Copyright 1999 Plain Dealer Publishing Co.
The
Plain Dealer
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July 18, 1999 Sunday, FINAL / ALL
SECTION: BUSINESS; Pg. 1D
LENGTH: 1358 words
HEADLINE:
POSTAL;
SERVICE;
PURSUES;
NEW ROLE;
COMPETITORS FEAR;
UNFAIR
ADVANTAGES
BYLINE: By SABRINA EATON; PLAIN DEALER
BUREAU
DATELINE: WASHINGTON
BODY:
The U.S. Postal Service wants Congress to
allow it to form private corporations and enter any business it chooses, a
prospect that has shippers and other purveyors of printed information up in
arms.
Advocates say the post office must branch out so it can compensate
for the $15 billion to $18 billion in postage sales it expects to lose as
consumers increasingly move to paying bills by the Internet. That's a third of
the service's yearly revenue, and it would be difficult to continue universal
daily deliveries without it, service spokesmen say.
To enable that
business expansion and address other problems, Rep. John McHugh, a New York
Republican, has introduced the Postal Modernization Act of 1999. The act would
allow the Postal Service to compete with private businesses by granting
discounts to bulk mailers who cut delivery costs through measures like
presorting.
"We will doom the Postal Service to failure unless we act to
update our nation's laws so that the service can adapt, compete, grow and
survive in carrying out its universal service mission well into the 21st
century," said McHugh, who chairs the House Subcommittee on the Postal Service.
But subcommittee member Steve LaTourette, a Madison Republican, is
leading an effort to limit the service to mail delivery and keep its rates
consistent for every user. He says he hopes to amend McHugh's act, the first
postal revamp in 29 years, when the House Government
Reform Committee considers it in a few weeks.
"I don't
think it's the business of the federal government to be in business," said
LaTourette.
"We'd have a situation where the federal government could
use its monopoly powers and compete unfairly with people who are working hard to
make a living."
LaTourette noted the Postal Service doesn't pay normal
business expenses, like freeway tolls, sales tax, and property taxes on its
buildings; postal vehicles are even exempt from parking tickets. While the bill
wouldn't extend those perks to the Postal Service's private companies, he said,
the subsidies inevitably would help form their opening stake.
Postal
spokesmen and congressional staff members blamed LaTourette's amendment on a
campaign by United Parcel Service, a private delivery agency, to undermine them.
A McHugh aide said UPS wrote LaTourette's amendment - a charge LaTourette and
UPS deny.
"It is clearly an approach that will lead to the decline and
ultimate demise of the Postal Service," Postal Service subcommittee staff
director Robert Taub said of LaTourette's proposal.
Atlanta-based UPS
has promoted resolutions opposing McHugh's bill in state legislatures around the
country, including Ohio's, where it is pending.
A UPS spokesman said the
plan would allow the Postal Service to expand the "unfair advantage" it already
enjoys over its private-sector competitors.
"The idea of a federal
agency spawning a private company is just wrong," said UPS spokesman Tad Segal.
"We aren't going to have a NASA Airlines tomorrow, or a McUSDA."
Lobbying on this issue is the most intense LaTourette ever has
experienced, he said. He has daily meetings on it and gets as many letters about
it as he does Social Security and Medicare.
Brooklyn-based American
Greetings, the world's largest publicly held greeting card manufacturer, told
LaTourette it fears the bill would subsidize bulk mailers through a hike in the
first-class stamp prices its customers pay.
"It is really geared towards
the large mailers, including large advertising mailers, and not the needs of
citizens," said Jeffrey Weiss, American Greetings senior vice president of
product development.
American Greetings is part of a group of postal
users, including banks, electric companies and newspapers in a trade association
that includes The Plain Dealer and 81 other Ohio publications, that are
crusading against the bill as the Main Street Coalition for Postal Fairness.
Many of its members fear the Postal Service could target their businesses for
competition, said the group's executive director, Jack Estes.
"It is an
unbelievable new policy for this country to set up a private corporation with
taxpayers' money and engage in competition with the private sector," Estes said.
Defenders of the postal expansion point to Europe, where many postal
systems conduct banking services, and some are completely privatized.
"To be a relevant organization, the Postal Service needs to be able to
respond as consumer needs change," said Postal Service spokesman Greg Frey.
Without a way to recover anticipated "e-payment" losses from its high-profit
bill payers, Frey said, the Postal Service will have trouble continuing
universal deliveries.
E-payments are payments made to companies via the
Internet.
"We are the only communications provider at every household
and business in the United States every day," said Frey. "That requires that
areas with higher volume and margins help offset services to some areas with
lower volumes and higher costs, like rural areas."
Frey wouldn't reveal
specific enterprises the Postal Service wants to pursue but said they'll "build
upon our market strengths that have to do with delivering to every household in
the United States. That is our strong point. I don't think there is some grand
scheme to undercut any particular businesses."
Postmaster General
William Henderson told a May postal forum that he wants the post office to
supply platforms for Internet e-payments and attach an Internet address to every
physical address in America.
"If you had an Internet address attached to
a physical address, you could reach someone by way of the Internet, and if they
didn't have a computer, it could be converted to hard copy for delivery to the
physical address," Henderson said. "We're committed to doing that."
William A. Frezza, a columnist with the InternetWeek trade publication
and general partner in the Pittsburgh-based e-commerce investment company Adams
Capital Management, said "anyone concerned about privacy, free enterprise and
civil liberties" should worry about the post office using its records on every
home in America to get a central role in e-payments.
But he is skeptical
that business would succeed because the post office is "congenitally incapable
of making money," and he predicted "it will be another enormous pork fest of
taxpayer money going down the drain."
Prudential Internet securities
analyst James Lucier, who authored a paper titled "Danger in Cyberspace: Will
Traditional Postal Monopolies Usurp E-Commerce Functions?" for the Cato
Institute, said the post office should instead look for savings by streamlining
its strongly unionized, 900,000-member work force.
"The bottom line is,
the more they think about selling T-shirts, the less they think about delivering
the mail," said Lucier.
But many businesses that rely on mail support
the McHugh bill. Its backers include Federal Express Corp., American Express,
Pitney Bowes, Magazine Publishers of America, and the National Newspaper
Association of community newspapers.
Frederick W. Smith, CEO of Federal
Express' parent, FDX Corp., told Congress the Postal Service
won't be financially viable unless reforms are made. Allowing
the post office to compete on the same terms as its competitors would be less
disruptive than turning its functions over to outside private businesses, he
said.
"No matter how quickly technology and competitive alternatives
advance, America will be dependent on the Postal Service for some period of
time," Smith told McHugh's subcommittee.
The Direct Marketing
Association Inc., whose members in the Cleveland area include The Plain Dealer
and Transamerica Holdings, believes McHugh's bill includes enough safeguards to
keep the Postal Service from forming "unreasonable" outside businesses, said
Senior Vice President Richard Barton.
"We think it takes a long step in
the right direction, by simplifying and making more flexible the very cumbersome
postal rate-making process that prevents the Postal Service from being able to
price products quickly to meet competitive demands," said Barton.
Phone:
(216) 999-4212
e-mail: seaton@plaind.com
LOAD-DATE: July 19, 1999 
