The Post Office Almost Delivered Your First E-Mail

A few failed visionaries tried to turn the U.S. Postal Service into an Internet pioneer.

Millions of Americans had their first encounter with e-mail thanks to a little help from the U.S. Postal Service, which stuffed mailboxes with discs for America Online. Yet, as Bloomberg Businessweek’s Devin Leonard writes in his new book, Neither Snow nor Rain: A History of the United States Postal Service, if things had gone differently, your first e-mail would have been delivered by your mailman.

Design: Daniel Rembert; Photograph: FPG/Staff/Getty Images

In 1971, the same year a computer engineer sent the first-ever computer-to-computer message, the U.S. Postal Service hired Gene Johnson to explore futuristic mail services. Johnson didn’t know much about the mail or the future. He had served in the Peace Corps and worked as a corporate financial analyst. But once he started working for a 196-year-old government bureaucracy, he became an entrepreneur for the rapidly approaching digital age.

One of Johnson’s earliest efforts at the USPS’s Advanced Services department involved sending mail using fax machines, which were then cutting-edge technology, but it wasn't fast enough for him. “It took six minutes a page to send through the system,” Johnson recalls now. His next attempt, the Mailgram, allowed for the delivery of telegrams by letter carriers.

Johnson needed to come up with something bigger. The USPS was losing vast amounts of money, and its future looked even worse. A congressionally appointed committee in 1977 foretold a time in which people paid their bills electronically and chatted with each other on networked computers. “Unless the Postal Service really makes a commitment, which it has not made, to electronic message transfer, they face a really bleak future,” warned Gaylord Freeman, the chair of the postal committee and a former banking executive. Freeman thought the advent of electronic messages would eliminate one in four first-class letters by 1985—a prediction that proved correct, if premature.

Fortunately, Johnson was already working on a way to protect the USPS against just such a threat. It was called Electronic Computer Originated Mail, or E-COM for short. The postal service’s largest customers, among them banks and insurance companies, already prepared most of their bills and account statements on computers. Rather than trucking mountains of printouts to nearby post offices, these large users would be able to transmit messages—either electronically or on reels of computer tape—to the USPS’s Sperry Rand Univac 1108 computer system in Middletown, Va. From there, the postal service would send the messages in the blink of an eye to post offices around the country, where clerks would print them out, seal them in envelopes, and pass them on to letter carriers who would deliver them to people’s homes along with their junk mail and packages.

E-COM was e-mail, with a stamp—only it wasn’t terribly fast. The USPS promised two-day delivery and hoped to reduce that to one day, an improvement on the three-day cross-country trip for an old-fashioned letter. Postal leadership was enthusiastic and wanted to charge 15 cents for E-COM, the same as a first-class letter.

Almost immediately, there were howls from the private sector. AT&T complained that E-COM was just a step away from the kind of computer-to-computer e-mail that it hoped to provide. Why should it have to compete against a government agency with its own police force?

E-COM message

There’s a reason few people remember E-COM. The Postal Rate Commission, which had to approve it, subjected Johnson’s proposal to a contentious 15-month review. “I spent 20 days on the witness stand,” Johnson says. The commission decided to prohibit the USPS from creating its own electronic network between post offices. Instead, outside telecommunication companies could transmit E-COM messages, and the USPS would just stuff the letters into envelopes and mailboxes. Johnson was dumbfounded. The result made the system more cumbersome and required raising the price per letter by 60 percent.

On Jan. 4, 1982, U.S. Postmaster General William Bolger sent the first official E-COM message from a terminal in Washington: “We are very proud of this milestone in the history of the Postal Service and pleased to share this occasion with you through this message.” The postal service signed up customers like Merrill Lynch, Shell Oil, the AFL-CIO, the Equitable Life Assurance Society, Hallmark Cards, and the Moral Majority, then a prominent lobbying group for the Christian right.

There were 3 million E-COM messages sent in the first year, 15 million in the next, and 23 million in 1984—not enough to make money. The Washington Post reported at the time that E-COM’s biggest customer was Automotive Incentive, a direct-mail car sales company in a Detroit suburb. It spewed out electronically generated junk mail: “This is your PERSONAL INVITATION to ATTEND the GREATEST AUTOMOTIVE INVENTORY REDUCTION SALE in the HISTORY OF MANASSAS. The Manassas Dealers involved MUST SELL 500 vehicles immediately!!”

