Will the Internet deliver?

Attention, ZIP code seekers! Now when you look up a ZIP code on the U.S. Postal Service Web site, you'll also be presented with an animated link to ads for the latest sales at your local Kmart, home of the BlueLight Special.

And the next time a postal truck trundles down your street, look for the America Online ad displayed on its side.

From selling cycling gear, stamps and phone cards online, to offering electronic bill-paying services, to providing Web- assisted direct-mail advertising for small businesses, the Postal Service continues to expand its presence on the Internet.

With costs rising and a projected deficit of as much as $2.5 billion this year in its traditional business of delivering the mail, the Postal Service is searching for profitable sidelines to bolster its bottom line.

The latest is a deal with Microsoft Corp. The Postal Service announced May 7 that it is joining with Microsoft's bCentral, an Internet site through which Microsoft sells services and applications to businesses. The Postal Service's NetPost Mailing Online service will be added to Microsoft's offerings.

NetPost Mailing Online enables users to write, print and mail correspondence directly from desktop computers. Letters are written and transmitted via the Internet to the Postal Service, where they are sorted and sent to printers close to their destinations. Then they are printed, put in envelopes and delivered.

With Microsoft bCentral applications, the service can be turned into a direct-mail operation.

In April, the Postal Service announced agreements with five other companies — three Internet direct-mail companies and two printers — to provide "complete online solutions for direct-mail campaigns."

A NetPost CardStore enables individuals and businesses to produce and mail customized greeting cards, and an "electronic courier service" is designed to enable customers to send time-sensitive electronic documents securely with proof of delivery and sender and receiver authentication.

Postal Service forays into such nontraditional services have provoked cries of dismay from competing businesses.

"The sector the Postal Service is moving in to is competing with private business that is already doing a decent job," said Jack Estes, director of the Main Street Coalition for Postal Fairness. "The philosophical problem is that a government agency ought not to be allowed to compete with the private sector."

The Postal Service enjoys many advantages over its private competitors — it doesn't pay taxes, it's not subject to anti.trust laws, and its vehicles don't even get parking tickets, Estes said. And when the Postal Service loses money on its unconventional undertakings, it uses revenue from its monopoly on first-class mail to cover the losses, he said. "No one else has that advantage."

The coalition includes organizations that use the mail and therefore oppose postal-rate increases, such as American Business Media, the Associated Church Press and the Greeting Card Association. It also includes e-business organizations such as the Computer & Communications Industry Association, which opposes e-business competition from the Postal Service.

But with costs increasing, the Postal Service must search for new sources of revenue, said spokesman Gerry Kreienkamp. And certain e-businesses seem a natural extension of the Postal Service's traditional mission of delivering the mail, he said.

Electronic billing and bill paying, for example, are simply the Internet Age versions of what the Postal Service has done for centuries: deliver bills to customers and payment checks to vendors, he said.

Likewise, accepting electronic documents and printing and delivering them for direct-mail campaigns is an updated version of a service the Postal Service has traditionally provided, Kreienkamp said. The Internet is another "delivery system," he said, and for that reason, "we feel we have a natural place" in e-businesses.

"Clearly, our core business is delivery to every address every day. But there are other viable services we can provide, and they will enable us to continue" providing the core service of universal mail delivery, he said.

At least that's the business plan. But so far, the Postal Service's e-business ventures have generated little additional revenue. And according to the General Accounting Office, no significant new revenue is expected from the new businesses over the next five years.

The Internet ventures are part of "a nascent industry," Kreienkamp said. "All the experts will tell you that at some point, this is going to explode, it's going to grow. We just don't know when."

The Postal Service wants to be ready to benefit from it when it happens, he said.


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