Canada Post Corp. is more and more a normal commercial business, and less and less a public service that is necessary to all Canadians. Consequently, the liability that all Canadian taxpayers will incur – which could be as much as $1-billion – from the company's new bond issues, which were announced on Monday, invites a renewed debate on whether the post office should be privatized. As things stand, the federal government guarantees all the financial obligations of Canada Post.

It is a long time since 1851, when the novelist Anthony Trollope, a civil servant for the British post office, proposed that five-foot-high iron letter boxes should be set up along public roads and streets. Now, e-mail, texting, online banking and other such technologies make it likely that letter mail as we have known it will disappear. Already, many people only rarely buy stamps or put anything in a mailbox. From 2008 to 2009, the volume of pieces of mail in Canada fell by one billion.

Moya Greene, the departing CEO of Canada Post, is going to Britain to become the CEO of the Royal Mail, an implicit recognition of her success in Canada. Yet the continuing profits of the corporation have mostly been achieved by strenuous cost-cutting.

Ms. Greene herself looks ahead to a time when post offices will supply e-post, a “super-secure” electronic service that travels independently of the Internet – in other words, a premium product that is a far cry from the universal service obligation now professed by Canada Post. She predicts that “every Canadian household” will have “a mailbox outside their door to get the newspaper” and “inside their home ... an electronic box called e-post.”

Moreover, she welcomes British proposals to privatize all or part of the Royal Mail.

Meanwhile in Canada, however, the company's Postal Transformation program – which is what the $1-billion bond issue is financing – mostly consists of the replacement of mail-processing machinery from the 1970s and 1980s with new equipment that can sort much more quickly and with far greater detail: to each carrier's route, in the order that each carrier walks. That is a huge investment in an unsustainable business model, not a plan of transformation for the largely electronic future that is no longer remote.

There is still a case to be made for a universal service obligation, for those who cannot afford high-tech premium services. But Canadians should seriously considering privatizing Canada Post, treating it as a business that competes on equal terms with other businesses.

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The last time Canada Post went on an infrastructure spending spree, Pierre Trudeau was prime minister and the average computer needed an entire room to itself.

In the three decades since introducing mechanical sorters to its plants in the 1970s, its executives constantly invested in people over technology, even as other industries looked to machines to increase their productivity and enhance their competitiveness.

Then the recession hit, and the consequences of those decisions came home to roost. An eight per cent drop in mail volume caused a $528-million revenue shortfall in 2009, which had to be patched over with management layoffs and productivity improvements on its lines.

Like many companies that are part of Canada’s productivity problem, Canada Post is now running to catch up. After years of doing less with more, it is staring into a future where it will need to do more with less.

It is fending off obsolescence with a $2-billion plan to upgrade the technology and infrastructure it will need to remain relevant in an increasingly digitized world that sees it delivering fewer pieces of mail, but to a greater number of locations.