Broadband Use Is Associated with Lower Use of First- Class Mail, Though Less So in Rural Areas; Extent of Future Decreases in All Areas Is Unclear

		Broadband Use Is Associated with Reduced Use of Some First-Class Mail but Continued Mail Volume Declines Are Uncertain

Broadband access to various Internet services, especially online bill  paying, has in recent years been associated with reduced of use  transaction mail, a subset of First-Class Mail. Our analysis of USPS’s  HDS data from 2007 to 2014 found a negative relationship between  broadband use and the volume of transaction mail sent, after adjusting for  available demographic and other factors that might be associated with the  use of postal services. In other words, controlling for age, income, and  education, households that used broadband to access Internet services  tended to send less transaction mail than other households. Correspondence mail, another subset of First-Class Mail, has been in  decline for over a decade, but we found that broadband use may not have  had a significant effect on that trend in recent years. As one expert we spoke with  suggested, the lack of a relationship between broadband and  correspondence mail in our analysis could reflect that individual  communication choices are no longer significantly influenced by  broadband in the home. However, although USPS has said that they anticipate that  First-Class Mail volume will continue to decline with the migration to  electronic alternatives resulting from technological changes, experts we  spoke with had mixed views on the future of First-Class Mail and its  relationship to broadband use. Only 4 of the 11 experts we spoke with  said that First-Class Mail was likely to continue decreasing at least in the  short-term. Four experts, as well as officials from six of the  groups we spoke with for our case studies, also suggested that Internet  privacy and security concerns could be contributing to a slowed rate of  electronic diversion. Specifically, our analysis of USPS HDS data found that among  households without broadband, households in rural areas tended to send  more correspondence and more transaction mail than did non-rural  households, after adjusting for demographic and other factors that might  be associated with the use of postal services. In other words, after adjusting for  demographic and other factors, rural households with broadband Internet  access were not statistically different in the volume of correspondence  mail sent compared to non-rural households. The USPS, ISP, and business officials we interviewed for our case  studies generally agreed that overall, residents of rural areas value mail  and postal services for a variety of reasons. E-Commerce Continues to Drive Package and Shipping Business, but USPS Could Face Increased Competition and Challenges in the Package Delivery Market

E-commerce continues to have a strong effect on USPS package  volumes. In other words, broadband use in the home  was associated with sending and receiving more packages with USPS. We found that households in rural areas made greater use of package  and shipping services. Overall Effect of Broadband Use on Post Office Visits Is Unclear, though Data Is Limited; Rural Residents Value the Presence and Services Provided by USPS

While access to Internet services has had a major effect on other postal  services, as described above, it is unclear what role the Internet has  played in the nationwide reduction in post office visits in recent years. Our  analysis of USPS’s HDS data found no statistically significant relationship  between broadband use and post office visits. With regard to rural households, however, we found that rural households  tended to visit post offices more than non-rural households, independent  of broadband use. Rural residents may also use USPS services and post offices at higher  rates because of the special role of USPS in rural communities. As a result, post offices serve as a valuable social space in  these small communities, where even the bulletin board can be a  valuable communication tool. To balance the benefits of its retail network with the high costs and  decreasing revenue generated by those retail facilities, USPS is  undertaking various initiatives. Irrespective of these efforts, balancing the benefits of a robust retail  network with the costs of maintaining that network, especially in rural  areas, will continue to be challenging for USPS. USPS did not have any comments on the  draft report. Postal Service’s (USPS) (1) mail services, (2) package  and shipping services, and (3) post offices, particularly in rural areas. We also used our literature review to identify research on the role of post  offices in rural America. Household Diary Survey Analysis

To assess the relationship between broadband use and the use of postal  services, as well as how use of postal products differs in urban and rural  areas, we conducted regression analyses using data from the USPS’s  Household Diary Survey (HDS). We therefore are not reporting the results  of this analysis for rural areas specifically.
Why GAO Did This Study

As broadband availability grows, Americans—including those in rural areas—increasingly partake in communications and services offered via the Internet. Some of these Internet services have changed how individuals use USPS. Though many factors influence use of postal services, understanding the relationship between broadband use and the use of postal services is critical to both the future of postal services overall and the communication options available to rural residents. GAO was asked to examine the relationship between broadband and postal use, particularly in rural areas.
This report addresses the relationship between broadband use and the use of USPS's (1) mail services, (2) package and shipping services, and (3) post offices, particularly in rural areas. To address these objectives, GAO reviewed literature on broadband and mail trends, factors associated with postal and broadband use, and the role of post offices in rural America. GAO conducted regression analyses using 2007-2014 data, the most recent available, from the USPS HDS, which collects information from a nationally representative sample of households. GAO interviewed local stakeholders, such as officials from post offices and Internet service providers, in five rural areas, chosen based on recent deployment of broadband and other factors. GAO also interviewed 11 postal experts, chosen based on participation in previous GAO work and postal conferences.
GAO is not making recommendations in this report. USPS did not have any comments on the draft report.

What GAO Found

Broadband use has in recent years been associated with reduced use of First-Class Mail. Continued declines as a result of broadband, however, are uncertain. Broadband access to various Internet services, especially online bill paying, is associated with reduced use of transaction mail, a subset of First-Class Mail. GAO analysis of the U.S. Postal Service's (USPS) Household Diary Survey (HDS) data from 2007-2014 found that households using broadband to access Internet services tended to send less transaction mail than other households, controlling for age, income, and education. However, GAO found that in recent years broadband use may not have had a statistically significant effect on correspondence mail, a subset of First-Class Mail that includes letters and greeting cards. Experts GAO spoke with had mixed views on the future of First-Class Mail as a result of broadband use, with only 4 of the 11 experts expecting decreases in First-Class Mail in the short term. Several experts and officials suggested that Internet privacy and security concerns, as well as many individuals having already changed postal habits in response to the Internet, are among the factors that could be contributing to a slowed rate of “electronic diversion” from mail. With regard to rural areas, GAO analysis of HDS data suggests that rural households without broadband tended to send more transaction and correspondence mail than non-rural households without broadband in recent years. The officials in rural areas GAO interviewed generally agreed that residents of rural areas value mail and postal services for a variety of reasons, including that they have fewer retail alternatives and trust USPS services. Despite this relationship, GAO found that the subset of rural households with broadband were not statistically different in the volume of correspondence mail sent compared to non-rural households. In rural areas, two groups of businesses that GAO spoke with also noted that improved Internet access could result in mail volume declines.
E-commerce continues to have a strong effect on USPS package and shipping volumes. GAO analysis of HDS data found that broadband use in the home was associated with sending and receiving more packages with USPS in recent years. This analysis also found that households in rural areas made greater use of package and shipping services, a view echoed in interviews with officials in rural areas. While research and experts interviewed by GAO generally agreed that USPS's package business will grow in the short term, USPS is likely to face longer-term challenges, such as increased competition in the delivery market.
It is unclear what role broadband use has played in the reduction in post office visits in recent years. GAO analysis of HDS data found no statistically significant relationship between broadband use and post office visits. However, GAO found that rural households tend to visit post offices more regardless of broadband use. Local stakeholders GAO interviewed said that rural residents may use post offices at higher rates because post offices play a valuable social role in small communities and that alternatives for certain services, such as money orders, are lacking. To balance the benefits of its postal retail network with the high costs of some facilities, USPS is undertaking various initiatives. Despite these efforts, balancing the benefits of a robust network with the costs of maintaining that network, especially in rural areas, will remain a challenge for USPS.