Monday, September 5, 2011

Ensuring Access to Retail Services: Defining Effecting Access

The issue of retail access to services provided by the Postal Service is a two-part policy question.  The two questions are:
  • How much access to retail services should be included in the Postal Service's universal service obligation?  Answered below
  • What restrictions should the Postal Service face in meeting its obligation to provide retail access? (Answered in a subsequent Post)
Right now the debate over saving Post Offices involves communities concerned about the future of 4351 Post Offices.  For 728 of them, the Postal Service is currently progressing through the current process of meetings with communities which is increasingly followed by an appeal to the Postal Regulatory Commission.   The Postal Service proposes evaluating 3,653 post offices, stations and branches though a uniform approach in its Retail Access Optimization proceeding at the Postal Regulatory Commission.  

The emotional attachment to post offices is understandable  as the establishment of a post office signaled the establishment of a town.  The history of Ashflat, Arkansas describes how a town's identify is linked to its post office.  With increases in population and trade, Ash Flat became a town when a new post office was built in 1856.
Today Ashflat, a town of 1,082 is the county seat of Sharp County. The town is also a regional commercial center with a Walmart.

The establishment of a Post Office was important in the 19th century as mail delivery in rural areas was to a Post Office and not a home or farm.  Looking at maps of Northeastern Arkansas it is hard to imagine how far someone would have had to travel on horseback or carriage to get to the nearest town that already had a Post Office and mail delivery.

Times have changed.  Mail is delivered to homes and businesses and Post Offices for most people is not where mail must be received.   Post Offices serve one or two roles today.   First, they provide retail services.  Second, they may act as a carrier depot, or a central location where carriers get mail that must be delivered and complete any sortation needed to more efficiently deliver the mail.

The question about what level of access to retail services, would meet the Postal Service's Universal Service obligation leads to the two questions at the top of the post that I will present the available options in turn.

How much access to retail services should be included in the Postal Service's universal service obligation?

Postal policy relating to Post Offices can be found in two sections of U.S. Code

Title 29 39 Sec. 101 Postal Policy:
(a)....It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.
(b) The Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining. No small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective postal services be insured to residents of both urban and rural communities.
 Title 29 403. General duties
(b) It shall be the responsibility of the Postal Service—
(3 ) to establish and maintain postal facilities of such character and in such locations, that postal patrons throughout the Nation will, consistent with reasonable economies of postal operations, have ready access to essential postal services.
What is clear is Congress's intent, "effective postal services be insured to residents of both urban and rural communities."   What is less clear how the Postal Service and the Postal Regulatory Commission should balance the need for effective service and the restriction on closing post offices.  

Defining what is effective retail access requires understanding what transactions require an in-person retail transaction and which ones can be performed as or more effectively without a retail outlet.  The following table lists most Postal Service retail transactions.  The three types of outlets that involve local physical access identify options for providing Postal retail services at that type of outlet.  A 4 indicates that the service is offered at all locations.  The d indicates that the service is offered at Post Offices and may or may not be offered at contract stations.   The D indicates that the service is offered at Office Depot and not at banks or supermarkets.  Postal Services offered at Office Depot may be offered at pack and ship stores and other locations that offer Postal Service parcel services and stamp book sales but do not sell single stamps and Postal Service money orders or rent Postal Service mail boxes. 

Defining what is effective access to postal services that require an in-person retail transaction is both a business and political decision.

Effective access from a business perspective describes access that is sufficiently easy for customers to use.  An optimally effective level of Postal retail access would reflect the level of access that adding an additional access point would add more costs than the incremental sales of Postal products or services.  The addition of the phrase "consistent with reasonable economies of postal operations," reinforces the comparison of marginal revenue to marginal costs in assessing effective access.

The political aspect of the definition of access focuses on the access issue independent of the business case for having a retail postal facility in a particular location.   The law states that the Postal Service should provide a "maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining."  Because the maximum degree of effective postal services is not defined, the operating assumption for the Postal Service, the Postal Regulatory Commission, and Congress has been that the Postal Service provides a maximum degree of service as long as it does not close an existing Post Office for financial reasons.  The political aspect of retail access now also assumes that effective retail access requires access in an employee-manned Post Office.

Solutions from Other National Posts

 The charters of the Australia Post, Canada Post, and La Poste (France) provide three similar approaches of defining effective access that do a better job of ensuring effective service that a national operator can provide without subsidies than what is in current U.S. law.  What is common among all of the solutions below is a definite rule for defining access for both rural and urban areas.  A similar approach to defining effective access can be found in Germany, Denmark, Ireland, the Netherlands and Sweden.  All of these countries, except France allow the national postal operator to choose fairly freely among corporate, franchise, and self -service options in providing access.

Australia Post

Australia Post's Community Service Obligation describes its access obligation as follows:
Access - Maintain mail lodgement [access] points at 4,000 retail outlets (2,500 in rural and remote areas).
Retail outlets to be located so that:
  • in metropolitan areas at least 90 per cent of residences are within 2.5 km [1.55 miles] of an outlet
  • in non-metropolitan areas at least 85 per cent of residences are within 7.5 [4.65 miles] km of an outlet.
Canada Post

The Canada Post Charter has three provisions that describe access.
  • Canada Post will provide an extensive network for accessing postal services that includes retail postal outlets, stamp shops and street letterboxes, as well as access to information and customer service through the Canada Post's website and call centres.
  • Canada Post will provide retail postal outlets, including both corporate post offices and private dealer operated outlets which are conveniently located and operated, so that:
    • 98 percent of consumers will have a postal outlet within 15 km[9.3 miles];
    • 88 percent of consumers will have a postal outlet within 5 km[3.1 miles]; and
    • 78 percent of consumers will have a postal outlet within 2.5 km [1.55 miles].
  • The moratorium on the closure of rural post offices is maintained. Situations affecting Canada Post personnel (e.g., retirement, illness, death, etc.) or Canada Post infrastructure (e.g., fire or termination of lease, etc.) may, nevertheless, affect the ongoing operation of a post office.             
La Poste

La Poste is required to provide retail access to ensure that:
  • 99% of the national population and at least 95% of the population within each department [state] is less than 10 km [6.2 miles] from a post office branch
  • In addition, every community over 10,000 should have one post office branch per 20,000 inhabitants.


Providing effective access needs a better definition than what is current law.   Countries like Australia and Canada with rural areas as rural any part of the United States provide retail services in their most remote areas with rules that are logical.  Canada Post face greater limits as it serves numerous arctic and sub-arctic communities and significant political pressure to plant the flag of the government of Canada in all provinces given that country's challenge of dealing with a long-standing separatist movement when the charter was written. 

No National Postal operator has an obligation relating to access that goes beyond defining how far an outlet may be from any citizen.  They have not attempted to put into the service charter or universal service obligation any measure of effectiveness that relates to how easy it is to use the service at a particular access point. (This could be important as an access point may be theoretically accessible based on the distance to citizens but effectively not be accessible if it is not open more than a few hours a day.)

Current legislative proposals before Congress either provide no effective guidance for defining effective access or set that guidance at a level that is significantly higher than countries with both large urban centers and vast territories of sparsely populated territory have chosen.  In addition, the financial problems of the Postal Service cannot wait a year or more to implement a more rational definition of access.  Congress would be wise to choose an effective access definition closer to what Canada or Australia has than what is now on the table.

1 comment:

Anonymous said...

This is a great article but I believe the correct US Code is Title 39, not 29.