Copyright 1999 Plain Dealer Publishing Co.
The
Plain Dealer
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November 25, 1999 Thursday, FINAL / ALL
SECTION: NATIONAL; Pg. 5E
LENGTH: 787 words
HEADLINE:
ONLINE BILL PAYING COULD CUT INTO POSTAL SERVICE REVENUE ;
HIGHER RATES,
SERVICE CUTS COULD FOLLOW
BYLINE: By MARK LIBBON;
NEWHOUSE NEWS SERVICE
DATELINE: WASHINGTON
BODY:
Every bill paid over the Internet means
another 33 cents that won't go into the pocket of the U.S. Postal Service.
Multiply that cost of a stamp times the explosive use of personal computers.
Factor in a culture that is gradually embracing electronic commerce.
Pretty soon - within three years, the experts say - the volume of
first-class mail handled by the Postal Service will begin to decline for the
first time ever. The corresponding loss of revenue - $17 billion is at risk -
could force the Postal Service to radically change the way it does business.
"The Postal Service may be nearing the end of an era," the General
Accounting Office concluded in a recent report to Congress.
Backers of
legislation to modernize the Postal Service say failing to act could have
serious consequences.
The first-class rate could nearly double.
Deliveries to 130 million addresses could be cut back from six days a week to
five, or even four days in some places. Many of the 38,000 post offices across
the country could be closed.
The GAO's warning about the eventual
effects of the Internet confirmed what many already knew, but the projected
timing of the revenue loss came as a surprise.
"The challenges we
thought were perhaps a decade off are much closer than we imagined," said Rep.
John McHugh, Republican of New York, chairman of the House subcommittee on the
Postal Service. "We thought the wolf was in the woods. It looks now, if he's not
at the door, he's coming up the front steps."
McHugh has been working
for four years on a bill that would give the Postal Service the flexibility it
will need to do business in the next millennium.
"Right now, you have a
system that is expected to operate as a modern, efficient business and yet on
the other hand has none of the natural incentives and requirements," McHugh
said.
Postmaster General William J. Henderson supports the basic
reform elements included in the Postal
Modernization Act of 1999:
Price caps. The Postal
Service would have greater flexibility to set rates, but a formula would hold
increases below the rate of inflation.
Separate rates could be
negotiated for various products, depending on the volume of material and the
amount of work done in advance by the mailer.
Private company. The
Postal Service would be forced out of the business of selling nonpostal products
such as T-shirts, ties, coffee mugs and mouse pads. Instead, the Postal Service
could create a separate, private corporation that would pay the same overhead,
taxes and costs of doing business as its retailing competitors.
Parcels
pay their way. The Postal Service would no longer be allowed to use money from
first-class business to subsidize delivery of parcels and urgent letters.
Instead, revenues from those competitive products would contribute to the
overhead costs of providing first-class service.
Current law requires
parcel delivery companies to charge at least $6 to deliver an urgent letter.
That's one reason why online retailers such as Amazon.com choose to do
business with the Postal Service. The proposed legislation would level the
playing field, reducing the minimum charge to less than $2.
The
legislation has gained support over the years but is opposed by some significant
players, among them the American Postal Workers Union, the Newspaper Association
of America and the United Parcel Service.
The union says the price cap
is the equivalent of a wage cap for its workers. The large newspapers say the
Postal Service could negotiate rates with bulk mailers and hurt newspaper
revenues. UPS is concerned that the Postal Service would still have unfair
advantages over its private competitors.
"The whole bill is really a
balancing act," McHugh said. "In order for the Postal Service to compete, they
need flexibility. ... On the other side, we also put in requirements that they
compete fairly."
As the Internet-based economy grows and eats into
first-class revenues, the Postal Service is looking for ways to join the
revolution.
McHugh believes consumers would be willing to pay for an
electronic postage stamp that would guarantee delivery of e-commerce
transactions over secure lines.
Postal Service spokesman Gregrick Frey
agreed that people are looking for a "trusted third party" that could certify
and confirm electronic messaging.
"That seems to be missing in the
current Wild West sort of atmosphere of electronics that's out there," Frey
said.
Some in Congress believe the Postal Service should stick to its
core business of delivering first-class and third-class mail. McHugh said his
committee chose to propose reforms that would position the
Postal Service to compete more effectively in a rapidly
changing environment.
LOAD-DATE: November 26, 1999
