USPS Goes Postal

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According to multiple sources, the U.S. Postal Service has decided to raise the price on a first-class postage stamp yet again, to at least $0.41 by 2006. That's about a 10% bump in price -- pretty sizable coming all at once, as looks likely -- that appears to have its source in a fit of bureaucratic pique. USPS was counting on the passage of some legislation by Congress, which would have relieved it of the obligation to pay about $3 billion in annual pension obligations for employees who are also military veterans. That legislation is now expected to fail, and, in anticipation of that event, USPS "went postal" with its rate hike. But this Fool wonders: If a subsidized government-run pseudo-monopoly cries for help in the wilderness, will anyone hear?

Probably not. The simple fact of the matter is that the post office is losing its relevance in the lives of ordinary Americans. We're abandoning USPS's services in favor of its twin nemeses: fast and free (or at least fairly cheap) email communication via Internet services such as Time Warner's (NYSE: TWX) AOL and fast (but decidedly not free) delivery via United Parcel Service (NYSE: UPS) and FedEx (NYSE: FDX).

That covers personal correspondence and shipment of big items over long distances. But what about the mundane bookkeeping work of our personal lives: paying the electric bill, receiving notice that the mortgage check is due, and the like? Those, too, are going online. These days, we bank at wired financial institutions such as Wachovia (NYSE: WB) and Bank of America (NYSE: BAC), both of which use CheckFree (Nasdaq: CKFR) to help their customers receive and pay bills online.

Why, even a service such as eBay (Nasdaq: EBAY), which USPS could reasonably have hoped would boost its business as shoppers began buying online rather than at the local five-and-dime, has turned into a USPS rival. Not only do many eBay sellers shunt business away from USPS and toward its brown and orange-and-blue competitors, but also eBay itself moved onto the post office's turf when it bought out PayPal, which provides for an electronic version of money orders.

Sadly, as the business of moving mail that people want to receive moves elsewhere, USPS has increasingly been relegated to the role of junk mail transporter. I suspect the day's not far off when, upon the announcement of a new rate hike, it will only be the credit card vendors and biweekly mortgage payment offerors you hear complaining. The rest of us simply won't care anymore.

Fool contributor Rich Smith owns no shares in any company mentioned in this article. But he'd like to point out that Time Warner, FedEx, and eBay are all Motley Fool Stock Advisor selections. Check out the market-beating newsletter out by subscribing today, without risk, for six months.