Friday, September 30, 2011

US Postal Service Versus Email: The Historic Grudge Match of the Ages

So apparently rumor has it that the USPS' new marketing strategy is to waste money on a bunch of ads trying to convince America that email is unsafe.  Hum.  Mr. Peabody, let's turn to the Wayback Machine and travel to the far and weird past:

The time is 1977. The country is in a tailspin. Saturday Night Live is singing carols about killing Gary Gilmore for Christmas . President Carter takes the Oval Office, and pardons Vietnam War draft evaders . The Clash releases their debut album. And the USPS is scared.

The USPS has learned about this thing called electronic mail and electronic transactions. It occurs to the USPS that if everyone were to use these electronic thingies, First Class mail would get wiped out and so would all that revenue. After some careful strategic planning, the USPS launched an attack on email with a classic pincer movement: on the left flank, the USPS initiated its own email service known as E-COM ; on the rank flank, the USPS considered banning all private email service.

E-COM was a simple concept. The USPS would set up a network where a message would originate electronically. It would then be sent to one of a handful of participating postal offices that had terminals, where it would be printed out. The hard copy of the message would then be delivered to its destination - essentially in the same manner and with the same speed as first class mail. USPS launched this service in 1981.

Before E-COM could get off the ground, however, it was mired in controversy. The US Postal Commission, the Department of Justice, private companies, and even the FCC, objected. The first objection was that it was against government policy for a government agency to compete with the private sector. Private commercial email services were nascent and promising, and did not think much of a government monopoly using its government bankrole to pay for a competing email service. The FCC made a particularly interesting objection. The FCC said, "we have jurisdiction over all wireline and wireless services. That jurisdiction has been interpreted broadly. And there is no dispute that the transmission of a message over a communications network is communications, under the Communications Act, and under our jurisdiction." "Not only that," the FCC was heard to say, "but its common carriage." The FCC stated:
With respect to the relevant judicial decisions defining the nature of common carriage, we note that none of the parties to this proceeding appears to dispute that ECOM service would constitute a common carrier offering if it were to be provided by an entity other than the Postal Service. We also conclude independently that ECOM is a quasi-public offering of a for-profit service which affords the public an opportunity to transmit messages of its own design and choosing. Based on those judicially defined criteria, we find that, in offering ECOM, the Postal Service is engaging in a common carrier activity.
In re Request for declaratory ruling and investigation by Graphnet Systems, Inc., concerning the proposed E-COM service, FCC Docket No. 79-6 (Sept 4, 1979).

In other words, before E-COM could get launched, the FCC said, "if you are going to do this, then you are under our jurisdiction, and you are going to have to file a tariff for the offering of your common carriage service" (The FCC doesnt say that email is common carriage any more).

Well, the USPS would not accept "no" for an answer, tinkered with its network in order to weasel out of FCC jurisdiction, and launched E-COM in 1981. A message was priced at 26¢ - and for each email message, the USPS was said to lose around $5. They had apparently estimated that the service would be a raging success; it was not and, with the low message volume, the cost per message was rather high. And by the way, if you used the service you had to send at minimum 200 messages. The service was one directional; if you got an error message, you would receive it in the mail two days later. When the E-COM messages were printed out, it would take two days more to be delivered. And it cost the same as First Class mail.

For some reason, E-COM was a failure (one Senator called it a turkey). Three years after service was initiated, USPS terminated the service and tried to sell it off.


Unknown said...

it's interesting to see what lessons can be drawn from this history. One might be that the private sector is better than the public one at innovation. But the email system that won in the long run were protocols (SMTP, POP3, IMAP, et. al.) that came from university people (especially Jon Postel) looking for simple ways to transfer messages. The commercial email market gave us MCI Mail, AppleLink, Compuserve, AOL, and other closed proprietary systems, all of which were obsoleted by products and services based on open protocols. And that market is much bigger and far more important than what the Post Office (or what it felt threatened by) could ever have given us.

Cybertelecom said...

And of course, Jon Postel and those early pioneers were working on a US Government, Department of Defense, ARPA project. Bit of a problem for the "private sector is better than the public one at innovation" mantra.