DigiStamp-USPS fight over E-Postmark heats up

DigiStamp has asked the Postal Rates Commission (PRC) to hold hearings as to whether, as it claims, the US Postal Service’s Electronic Postmark service is anticompetitive and illegal and should therefore be discontinued.

DigiStamp CEO Rick Borgers is also planning to stir things up by reaching out other companies on the whole issue of the post competing against private industry.

For its part the post wants the PRC to throw out the complaint DigiStamp lodged on February 25 (EPM No 197).

The agency claims DigiStamp’s problem doesn’t rise to the level of a legitimate complaint proceeding and argues that the commission lacks the jurisdiction anyway since the EPM service isn’t a class of mail or type of mail service.

The USPS does admit that, as DigiStamp claims, it didn’t get the PRC’s okay before the EPM launched.

The USPS EPM, which the post continues to promote though it’s been turned over to AuthentiDate, affixes a trusted time-anddate seal on an electronic document. It also validates digital signatures and user certificates and stores and archives all the nonrepudiation data needed to support any potential court challenge.

The post rejects DigiStamp’s contention that the EPM is a service ancillary to mail, that it’s a mirror mail service, that it substitutes for hardcopy mail and that therefore it comes under the commission’s purview.

Oddly enough, the post also claims it has insufficient information to respond to DigiStamp’s charge that the EPM competes against it but nonetheless denied that it was unfairly competing with the company.

And the post denied that it cross-subsidizes the EPM with “monopoly revenue,” as DigiStamp calls it.

DigiStamp, on the other hand, relying on the post’s own documents such as press releases, is trying to prove that EPM is a mail service.

DigiStamp points out that when EPM launched the USPS referred to it as “creating the first in a series of ‘First Class’ Mail electronic commerce services,” which leads DigiStamp to observe that if the EPM mirrors First Class Mail, it can’t be different from First class Mail.

The tiny company also says that the agency’s use of the name Postmark suggests that the EPM is used in conjunction with mail service.

“It is well settled that a postal service does not necessarily always need to be used in conjunction with mail in order to be deemed a postal service subject to commission jurisdiction,” DigiStamp told the commission.

Since the EPM enjoys unique protections reserved for mail services such as criminal statutes, DigiStamp argues that the EPM is a mail service.

The ball is now in the commission’s court.

Apparently, the PRC has no set time to make a decision.

However, Borger believes it usually takes the commission about five-and-a-half months to determine whether to hold hearings. Borgers said that he was planning to involve UPS, FedEx and the Computers and Communications Industry Association in arguing that the government should not compete with the private sector.

Borgers’ decision to involve UPS and FedEx, both of which are no great friends of the post, is sure to complicate the situation. Borgers is, by the way, a former FedEx employee The USPS said that in its current configuration, offered through a strategic deal with AuthentiDate, operating revenues from the EPM are covering operating expenses.

The post, however, acknowledged that it had incurred a large net loss on the service’s first configuration.