Implications of Electronic Mail and Message Systems for the U.S. Postal Service

Ch. 1-Summary .9

Generation II EMS growth. Assuming that
USPS delivers Generation II EMS hardcopy
output, the faster the rate of growth (and the
earlier the takeoff), the larger the Generation
II EMS volume and USPS delivered volume.
There is currently little agreement on which
USPS role would contribute the most to Gen
eration II EMS growth and volume.
The revenue/cost results indicate that Gen
eration II EMS cost displacement and con
tribution to covering USPS fixed costs are also
key factors in considering a USPS role. The
greater the cost displacement (avoidance of
conventional mainstream costs) and contribu
tion to covering USPS overhead, the less likely
the need for service (and/or labor) reductions.
Mailgram apparently provides both a substan
tial cost displacement and contribution to
fixed costs; it is not clear whether E COM
would do likewise at current rates and in its
present configuration. All parties, including
USPS, agree that the RCA cost estimates pre
pared for the Electronic Message Service Sys
tem in 1977 and the original E-COM cost es
timates prepared for the Postal Rate Commis
sion in 1978 are now outdated. If E COM is
to be fully evaluated and its role in USPS'
future understood, a comprehensive cost re
view of E COM is needed.
In contrast, there is general agreement that
USPS participation in Generation II EMS
would generate only a relatively small number
of new jobs. An estimated 200 persons (125
operations, 50 maintenance, 25 marketing and
administrative) currently work on E-COM. A
fully deployed service (at 150 serving post of
fices (SPOs) rather than the current 25) is es
timated to require perhaps 2,000 persons. The
additional volume from USPS delivery of Gen
eration II EMS hardcopy output could help
to offset some of the reductions in the existing
labor force that will be necessary if the pro
jected decline in USPS delivered mail materi-
alizes.
Based on interviews with many of the stake
holders and a comprehensive review of the his
torical record, OTA has concluded that absent
congressional action, the controversy over the

USPS role in EMS is likely to continue indef
initely. The fairness and legality of a USPS
role in EMS, the impact on innovation and
competition in the EMS industry, and implica
tions for EMS privacy and security continue
to be in dispute. Although the U.S. District
Court of Appeals has denied a Department of
Justice petition to block E COM, further reg
ulatory proceedings are anticipated and addi
tional legal actions are possible.
With continuing uncertainty over the future
of E COM, and in general over the USPS role
in EMS, the prospects for a successful USPS
entry into domestic EMS services are uncer
tain. This affects both USPS and its potential
competitors in the private sector. Some firms
have indicated to OTA that they are reluctant
to make any major commitments until they
are certain what role USPS is going to have.
Meanwhile, most private sector R&D efforts
are going into Generation III EMS, which
would completely bypass USPS. In addition,
given the continuing adversarial atmosphere,
USPS is unable to establish effective working
relationships with many private carriers and
potential Generation II EMS users.
Should Congress wish to take action, there
are several possibilities: 1) provide a clear
direction for USPS involvement in EMS; 2) re
duce or eliminate further regulatory and ju
dicial delay; 3) strengthen privacy and security
protection; and 4) maintain oversight and in
itiate planning on USPS long term viability.
These possibilities are outlined below.
Provide a Clear Direction for
USPS Involvement in EMS
There is a range of alternatives for a USPS
role in EMS:
1. no real involvement other than delivery
of Generation II EMS hardcopy output
when deposited into the mainstream;
2 delivery of all hardcopy output when con
veyed over postal roads;
3 hardcopy delivery plus location of
carrier provided EMS terminal equip
ment on USPS premises (as in Mailgram);

United States. Congress. Office of Technology Assessment. Implications of Electronic Mail and Message Systems for the U.S. Postal Service. UNT Digital Library. http://digital.library.unt.edu/ark:/67531/metadc39480/. Accessed July 12, 2014.