USPS fires back over e-commerce

U.S. Postal Service officials say they intend to continue developing online

services despite complaints from industry organizations that government

agencies have no business competing in e-commerce.

Without electronic services to serve as a new source of revenue, the

Postal Service could face financial failure, warned Deborah Willhite, a

USPS senior vice president.

Even with a newly approved postal rate increase that would boost the

price of first-class stamps by a penny next year, the Postal Service estimates

it will incur a $480 million loss during 2001.

"In today's economy, offering a mix and match of traditional services

with some electronic commerce applications and solutions is simply sound

business sense for all service organizations, including the Postal Service,"

Willhite wrote in a letter to members of Congress Nov. 14.

Over the past year or so, the Postal Service has ventured into a number

of electronic services, from electronic billing and bill-paying to operating

an online store.

The e-commerce enterprises have drawn condemnations from business organizations

that accuse the Postal Service of breaching a barrier erected to keep government

agencies from competing with companies.

The Computer and Communications Industry Association has been among

the sharpest of critics. CCIA commissioned a report that contends the Postal

Service enjoys an unfair competitive advantage because it is a government

agency.

In her message to Congress, Willhite noted that the Postal Service "has

received no tax subsidies for operations since 1982," but continues to be

heavily regulated. For instance, the Postal Service is required to provide

universal service, even to remote locations where delivering the mail "is

enormously expensive," she said.

Although CCIA has picked up some supporters in the House, there is no

immediate indication that Congress will press the Postal Service to abandon

its online initiatives.

The growing use of e-mail and electronic fund transfers is chipping

away at the Postal Service's most lucrative business — delivering letters,

bills and checks. USPS hopes to recoup some of that loss by offering its

own electronic services.

But so far, the Postal Service record with such ventures has been poor,

said Ed Black, president of CCIA. "The USPS is shoveling dollars into e-commerce

ventures that compete with private industry," but in the past year has lost

$85 million "by selling prepaid calling cards, credit card processing, and

even ties, mugs and T-shirts" online, he said.

Willhite contends that the Postal Service does not compete directly

with the private sector because it has established partnerships with private

companies to offer its online services.