Denmark's Proposal to End Universal Service Obligation: Implications for Marginalized Groups and the Future of the

In a world of diminishing volumes, is the Universal Service Obligation (USO) an anachronism or a fundamental compact between populations and their governments?

The Danish government's recent proposal to eliminate the USO on mail delivery marks a dramatic shift that could have far-reaching impacts. According to the official statement by PostNord, the country's postal service provider, the government intends to end PostNord's centuries-old role of guaranteeing nationwide mail access. Instead, mail delivery will be opened to competition, expecting the market to meet accessibility needs.

This action aligns with the 1997 EU European Postal Services Directive, which aimed to liberalise the postal sector by gradually reducing monopoly protections and introducing more competition. While the directive still mandates that EU countries provide minimum postal services, its market liberalisation goals may be influencing Denmark's consideration of more radical USO reform.

Eliminating Denmark's USO risks excluding marginalised groups dependent on mail. PostNord notes that the draft agreement only specifies service requirements for small islands, the visually impaired, and international mail. This suggests that rural communities, older people, and other groups dependent on physical mail could have inconsistent or inequitable access under a competitive market approach. However, supporters argue that citizens and businesses will adapt if USO requirements are relaxed, as the directive permits. This reflects a view that universal postal access is less critical in Europe's advanced digital economies.

To look at the impacts of this liberalisation, it's worth looking at the example of the UK. In the early 2000s, the UK government pursued significant postal sector liberalisation, splitting Royal Mail (RM) from Post Office Ltd in 2012 and floating Royal Mail on the stock exchange. This enabled private-sector competition in delivery services while keeping Post Office for consumer-facing services.

Despite market liberalisation, RM has largely maintained ubiquity as the provider of last-mile delivery across the UK for letters and small items. Paradoxically, it is almost certain that the USO has played a vital part in enabling RM to hold its position broadly. The USO obliges RM to maintain an infrastructure and logistics network that facilitates delivery to every address in the UK. Though competitors have emerged, they heavily rely on Royal Mail for final-mile delivery, especially in rural areas. In fact, some of Royal Mail's largest customers are now their biggest rivals; Whistl and Deutsche Post UK are just two examples.

On the other hand, the customer-facing retail arm of the USO, the Post Office, was retained as a government entity and continues to deliver services to customers who need/want direct interaction with the Post alongside financial services etc. A long-term exclusivity arrangement meant that while they were separate businesses, the historical relationship between Royal Mail and Post Office remained symbiotic until very recently.

This demonstrates that even in liberalised postal markets, the historically designated operator retains its vital role in ensuring universal nationwide coverage and last-mile connectivity. Competitors struggle to replicate this capillary reach across disparate geographies.

In Asia-Pacific, many incumbents like Singapore Post and Korea Post are pursuing or have also sought corporatisation and commercial freedom. In many cases, traditional Post is no longer the focus of the business. But fully privatising the legacy postal operator risks undermining universal service capabilities cultivated over long periods.

Examples like the UK show that Governments should adopt a nuanced approach - introducing competition for innovation while preserving the national infrastructure and social service aspects of flagship postal entities. Pursuing drastic deregulation without considering geographic and development contexts could deprive rural communities of access and connections. Policymakers must find the right balance between liberalisation and protecting universal service.

Many Asia and Pacific countries place high importance on USOs to promote development. For example, Japan Post has a USO to deliver to all areas of the country. Australia Post's USO requires 5-day per week delivery to every address, And New Zealand Post's USO includes specific service standards for rural areas. Developing nations like Thailand and the Philippines enacted USOs to expand mail access nationally.

Eliminating Denmark's USO could signal a growing view that universal postal access is obsolete in digital-first societies. This may encourage other European countries to consider relaxing USO requirements as letter volumes decline. However, given the ongoing importance placed on USOs in Asia-Pacific, Denmark's approach is unlikely to be adopted widely there in the near future.

There are supplementary considerations also, from a business aspect Posts have held their position in the market for a variety of reasons, of those the key one is the direct relationship they have with every consumer in a given territory, by delivering to each doorstep Posts have, over many years, built enviable brand presence Dilution of the USO threatens to dilute this brand presence, removing populations' powerful personal connection with their Post While maintaining the USO may seem costly, carrying a brand presence without it is likely to be hugely expensive.

At the international level, Denmark's reform raises questions about the future of the Universal Postal Union's (UPU) vision to "ensure a truly universal network of up-to-date products and services." The UPU may need to focus more on providing technical assistance for developing countries to maintain USOs as industrialised nations potentially move away from guaranteed universal access.

Denmark's USO reform has potentially revolutionary implications for its domestic population and posts worldwide. The impacts on rural communities, elderly citizens, and others who rely on mail must be evaluated. The UPU's progress on universal access goals may face new challenges if more privileged nations begin eliminating USOs in the digital age. The Danish policy will be closely watched as a potential indicator of a more fragmented global postal landscape in the future.