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Postal services to deliver email security

Canada Post signs a deal to launch an electronic security delivery service, and the U.S. Postal Service agrees to provide USPS-branded email postmarks to a secure Internet transmission service.

Postal services are embracing the enemy: email.

Canada Post signed a deal Friday with Tumbleweed Communications to launch an electronic security delivery service, called PosteCS, that offers encryption, password protection and delivery tracking.

In addition, the U.S. Postal Service took another cautious step into the digital age last week, agreeing to provide USPS-branded email postmarks to PostX, a secure Internet transmission service.

"Tumbleweed does not look to replace the post office," said ING Barings analyst George Godfrey. "Rather, they look to enhance their value proposition by giving them a software platform instead of sending mail the traditional way. So Tumbleweed is very much a partner, not a competitor."

Still, this week's deals underscore the pressure on traditional mail services posed by the Internet.

First-class mail is expected to begin declining by 2003 in the face of email and electronic bill paying, according to a General Accounting Office (GAO) report delivered to the House Subcommittee on the Postal Service last October. Based on projections provided by the USPS, the document says the Internet could wipe out $17 billion in postal service revenues and threaten the agency's ability to provide universal first-class mail service.

The USPS is not the first entrant in the market for secure document delivery online. United Parcel Service already has a service, unveiled in March 1998, that uses both Tumbleweed technology and a system from NetDox. And Pitney Bowes' Send service, launched last August, sends confidential, high-value documents online and uses Tumbleweed software.

Since 1996, the USPS has had several initiatives designed to move its services online. The most visible is its online postage meter project, in which five vendors, including land-based postal meter powerhouse Pitney Bowes, are testing services to sell postage online.

The USPS said it sold 2 million electronic postmarks to PostX, which provides customers such as discount brokerage firm Ameritrade the option of using the USPS' branded date and time stamp. PostX then uses its encryption technology to protect the documents and the time stamp feature to allow people to see whether a document has been tampered with.

According to spokesman Greg Frey, the USPS is in the process of working with other Internet companies in hopes of incorporating the electronic postmark in mail to individuals.

"The electronic postmark is an add-on service that provides the security of what the U.S. Postal Service brand is, which is a trusted third party," Frey said. "We are an agency of the government, and our postmark provides a level of trust and security."

According to Cupertino, Calif.-based PostX, the electronic postmark is the first to be endorsed by the USPS, which will help add a layer of security to email documents.

"Just like in the physical or in the postal world, there's this idea of certified mail and other valued features" for Internet communications, said PostX chief executive R.C. Venkatraman. "It's a big honor and privilege to be the first one to commercialize this."