Discussion Papers

Alex Kalevi Dieke, Petra Junk, Sonja Thiele

Electronic delivery services: products, business models, and regulatory implications

No. 354 / June 2011

(full version only available in German) 

Summary

The disadvantages of email are well-known: The identity of users remains unclear and transmission of emails is unsecure as they can be hacked relatively easily. This led to the development of alternative electronic delivery technologies. Secure electronic delivery services are offered, inter alia, by postal service providers. Especially senders of bills and other transactional mail have a need for electronic delivery, a fast and low priced service.

The study identifies four business models for electronic delivery: electronic mailboxes, reverse hybrid mail, qualified electronic signatures, and industry-specific solutions. Electronic mailboxes enable users to receive and send electronic messages. An important characteristic of electronic mailboxes is secure identification of users. Service providers offering reverse hybrid mail solutions scan physical letters and send them electronically to the recipient. Qualified electronic signatures include encryption and digital authorization of messages that can be read only by the receivers they are meant for. Industry-specific solutions are a generic term for electronic communication portals which in some industries exist for communication between e. g. clients and service providers or public authorities and courts.

In Germany, a law on secure electronic communications ( ‘De-Mail-Gesetz’) provides a legal framework for the provision of electronic mailbox services since May 2011. The law includes e. g. conditions for the authorization of ‘De-Mail’ providers, optional and mandatory parts of the service, and identification of users. The main beneficiaries of ‘De-Mail’ are corporate and public users with large physical mail volumes that can save costs for printing, handling and postage. Private users who receive large amounts of mail but send only few letters benefit much less, if at all. Our analysis of social costs and benefits shows that the estimated benefits of ‘De-Mail’ will likely be higher than estimated costs – although this estimate is highly uncertain due to unknown market prices and implementation costs.

Our study discusses possible regulatory consequences concerning three issues: 1) portability of ‘De-Mail’-addresses; 2) possible fees charged by service providers for delivery of electronic messages to receivers registered in their system; and 3) international co-ordination of ‘De-Mail’ with foreign electronic mailbox services. At present, we see no urgent need for regulatory interventions into the market. However, we recommend observing market developments carefully with respect to potential regulatory problems.

Demand for physical letter services will likely decline due to ‘De-Mail’ in the future. Yet, ‘De-Mail’ may foster competition on the letters market as providers of ‘De-Mail’ may give those messages they cannot delivery electronically to entrants in the traditional postal market, i.e. to competitors of Deutsche Post.

Diskussion Paper is available for download.

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