Makers of high-tech software, along with telecommunications and online providers, are sounding a warning that the federal government is encroaching on its territory -- singling out the U.S. Postal Service for particularly harsh criticism. The Computer and Communications Industry Association makes the charges in a new report, "The Role of Government in a Digital Age," released last Thursday.

It warns that federal programs threaten to turn the government into a "publicly funded market competitor" against which private companies could not possibly afford to compete.

• Critics charge that the U.S. Postal Service and its "e-Bill Pay" program competes unfairly against other online bill payment systems and other delivery services because it pays no taxes and does not have to worry about bankruptcy.

• Rep. Zoe Lofgren (D-Calif.) makes the point that "e-government is not the same as e-commerce" and that the clash represents "an important new issue."

• The report concluded that e-government is appropriate in some areas, such as the Labor Department's online job bank and dissemination about important judicial decisions -- but it drew the line at Internal Revenue Service online tax preparation software, a market already well-served by private companies.

• It warned that a conflict of interest arises when the IRS acts as both tax counselor and tax collector.

The report offers 12 "principles" for evaluating the appropriateness of federal activity. Providing data and information, improving efficiency and supporting basic research are proper functions. But agencies should not offer services that add value to public data, enter markets in which private-sector firms are active or aim "to maximize net revenues or take actions that would reduce competition."

Source: Curt Suplee, "Government E-Ventures Hit as Rivals to Business." Washington Post, October 13, 2000.