In the October 21, Wall Street Journal, there was an article entitled “Japan Post Goes in New Direction.” Reporters Atsuko Fukase and Allison Tudor reported on a change in leadership and the potential reversal of the government’s commitment to privatization.  As they described the unfolding situation, they cite a statement from the chairman of the Japanese Bankers Association, who stated that he believed that private banks would face unfair competition from a government-owned Japan Post that offers banking services.

If this sounds like the concern expressed about the “public option” U.S. health insurance reform proposal, there is a good reason: the issues are remarkably similar.  In the U.S., the U.S. Postal Service has largely avoided competition with the private sector, except in the area of package delivery, in which it competes with UPS and FedEx, express mail, in which it also competes with these same companies, and international mail, in which it competes with DHL, and, more recently, Pitney Bowes.

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Having just finished attending the Conference on Research in Regulated Industries sponsored by Rutgers University and led by Dr. Michael Crew, I have been immersed in many presentations relating to many subjects, but one, in particular, caught my attention:

• What universal or public services do we expect of major communication media?

With respect to mail, postal services around the world all have a variety of what are called “universal service obligations.” They are expected to maintain a network that allows every citizen in their country to transact business, to deposit mail into collection boxes or at a conveniently-located post office, and to receive mail at a designated home or business address 5-6 days a week all year. Additionally, their governments expect them to subsidize charitable and educational organizations, to charge affordable and uniform prices for mail originating from individual citizens and to be large employers and anchors for rural communities. In the U.S., the Postal Service also absorbs an enforcement responsibility for obscene, offensive, and fraudulent material that gets sent through the mail. In recent years, Congress has deferred its payments to the Postal Service for the mandates imposed on the Postal Service to subsidize certain categories of mail and certain types of users, such as non-profits. (more…)

I recently had the opportunity to speak with Eleanor Trickett, the editor in chief of DM News, about the inaugural DM News/Pitney Bowes survey on direct mail and the environment.

The survey reveals that consumers greatly overestimate the environmental impact of direct mail. Eleanor and I discussed the implications of this survey and how the industry can implement new technology and other initiatives to reduce the environmental impact of mail. We also discussed how industry leaders can work to improve the public perception of mail, and grow the value of mail as a medium in the long-term.

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Twice in the past three weeks I have been in Europe to meet with key mailing industry stakeholders to discuss postal issues. During the last week, the European Union has again considered postponing the effective date for full market opening from 2009 to 2011 for many countries, and to 2013 for many others. This reform process was started with a directive issued in 1997.

Why has it been so difficult? Postal issues are indicative of challenges governments all over the world have in effecting fundamental reform:

• While the broader public may benefit, the benefited individuals and businesses are focused on many issues. Those who might be harmed in the short term, in this case, postal workers, are highly focused, well-organized, and often very militant. They will react far more negatively to reform than the benefited public will act positively. Therefore, in the short run, elected officials find reform very risky.
• Competition, privatization, or other reforms are often disruptive in the short run, but beneficial only in the longer term. Politicians are much more likely to think in the short term because election cycles are relatively short.
• The disruption when reform does not work perfectly, which is often the case, is usually a highly-visible media event, whereas improved service quality does not create the same media opportunities.

The U.S. actually made some good decisions in effecting postal reform. We left a great deal of discretion to an independent regulator, and took a great deal of the heat from elected officials. Europe, on the other hand, has issued broad guidelines, but has left postal reform squarely in the hands of elected officials and regulators in each of the member countries. Some countries have dealt with more of the issues through the decisions of elected officials; others, like the UK, have had more active regulators. (more…)