Get ready for the great digital mailbox melee: Kohler

The other paper business that’s painfully going digital – apart from the beleaguered newspaper publishers – is mail.

It’s happening rather less chaotically, and to tell you the truth it’s mostly happened already – except for all those damn bills, which still keep arriving on paper.

There is now a very interesting, quite brutal, race on to win the Australian digital bills business. Australia Post has Digital MailBox; Computershare, Salmat and Zumbox, a US company, have Digital Post Australia. And they are going at it hammer and tongs, pre-launch.

Between them, Salmat and Computershare have about 80 per cent of the business of preparing paper bills for sending by Australia Post, so they already have a direct relationship with the utilities.

To put a bit of sand in their gearbox, Australia Post is suing the others over the use of the word “post”, suggesting it’s passing off. Either the suit will succeed, in which case Digital Post Australia will have to become Digital Letters Australia or something like that, or it won’t, in which case, as you were.

Two digital mailbox platforms have been developed in the US: One is called Zumbox, and is owned by the company of the same name, and another is called Volly, and is owned by Pitney Bowes. Australia Post has gone with Volly.

The idea is simply an online version of the old post office box, accessed through a browser and password. Bills and other correspondence collect there, with no spam, and they can be paid directly from a mailbox and then stored securely in the cloud.

Zumbox has been operating in the US for about 18 months and is due to launch in Australia, as DPA, with Computershare and Salmat in a few months. Australia Post’s Volly-based product is due to launch about the same time.

This is undoubtedly how we will soon get all of our bills. Email doesn’t work because it is too insecure and crowded with spam. Biller websites are OK, except that nobody is going to go onto all the utilities’ websites separately every time they have to pay their bills.

Digital mailboxes are free for the recipient and the sender pays “postage”. The Computershare, Salmat-owned DPA plans to charge 15 cents, minus three cents’ discount for early users, while Australia Post is not revealing its prices, although it’s probably a bit more than that.

Once you have signed up for a digital post box, all of your bills will automatically start arriving in it; you don’t have to notify all of the utilities. That’s the theory at least, although it depends on which billers the particular operator has signed up.

Both say they are signing up billers now. Australia Post has this month announced two big ones: Telstra and AMP. Importantly, both of those companies will use Australia Post’s Digital MailBox for their shareholder communications as well as their bills and other customer notices.

The question no one knows the answer to yet is whether this will be a ‘winner takes all’ game, or whether there will be room for two.

Telstra and AMP might well have to sign up with DPA as well, because a lot of their customers have chosen to use its mailbox instead of Australia Post’s. In fact, it seems to me likely that all utilities will have to have an account with both digital mailboxes just in case. They’ll only pay when a bill gets sent, so it shouldn’t cost any more.

However, Ahmed Fahour at Australia Post is playing this game hard, and seems to be keen on keeping his mail monopoly.

On May 30, Salmat notified the ASX that it had received an “unsolicited and conditional approach” to buy its Business Process Outsourcing division, which is the division that owns the digital mailbox interest, among many other things.

A few days later, the Australian Financial Review reported that the bidder was Australia Post, although this has never been confirmed and Ahmed Fahour refused to comment this week. Nothing further has come to light about that approach, which was reportedly worth $300 million.

Given that this would knock out the only potential competitor in the future of mail, one would think the ACCC would take an interest in this, although at this point the Post is still owned by the government.

The other thing that Australia Post is trying to use to press its advantage is that its legislation provides that, under law, a mail item that has been sent is deemed to have been delivered; the customer apparently can’t claim that the bill must have got lost in the mail. It seems that principal will apply to digital mail as well.

Meanwhile, there is a bloke named David Holton on the outskirts of this fight who has a direct mail business in Port Melbourne, and who claims to have registered the Australian patent, and to have patents pending all over the world, for all digital mailboxes. He is suing Australia Post for breach of patent.

Ahmed Fahour does not seem to be taking this very seriously, and is metaphorically brushing him off his shoulder like an insect. Computershare and Zumbox say they have never heard of him, which is a bit strange, considering they have been operating a digital mailbox for 18 months.

Anyway, the great digital mailbox melee is about to begin in Australia: the government-owned behemoth trying to preserve its postage monopoly versus the attack joint venturers, Computershare, Salmat and Zumbox, or maybe not, if Aussie Post pays $300 million to take Salmat out of the game.

One thing is for sure: bills are about to go online and the cost of sending them is about to fall dramatically – yet another case of the internet doing everyone a favour.

Follow @AlanKohler on Twitter.

This article first appeared on Business Spectator.