Computers are going postal, but in a good way.
Declaring that "This is the future," Postmaster General Marvin Runyon Monday presided over a ceremony that saw the first postage ever to be pumped out of a PC. The stamp-equivalent, printed on an H-P LaserJet, was a modest first step that portends a bright future.
Joining Runyon at the podium in Washington DC were officials from E-Stamp Corp., which developed the electronic postage technology, and Hewlett-Packard, whose printer did the honors.
A Washington reception is significant, underscoring as it does the government's belief that technology is destined to alter our world. In this case, it should mean shorter lines at the post office, at the very least.
E-Stamp’s "Internet Postage" -- the first electronic system to get a thumbs up from the Postal Service -- can be downloaded and secured in an electronic vault that connects to a PC's printer port. Currently entering beta testing, the program will allow users to print digital postage, called SmartStamp, directly onto their envelopes.
In the meantime, another half dozen companies await endorsement from the Postal Service for PC-based postage proposals, including the industry leader in mechanical postage meters, Pitney-Bowes.
Within a year, predict industry insiders, users will be hooking up scales to their PCs (attached like any peripheral) to calculate postage due. They'll download the postage via the Net, then print an authenticated postmark onto the envelope. Individuals and their pre-formatted addresses will be located in CD-ROM databases, designed to be quickly "read" and sorted by post office scanners.
Although it will probably be a while before you see shorter lines at the post office, that's the worthy goal of those who are pushing the new technology.
"If you consider over 180 billion transactions a year that go through 40,000 post offices," says E-Stamp CEO Sunir Kapoor, "... even if we were to capture 1 percent of the postage value over a 5-year period, that's a big deal."
Technology pioneer E-Stamp is solid, bolstered as it is by Microsoft and AT&T, who each own 10 percent of the company. But it will face some well-entrenched competitors as the online postage saga plays out.
Pitney-Bowes, for instance, already has an installed base of 1.4 million mechanical postage meters in post offices, as it prepares to roll out an electronic version. Neopost is in the business, too, and there are at least three others which the Postal Service declines to identify because of confidential agreements.
The business model for all of them is to sell the initial software for between $100 and $300, then charge a $10-$20 monthly subscription fee for access to the downloadable postage. Consumers will pay the Postal Service for the postage like they do now.
The monthly fee is due partly to the fact that postal security devices are required by law to be leased, not sold, according to Patrick Brand, vice president of small office/home office marketing for Pitney-Bowes. Currently, a mechanical meter costs about $20 per month.
For the post office, too, the benefits of online service are considerable.
Currently, according to E-Stamp’s Kapoor, a 32-cent stamp costs 11 cents to make and distribute. Digital postage would drop that figure to nearly zero, making it pretty attractive to the ol’ post office. There is also incentive to compete with Federal Express and United Parcel Service, which both use the Web for package tracking.
And importantly, the new system includes two-dimensional barcodes, containing return address, value, class, and a digital signature. That will make it easier to track postal fraud, which costs an estimated $180 million per year, according to E-Stamp.
"Every form of postage payment is monitored at processing and distribution facilities to assure that there is postage, and the proper amount," says Roy Gordon, who manages the Information-Based Indicia Program for generating electronic postage at the Postal Service. "The new information-based indicia allows us to do that more efficiently."
E-Stamp, Pitney-Bowes, Neopost and the others will be marketing their software to more than 40 million home users and small offices in America, according to Pitney-Bowes estimates, but some bigger fish are expected to follow within a couple of years.
The Postal Service has ruled that all 750,000 mechanical meters in service must be phased out by 31 December 1999. If digital postage can mature in time, it will surely catch the wave.
