NCPA - National Center for Policy Analysis


July 28, 1997

Advancing technology and competition from private carriers is leaving the U.S. Postal Service's two centuries of monopoly power in tatters, analysts say.

  • Telephone conversations have largely replaced written correspondence, with faxes and e-mail providing almost instantaneous service compared to the several days of delay involved in delivery of a letter.
  • First class mail, however, is still the bread-and-butter of the U.S.P.S. -- paying for 71 percent of the service's overhead in fiscal year 1995.
  • Some 90 percent of all mail is generated by businesses -- with half of it going to homes.
  • First class mail volume dropped 1.4 percent last year, after falling 0.2 percent the year before that.

Although the number of first class pieces mailed during the first three quarters of this year is up, the volume for 1997 is still expected to be some 8 percent below earlier projections.

Observers say that chronic problems plague the U.S.P.S. -- particularly high labor costs and regulatory delays involving rate changes.

Advancing technology in bill paying is also taking business away from the postal service. Experts say there are three basic means to pay bills electronically: preauthorized debits from bank accounts, paying by touch-tone phones -- used by one in 20 households -- and payments through personal computers. Average households pay between 12 and 15 bills per month.

Source: Daniel J. Murphy, "The Death of the Post Office?" Investor's Business Daily, July 28, 1997.


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