USPS fires back over e-commerce
- By William Matthews
- Nov 16, 2000
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
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.