USPS unplugs e-mail biz

In what may mark the beginning of the end of its e-commerce ventures, the U.S. Postal Service has decided to pull the plug on its secure e-mail business, PosteCS.

Unable to make money on the service or find a private company interested in buying it, USPS will discontinue it, said Postal Service spokeswoman Sue Brennan. Meanwhile, a review of other e-commerce services continues as the Postal Service prepares a "transformation plan" to be sent to Congress April 4.

Burdened with about $7 billion in debt, the Postal Service is developing a plan to "reform and revitalize" itself.

As part of the exercise, USPS is re-evaluating all of its e-commerce ventures, including its online store, which sells stamps, T-shirts, coffee mugs and other souvenirs; an online billing and bill-paying service; an electronic greeting card store; and a money transferring service, Brennan said.

"I would expect that they would eliminate most or all" of the e-commerce offerings, said Charles Guy, former director of the Postal Service's economics and strategic planning office. "These things have not succeeded, and they are not likely to." Managing e-commerce ventures "is just not what the Postal Service is good at."

A General Accounting Office examination of Postal Service e-commerce ventures last year concluded that most of them lost money.

USPS launched PosteCS in May 2000 as a Web-based service designed to deliver digital files that are too large for many commercial e-mail services. The service also offered electronic postmarks that would verify the time, date, origin and receipt of e-mailed documents.

PosteCS also offered security features to assure e-mail senders that their messages had not been tampered with en route. The service was meant to appeal to companies that send time-sensitive and content-sensitive documents such as contracts, tax records and legal filings via e-mail. The service was aimed chiefly at commercial customers, but never generated revenue.

"The issue of profitability is a huge issue for us now," Brennan said. During 2001, USPS experienced $1.7 billion in operating losses and faces an additional $5 billion in losses because of the Sept. 11 terrorist attacks and the October anthrax attacks.

PosteCS was launched 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 changed," she said.

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

The decision to launch PosteCS was puzzling, Mahler said. "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," he said.

"There are various other means of verifying" when e-mail messages were sent and received, and there are numerous commercial encryption programs that can prevent tampering with e-mail messages, he said.