E-COM service commences
USPS’s January 1982 Memo to Mailers announced the initiation of E-COM.

After losing $40 million, the postal service canceled E-COM in 1985. By then, Johnson had already given up on his futuristic postal product and departed to work for International Telephone & Telegraph. “It just got so bastardized it didn’t work at all,” he says. A decade later, Johnson and another former USPS executive founded a company called Mail2000, which followed virtually the same business model as E-COM and was sold to UPS for $100 million.

The failure of E-COM would haunt the USPS. The agency largely avoided electronic mail throughout the 1980s and early 1990s. It helped that dire predictions of the decline of first-class mail hadn’t come true. First-class mail rose from 48 billion pieces in 1980 to 89 billion pieces in 1990. “Rightly or wrongly, I didn’t spend much time on electronic mail,” says Anthony Frank, a former postmaster general from this period. “I spent more time trying to get the public and business to use bar codes.” By the early 1990s, the situation had changed. A British scientist had invented the World Wide Web and people had begun to talk about “surfing the Internet.” America Online started mailing all those discs. E-mail trickled out to the masses, and the USPS began to worry once again about what might happen if it didn’t develop its own kind of electronic mail.

Robert Reisner was feeling pretty good about himself. A baby-faced 46-year-old with an undergraduate degree from Yale and an MBA from Harvard, he was working as a consultant on the privatization of a government-owned telephone company in the former Soviet Union. From his office in Washington, he had figured out how to hook the phone system up to an old Sputnik satellite so users could make international calls. “It was pretty wild,” he says. He got a call from a headhunter working for the USPS and became the agency’s first chief president of technology applications in 1993.

USPS mail carrier
A mail carrier on his route, Santa Monica, Calif., 1988.
Source: Visions of America/UIG via Getty Images

Some of Reisner’s new colleagues greeted him skeptically. “You know why we hired you, don’t you?” the head of the engineering department asked him. “So we can fire you.”

“Really?” Reisner replied.

“Yeah, we can’t do that with someone who’s been with us for 25 years. They don’t want to do these things. They just want to talk about them.”

That was nothing compared with the disbelief Reisner encountered from the technology industry. Some laughed outright at the idea of the lumbering USPS trying to compete with nimble startups. “I don’t think we’re going to convince the Net culture that we’re cool,” he says looking back at that time. “But we’re not going to go away.”

Reisner helped the USPS launch its first website in 1994. “The Postal Service is on the information superhighway,” the agency declared in a quaintly worded press release. “We have linked to the Internet World Wide Web, or Web for short.” Visitors to the site could look up ZIP codes and take a postal history quiz, but they couldn’t buy stamps.

Reisner worked with Time Warner on a short-lived experiment enabling the company’s cable television customers in Orlando to use their remote controls to shop for groceries that the USPS would deliver. Time Warner lost millions of dollars before canceling it.

Reisner also oversaw an effort to put 10,000 Internet-connected kiosks in post offices to serve customers without access to computers. The devices sat unused in dingy lobbies. “It’s like a pay phone,” Reisner says now. “It sounds silly, but you have to have someone plug it in, and you have to have a barker to show people that they can get things on it.” Presumably, the USPS couldn’t count on its window clerks to step in; it was difficult enough just to get them to smile at customers.

Alongside these doomed projects, Reisner oversaw more promising Internet initiatives. A new digital postmark allowed e-mail to be certified just as the traditional postmark did with paper envelopes. Another service allowed customers to create fliers and catalogs on their home computers and e-mail them to the USPS, which delivered them as hard copies. The USPS even tried to defend itself against the inevitable spread of electronic bill payment by purchasing, from American Express, a company that opened envelopes with checks, scanned them with optical character readers, and sent them electronically to banks.

As far as Reisner was concerned, these efforts all fit the mission of an agency with a history of embracing new forms of technology from stagecoaches to airplanes. “I gave some speeches and talked about how the postal service has changed its technology many times,” he recalls.

But others felt just as strongly that the USPS was straying from its mission. “This thing doesn’t need reinventing,” said Robert Setrakian, a USPS board member at the time. “Its mission is hard copy delivery, and all it needs to do is to be sure it gets there.”

