Will Feds Pay For Post Office's Funeral Using E-Payments?

Jan 28, 2004 (11:01 AM EST)

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The U.S. Postal Service is at risk as use of E-mail, wireless devices, and the Internet increase, Comptroller General David Walker said Wednesday in prepared testimony before a special House Government Reform Committee panel on postal reform and oversight.

Walker, who heads the General Accounting Office--the investigative arm of Congress--said the nation's communications, technology, and delivery markets have seen vast changes since the Postal Service was reorganized in 1970 as a wholly owned, self-supported government corporation from a cabinet department. "These technological advances appear to have placed first-class mail volume in the early stages of a long-term decline," he said.

Citing a report prepared by the president's Commission on the United States Postal Service, Walker also pointed to growing popularity of electronic payments as another factor in smaller first-class mail volume.

"The rapid diffusion of computer, Internet, and broadband technologies has led to high adoption rates among those with high levels of income and education--the same groups that send and receive a disproportionate share of first-class mail," Walker said. "These trends point to the strong potential for further diversion. Raising postal rates to offset this trend may provide an immediate boost to the service's revenues, but over the longer term will likely accelerate the transition of mailed communications and payments to electronic alternatives, including the Internet."

The Postal Service also faces increased competition from private delivery companies, some of which have established IT-intensive national ground-delivery systems and a national network of retail facilities.

"In this new environment," Walker said, "unless the service's operating expenses can be reduced correspondingly, with a rightsizing of both its infrastructure and workforce, it is questionable whether affordable universal mail service can be sustained over the long term."