Universal Service Obligation Archives

Canada Post and the Universal Service Obligation

How much money Canada Post is legislated to lose every year.

Canada Post is obligated under the Canadian Postal Service Charter to a uniform pricing structure for any mail services delivered across Canada.

Anyone will quickly notice that sending parcels and mail to remote places such as Rankin Inlet, Nunavut, or Hopedale, Labrador is going to cost more than any profit that could be generated out of these communities. And there are some rural and urban routes too, especially those that have a large transient population and low levels of income generation, that Canada Post would lose money on. However, legislation requires Canada Post to absorb these losses.

The MIA 2010 Canada Post Annual Report

This blog went through a number of theories why the 2010 Annual Report issued by Canada Post was delayed by almost four months.

It went from accusing Canada Post, to the Government, to a new accounting system bringing on delays, and referred to some conspiracy theories out in the general public.

All of these are wrong. The Federal election caused the delay.

Therefore this article in its original form has been withdrawn and replaced by this short statement.

The 2009 Annual Report – Some Answers

The 2009 Canada Post Annual Report contains many details that answer a few key-questions as outlined in the previous post, “Important Questions…”.

The 2009 version is much improved over the 2007 one, which the questions were based on. Much more will be pulled out of this document, but in reference to some of the important questions:

• Food Mail program: (Pg. 28) A large portion of this was covered by the Government of Canada. Canada Post attributes to absorb 11 million in ‘foregone’ revenue on the difference between what the Government gave and their actual costs based on commercial rates.

• Government Mail and Materials for the blind: (Pg. 28) 17 million in ‘foregone’ revenue.

• Library Book Rate: (Pg. 28) 6 million in ‘foregone’ revenue.

The total lost ‘foregone’ revenue to Canada Post for these three programs is an annual 34 million dollars.

This total does not include free mail to the military in Afghanistan.

Nor does it include a breakdown of how much the Universal Service Obligation costs. What is meant here by USO? All points serviced that Canada Post loses money on, which is typically rural and non-urban communities. Losses that are required to be recouped through the profitable urban operations.

These two entities, Urban and Non-Urban, should be distinct in all Canada Post financial reports.