While Reisner struggled to defend his efforts, e-mail continued to radically alter correspondence. By 1998, the year You’ve Got Mail reached theaters, there were 13 million AOL members and a wave of startups offering postal services. Evite, iRSVP, and TimeDance provided online invitations, and even an Internet novice could figure out how to send a digital postcard for Valentine’s Day. The USPS delivered 190 billion pieces of mail, meaning the average person received 712 items, although junk mail now made up 40 percent of the volume.

AOL discs
America Online software CDs.
Photographer: Julie Thurston/Moment Editorial/Getty Images

Reisner was now the postal service’s vice president of strategy, and he was more convinced than ever that the USPS needed to be part of this revolution. But it seemed as though everywhere he turned, somebody was telling him to forget about it. The banking industry was adamantly opposed to the USPS’s check scanning project. The technology industry wanted the postal service to stay away from the Internet.

“Silicon Valley had a pretty strong lobby,” Reisner says. “It was arguing that the postal service shouldn’t do it.” Federal Express and UPS joined the campaign to rein in the postal service, arguing that it was using money from its monopoly business of delivering letters to enter new markets where it didn’t belong.

Reisner was stunned when the Government Accountability Office audited the USPS’s new services in 1998 and concluded that his nascent efforts had lost $84.7 million over three years. The audit came out in a year when the USPS made $60 billion and had a budget surplus of $550 million. Reisner thought it was crazy for anyone to criticize the postal service for experimenting with the Internet at a time when it was flush with cash.

Marvin Runyon, the postmaster general at the time, could see clearly enough where the mail business was going. He resigned in 1998 and soon joined the board of Stamps.com, a startup backed by Microsoft co-founder Paul Allen that allowed customers to purchase stamps online and print them from their computers. It seemed like a natural business for the postal service itself, but the agency feared that it would be attacked by the private sector and left digital stamps alone.

Marvin Runyon and Zsa Zsa Gabor
Postmaster General Marvin Runyon and actress Zsa Zsa Gabor attend the Marilyn Monroe Stamp Celebrity Launch Party on June 1, 1995, at Universal Studios in California.
Photographer: Ron Galella/WireImage

It turned out that Ruynon’s replacement, William Henderson, was genuinely enamored with the Internet. He could see that online shopping was boosting the USPS’s package business, and so the new postmaster struck up a relationship with Jeff Bezos, chief executive of Amazon.com. The USPS promoted Amazon in its television ads and talked about building a distribution center across the street from its Seattle headquarters.

Alas, UPS was able to move faster and grabbed the site instead.

Henderson had a plan for every American to get a free e-mail address with the suffix .us. “It would have been a great opportunity for the postal service,” Henderson says now. “If we could control millions of mailboxes in the United States effectively, we can certainly control e-mail addresses.”

The USPS also briefly floated the idea of giving its customers e-mail addresses composed of their first initials, their nine-digit ZIP code, and the last two numbers of their street address. Here’s how it would have worked for President Bill Clinton. His address at the White House—1600 Pennsylvania Ave., Washington, D.C. 20500-0003—would have made his e-mail bc20500000300@usps.com. It was certainly unique, but how would anybody remember all those numbers?

Technology lobbyists and their allies in Congress vehemently objected to these e-mail ambitions. Representative Christopher Cox, a California Republican, introduced an amendment prohibiting the USPS from using the suffix .us. “The U.S. Postal Service won’t become the U.S. Portal Service,” his office said.

There was a similar uproar when the USPS started an online bill-paying venture with a company called CheckFree. The Computer and Communications Industry Association, a lobbying group representing companies such as Yahoo! and Netscape, said the private sector should handle this. “We don’t need a big, heavy, stifling competitor, subsidized by public funds, trying to compete in some of the most dynamic areas of our economy,” said Ed Black, the association’s president.

Ultimately, Henderson decided that the only way for the postal service to survive and prosper in the Internet era was to give up its letter monopoly and become a private company. “It was my belief that the monopoly was worthless,” he says. “It was really an impediment to making changes.”

