People's choice of poor quality service provider X impacts their ability to do their tasks when the service is poor. X can be email, insurance, banking, anything you externalize in your life.

The fact that a service is popular is a poor indication of service quality, if there is a correlation at all. Examples abound for popular services and products that are poor quality. Usually, the best services are a bit up, from the popular choice point, in the price/quality ratio. More so if there are free (as in beer) offerings in the market.

What's the alternative? Making sure that the recipient gets the message by sending a courier to his home address?

I remember when a buddy of mine, back in the pre-email days, applied for a job at a company. About a week later, he received a letter, asking him to call them. Turns out, he forgot to put his contact info into the application, but they were interested enough to look up his name in the phone book (they also have/had street addresses were I live) and write him a letter, hoping it would reach the right person. "Always put your contact into into an application" isn't a petty rule, and neither is "use an email-provider that doesn't randomly reject messages" in my book.

I would expect both sides to make a bit of effort. Applicants should check their spam folders and follow up, especially if there's a known timeline (American grad school offers need to be extended and accepted by the 15th of April, for example).

Institutions should maybe not rely on only an unreliable, unacknowledged form of communication. Since the applications usually collect phone numbers and addresses, a phone call or letter would be a very reasonable follow up; neither costs more than 50¢ to use. I think all of the PhD programs that accepted me did call and it seems like a good way not only to notify, but to actively recruit.