USPS cancels secure e-mail biz

The U.S. Postal Service has decided to get out of the secure e-mail business and is pulling the plug on its PosteCS service.

Unable to make money on the service or find a buyer for it, USPS will discontinue the e-mail initiative, said Postal Service spokeswoman Sue Brennan.

PosteCS is a Web-based service designed to deliver digital files that are too large for some commercial e-mail services and to deliver electronic documents that require timely receipt and assurance against tampering. Documents could be stamped with an electronic postmark to verify the time, date and place of origin and receipt.

The service was intended mainly for commercial customers such as those who transfer sensitive legal documents or large graphic files. But it never generated revenue.

"The issue of profitability is a huge issue for us now," Brennan said.

During 2001, the Postal Service experienced $1.7 billion in operating losses and faces an additional $5 billion in losses because of the October anthrax attacks and the Sept. 11 terrorist attacks.

As a result, the Postal Service is re-evaluating all of its e-commerce initiatives, Brennan said. They include an online store that sells stamps, T-shirts, coffee cups and other souvenirs; an online billing and bill-paying service; an electronic greeting card store; and a money transferring service.

PosteCS was launched in May 2000, at a time when Internet industry analysts were predicting an explosion of online commerce, Brennan said. Instead, they were confronted with the dot-com meltdown.

"Demand has changed," Brennan said.

"We are pleased that they are discontinuing it," said Jason Mahler, vice president of the Computer and Communications Industry Association. The CCIA has been critical of the Postal Service, the Internal Revenue Service and other government entities that have ventured into online services that compete with commercial ventures.

However, it is questionable whether PosteCS actually competed with the commercial sector. "We were somewhat befuddled that they were trying to make a go of this business because we didn't foresee any significant demand for electronic postmarks," Mahler said. "There are various other means of verifying that kind of information if you are desirous of doing so."