There was an example to follow overseas. Germany had decided to privatize Deutsche Post, its government-operated postal service. But rather than simply stripping Deutsche Post of its letter monopoly, the German government allowed it to use cash flow from its traditional mail business to finance its transformation. By 2000, Deutsche Post would conduct its first public stock offering, raising $5.6 billion.

Reisner, who had spearheaded the largely unsuccessful attempts to bring the USPS into the digital age, was given the task of coming up with a privatization plan. But it was 2000, an election year. Democratic Vice President Al Gore was running for president, and he was counting on the support of the USPS’s powerful employee unions. Privatization didn’t stand a chance.

When Henderson resigned as postmaster general in 2001, very little had changed. “I had gone to the White House,” Henderson says. “I had talked to Congress. The customers weren’t receptive either. They just wanted us to deliver mail.” In 2006 he took a job as chief operating officer of Netflix, an Internet company that was at the time a heavy user of the mail.

Reisner also departed in 2001 and went back to consulting, sometimes advising foreign posts about how to create new kinds of services in the age of the Internet.

mailboxes
A row of rural postal boxes in Hopland, Calif., 1989.
Photographer: George Rose/Getty Images

There would be no more risky digital initiatives in the new millennium. The postal service would focus on delivering the mail and forget about the Internet—and it would also have to reduce its costs. The USPS lost money in 2001 as first-class mail started to decline, and the GAO put it on its list of high-risk federal agencies.

Still, it was impossible for the USPS to ignore the Internet, which was rejuvenating the postal service’s long-dormant package delivery business. Postmaster General Jack Potter appeared before 15,000 cheering EBay users in Las Vegas to express his gratitude. “I have one message today for the entire EBay community,” he said. “We, the Postal Service, we love you. We love every buyer, every seller, every power seller.”

It appeared that Congress might finally do something to help, too. For years, the USPS had complained that it was supposed to operate like a business even though it had to submit every proposed rate increase to the Postal Rate Commission for approval, a process that would drag on for more than a year. The USPS couldn’t offer discounts to the large companies, as UPS and FedEx did.

In 2006 the Republican-controlled Congress passed the Postal Accountability and Enhancement Act, allowing the USPS to raise its rates without the commission’s approval and negotiate special deals for packages. But the new law strictly limited the USPS’s mission to “the delivery of letters, printed matter, or mailable packages.” In other words, the postal service was now legally forbidden to sell neckties in post offices, buy a check processing company, or create an e-mail service.

The law also required the USPS to make annual payments of more than $5 billion a year for the next decade to build a fund to pay for the health care of its future retirees. For some former postal service executives, it was a surreal moment. Essentially, Congress was making the postal service pay in advance for costs it wouldn’t have to cover for decades. But the Internet had finally made the future of the USPS uncertain, so the elected officials wanted to make sure there was money in the bank no matter what.

The collapse of the global economy in 2008 did not spare the postal service, which lost more than a fifth of its volume in four years. The great migration to electronic bill paying finally occurred as businesses tried to save money in the recession, which also ravaged the junk mail industry. It seemed as if everybody in the mailing business was in pain. Hallmark shuttered greeting card plants and shed employees. Shares of Pitney Bowes, the postage-meter manufacturer, plunged.

The USPS's mail volume has continued to vanish. Last year it delivered 154 billion pieces, 27 percent less than a decade ago. Package volume is up significantly because of the popularity of Amazon, one of the agency’s largest customers. But the USPS doesn’t make as much money from delivering boxes as it does with letters in mailboxes. The toll in 2015 was another $5 billion loss.

Three decades after E-COM’s demise, the USPS is still trying to create futuristic mail services, although it’s doing so cautiously because of funding constraints and the age-old fear of outside opposition. There’s a USPS app that allows people to see what’s on the way and when it should arrive. But unlike some European mail users, Americans won’t be able to use the app to decline delivery of catalogs and pizza parlor circulars. Another service developed by the USPS would allow users to order a single bottle of wine or a six-pack of beer online and have it delivered. The only problem? It can’t offer alcohol delivery without the approval of Congress.

The debate in Washington, meanwhile, focuses more on cutting services than the future of the mail. The USPS looks just like other pre-digital behemoths that came too late to the Internet. But if anything, perhaps the post office’s biggest blunder was trying to embrace electronic mail too soon.