission recommends focusing the Postal Service on traditional mail, leaving electronic products and services to a well-served and innovative private marketplace.”  

The commission was clearly opposed not only to innovations in the digital realm but to all types of non-postal products and services:  "While the Postal Service in recent years has explored an array of new revenue streams far afield of what most Americans consider 'postal services,'  the Commission recommends that the Postal Service be restricted to products and services related to the delivery of letters, newspapers, magazines, advertising mail, and parcels."

That 2003 report, by the way, is the blueprint for Darrell Issa's postal reform bill in the House.  It describes setting up a commission to aggressively close post offices and other facilities ("the legacy network could be retired"), putting limits on collective bargaining, opening the way to competition, and paving the path to privatization. 

Then in 2006 came the Postal Accountability and Enhancement Act.  Not only is PAEA responsible for the Postal Service's massive debt thanks to the retiree health care mandate.  It also prohibits the Postal Service from offering “non-postal services.”  The PAEA enshrined in law exactly what President Bush's commission had recommended.

Before PAEA, notes the OIG, “the Postal Service had virtually limitless discretion to offer non-postal services.”  After PAEA, the Postal Service could only offer the non-postal services it offered as of January 1, 2006.

There are many other obstacles to diversifying products and services at the post office.  Statutory requirements, for example, put limits on how much time the Postal Service has to re-coup start-up costs.  The culture of postal management does not embrace experimentation or a strategic vision beyond the traditional mail business.  And of course, given its financial problems, the Postal Service lacks operating capital to invest in the future.  (These and other obstacles to diversifying the post office are described in this 2011 OIG report.)

 

Prospects for the future

The Senate bill passed in the spring (S.1789) makes a nod toward giving the Postal Service more freedom to innovate.  As the new OIG report notes, S.1789 proposes creating “a commission to provide strategic guidance and foster innovative thinking to address the challenges facing the Postal Service.” 

But the bill authorizes the Postal Service to provide new products and services that are not strictly speaking “postal” only after the PRC has determined that the new product or service “would not create unfair competition with the private sector.”  Even if the PRC were inclined to help the Postal Service diversify, that kind of restriction would make it difficult to approve most of the ideas in the OIG report.

Given today’s political climate, our mindless worship of the free market, the mentality of current postal management, and the steady drift toward privatization, it’s not likely that we're going to see the suggestions in the OIG report ever come to fruition. 

But the report is still worth reading.  It offers a welcome alternative to the Postal Service’s view that brick-and-mortar post offices are a thing of the past, and it provides a useful snapshot of “what might have been.”

 

For further reading

For more on this topic, check out the previous OIG reports listed at the end of the new report.  A few other useful reports and news articles:

Reinventing Post Offices in a Digital World,” New York Times, Oct. 30, 2011

Reinventing the Post Office,” Time Magazine, June 4, 2012

Foreign Posts’ Strategies Could Inform U.S. Postal Service’s Efforts to Modernize” (Phillip Herr, GAO)

Is Diversification the Answer to Mail Woes? The Experience of International Posts” (Accenture)

"Achieving High Performance in the Postal Industry” (Accenture) 

(Photo credits: diversification at an Australian post office; Uganda post office; Pack & Send at UPS; 2003 President's Commission on Postal Service)

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