This study is making the case that the Universal Postal Service as currently defined at the European level should be modernized. The European Union plans to liberalize and build up an internal market for postal services by 2009 with the aim to foster improved services and innovations in the postal sector to benefit the customer. This paper argues that the European Union has to improve it’s Universal Service rules to take into account technological changes that increasingly shape consumer behaviour and in fact make the existing Universal Service Obligation (USO) obsolete. If the EU is to take postal innovation outside the existing USO initiated by postal operators and changing consumer behaviour into account then a new and updated USO has to be less strict and more encouraging of further innovative developments. Indeed, the fact that the postal sector innovates outside the USO shows that the market is fully capapble of catering for the needs of customers. The study takes the perspective of a fully liberalized postal sector driven by the information and communication technologies. This in turn shall be supported by an USO that supports innovation and dynamicsm in the industry so to offer the customer the best service available.