- The Washington Times - Monday, May 14, 2001

The U.S. Service faces a sea of red ink. What can it do? The term downsizing is conspicuously absent from postal managements vocabulary this bloated federal agency now employs more than 900,000 workers, up nearly 250,000 since 1980 alone. Therefore, it has opted to use its monopoly position as a springboard to expand into several non-postal competitive markets, in a desperate search for new revenues. The competitors in the agencys newfound markets, which have nothing to do with mail service, should be scared very scared.
The U.S. Postal Service has a tradition of attempting to pre-empt emerging communications and delivery markets, as well as using its regulatory powers to disadvantage competitors. Fearful that new technology would render it irrelevant, the postal monopoly actually attempted to claim dominion over the telegraph at one point. It later attempted to control the use of fax technology. In the late 1970s, the agency tried to hijack the market for transporting magnetic data tapes from local couriers and express delivery companies. It simply decreed that magnetic tapes be magically transformed into "letter mail" and thus part of the postal monopoly. Only massive protest, and Department of Justice criticism, stopped it.
Recently, the agency has been putting mom-and-pop, mail and parcel centers out of business with anticompetitive regulations adopted in March of 1999. It regularly subjects those that sell postage meters and online postage to unnecessary regulatory hurdles just for the privilege of making it easier for people to buy postage. In keeping with tradition, the Postal Service is now attempting to extend its reach into emerging Internet and e-commerce markets. It seems barely a day goes by without Postal Service management announcing some new Internet initiative.The Postal Service currently offers electronic bill payment, digital signature and electronic document delivery services as well as Internet-based mailing and list management programs. It has even announced a controversial plan to assign every street address in the country a USPS controlled e-mail address.The federal agency operates an e-commence Web site at www.usps.com selling T-shirts, ball caps, baby blankets, infant wear, greeting cards, prepaid phone cards, stationery, and has recently announced it would be competing with the television networks, magazines, newspapers and billboard concerns by selling advertising space on postal vehicles and inside its 38,000 post offices.
As the agency expands into an ever-increasing number of non-postal markets, the use of its regulatory powers to disadvantage competitors becomes ever more problematic. This lethal combination of competition and regulation can harm not only the agencys newly targeted competitors, but the entire economy as well. Many of these non-postal competitors are "new-economy" start-ups in need of continued funding from public capital markets.The mere existence of a federal agency both competing in and regulating these markets will clearly have a chilling effect on capital flow. Would you want to put your money into a company forced to compete with its regulator?
Letting the USPS both compete and regulate is likely to stifle competition, innovation and economic growth. Allowing the Postal Service to continue regulating competitors is like letting Amtrak regulate Greyhounds buses or USAirs planes. We just do not do this in the United States.
Most can agree (excepting the Postal Service) that allowing any federal agency to compete with those it regulates is poor public policy. Moreover, it is directly contrary to our basic traditions in other words, un-American.
Provisions of the Postal Modernization Act of 1999 (H.R.22), former Postal Subcommittee Chairman John McHughs five-year uphill effort for massive Postal Service reform, would have banned the agency from regulating competitors, had it garnered enough support in the last Congress. With the economy teetering on the brink of recession, battered technology companies starving for capital and significant postal reform nowhere in sight, Congress should act now to bar the Postal Service from regulating its competitors. The ban should be clear, across the board, immediate and retroactive.
Free markets drive prosperity and nothing could be further from a free market than one where a tax-exempt federal agency regulates competitors.

Rick Merritt is executive director of Postal Watch.

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