The key to understanding Canada Post's latest strategic masterstroke - henceforth, the post office will charge you nearly twice as much to deliver a letter half the way - is to understand the logic of monopoly. Only in a world entirely insulated from competitive reality would the appropriate response to declining demand be ... higher prices and worse service. Or more commonly known as 'shooting oneself in the foot'

But then, this has been the post office's strategy all along. My research tells me for the last 40-odd years Canada Post's business plan has amounted to charging more and more for less and less. Long before email or electronic funds transfer or any of the other things the corporation blames for its woes, the post office was using the brief intervals between strikes to cut service.

First Saturday deliveries were discontinued. Then next-day service became day-after-next, redefining at a stroke a half-billion late letters every year as "on time."

At length home delivery was discontinued altogether on rural routes in favour of community mailboxes - an innovation to which urban customers are now to be introduced. The price of a stamp, meanwhile, is to jump to a dollar - two and a half times, after inflation, what it cost in 1981, when it still made house calls. The day is not far off when, for $5, the post office will refuse to deliver your letter at all. Such is the logic of monopoly.

And yet all the while it was withdrawing service from wider and wider swaths of the country the corporation was insisting on maintaining its "exclusive privilege" in first-class mail - under the Canada Post Corporation Act, it is illegal for anyone but the post office to deliver a letter for less than three times the price of a stamp - on the grounds that it would otherwise be unable to provide universal service.

As loopy as that sounds, it still has its adherents. That, too, is the logic of monopoly: The less the service, the more attached people become to what remains. Alreadyrural customers are lecturing their urban cousins on the delights of community mailboxes. ("You get to meet your neighbours!") For without anything to compare it to, people cannot imagine how it could be better - though they are easily persuaded it could be worse.

Hence the political debate now shaping up, between the Conservatives, who support the cuts based on the need to "protect the taxpayer" - Canada Post has parlayed its statutory monopoly into projected losses of near $1 billion - while the opposition demands that they be reversed, in the name of protecting consumers. The possibility that the interests of both might be served does not seem to occur to either, because neither can conceive of a world outside the monopoly: a world in which anyone other than Canada Post is allowed to carry the mail.

But that alternative must surely now be inescapable. The question before us is not whether to "save home delivery" or "save Canada Post." That is a false choice, which only the logic of monopoly forces upon us. Step outside its confines, and the question is "who can offer the best service to postal users at the lowest cost?" To which the answer is: Open it up to competition and let's see.

Indeed, step outside Canada, if you dare to compare and you find that is increasingly the norm. Across Europe, under the aegis of the single-market directive, the old state postal monopolies are being cracked open, and have been transformed into dynamic international competitors.

Yet in Canada, we remain inert, seemingly helpless to do anything but watch as Canada Post grinds slowly and expensively to a halt. And as ever, the obstacle remains the "universal" service mandate. Private competitors, it is asserted with utter conviction, would refuse to serve the countryside. They'd undercut Canada Post on urban routes, leaving the post office with the costlier rural routes.

That would certainly be true - if the private carriers were obliged, as Canada Post is now, to charge the same price for a letter anywhere in the country, no matter where it goes or how much it costs to get it there. But this is an absurd restriction, required of no other good or service, public or private. We do not pay the same for a phone call, regardless of duration, distance or time of day. Neither is it expected that the price of a house should be the same in the country as it is in the city. Why should it be so for a letter? Why has it been so?

Because it was useful. Politicians liked it, because it allowed them to subsidize rural constituents out of the prices paid by those in the cities. And the post office liked it, because it helped sustain the case for monopoly. But what was previously merely inefficient and unjust is now intolerable. The "exclusive privilege" has got to go, which means so must the uniform postage rate, and the rest of the logic of monopoly.

The issue, in short, that ought to concern us is not what becomes of Canada Post, but what is the best alternative for the people it serves; not whether Canada Post pulls out of the mail delivery business, but whether others are allowed to get in.

Or will we continue to protect it from competition on a service it refuses to provide?