BEFORE THE POSTAL
RATE COMMISSION
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COMPLAINT ON ELECTRONIC POSTMARK DOCKET NO. C2004-2
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COMPLAINT OF
DIGISTAMP
(February 25, 2004)
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Pursuant to 39 U.S.C. § 3662 and 39
C.F.R. § 3001.81 et seq., DigiStamp brings this complaint against the United
States Postal Service under the Postal Reorganization Act, 39 U.S.C. § 101, et seq ("the Act"), on the
following grounds:
Name and Address of Complainant
1.
Complainant is DigiStamp, Inc. ("DigiStamp"). DigiStamp 's address
is
Statement of Grounds for Complaint
2.
On or about January 2004, the Postal Service began
providing a document delivery service called the "Electronic Postmark™"
(EPM).
3.
EPM is a service that involves the use of auditable
time stamps, digital signatures and hash codes.
Through the USPS EPM service, any third party can verify the
authenticity of the EPM purchaser’s content. This proof is postmarked by the
Postal Service and, according to the Postal Service, provides evidence to
support non-repudiation of the user’s content. The EPM is designed to deter and
detect the fraudulent tampering or altering of the user’s content. See http://www.usps.com/electronicpostmark/aboutepm.htm
4.
According to the Postal Service, some of the key
features of EPM are: proof of document
authenticity and timestamp accuracy to detect and prevent fraud; and the data
stays private. The Postal Service never has access to the purchaser’s content
and requires no modification or transmission of content. See
http://www.usps.com/electronicpostmark/aboutepm.htm
5.
According to a Postal Service white paper issued
September 2003:
“The USPS EPM
service provides document authenticity when a resulting USPS EPM is associated
with a document or transaction that can later be verified using the USPS EPM
repository.” Also, “The USPS EPM
supports applications so that they can comply with the E-SIGN legislation . . .
which made electronic signatures the legal equivalent of their paper
counterparts . . . .” See
http://www.authentidate.com/docs/whitepapers/USPS%20EPM%20White%20Paper%20Sept%202003%20_112103_.pdf
6. According to a press release issued by the Postal Service, "The Postal Service is developing a series of services to mirror those of First-Class Mail. The first in this series call for a time and date stamp to represent the electronic postmark.” Exhibit A hereto, which is incorporated herein by reference.
7. “The United States Postal Service® has contracted with Microsoft and AuthentiDate to provide the sales, marketing, technology and services for customers to purchase and use the USPS EPM.” See: http://www.authentidate.com/www/partners/usps.htm
8.
According to the Postal Service, some of the key
benefits of EPM are: that
“correspondence handled by USPS [is] subject to confidentiality statutes and
regulations;” the Postal Service is a “[n]eutral third party with [a] universal
public service mandate; the Postal Service has a “[h]istory of providing
postmarks with legal significance;” and the Postal Service has a “[l]ong-lived
statutory purpose ‘to bind the nation together through the… correspondence of
the people’ 39 U.S.C. §101.” See http://www.usps.com/electronicpostmark/benefits.htm
9.
According to the Postal Service, purchasers obtain
legal protections by choosing a USPS electronic postmark. These include the protection provided to
purchasers under 18 U.S.C. §1341 “Frauds and swindles.” See http://www.usps.com/electronicpostmark/benefits.htm
Section 1341 provides in part that:
“Whoever, having devised or intending to devise any scheme or artifice
to defraud . . . places in any post office or authorized depository for
mail matter, any matter or thing whatever to be sent or delivered by the Postal
Service . . . shall be fined under this title or imprisoned not more
than five years, or both.” (emphasis
added)
10.
The lead contact for EPM is an employee of the Postal
Service:
Leo Campbell
Program Manager, EPM
Room 4034
703-292-3814
See: http://www.usps.com/electronicpostmark/contact.htm
11.
Information that the Postal Service disseminates to the
public concerning EPM makes it clear the EPM is a service provided by the
United States Postal Service:
·
The name used for the service is “USPS
Electronic Postmark” and “USPS EPM.” (emphasis added) See:
http://www.usps.com/electronicpostmark/aboutepm.htm
·
The Postal Service states that: “This electronic proof [is] postmarked by the
PostalService
. . . .” See:
http://www.usps.com/electronicpostmark/aboutepm.htm
·
A potential
customer should contact an employee of the Postal Service, Leo Campbell, at his
usps.gov e-mail address or contact Authentidate.
·
The U.S. Postal
Inspection Service will investigate instances of tampering with EPM. See September 2003 white paper cited above.
12.
The Postal Service has ventured millions into an
entrepreneurial market-based risk investment to provide a government service
Exhibit B hereto. Electronic Postmark,
together with other Secure Electronic Delivery Services, lost $8.6 million from
its inception in November 1999 through the date of the Postal Service’s
response to interrogatory OCA/USPS-239 on
13. The USPS uses its monopoly government position to subsidize unfair competitive ventures against free enterprise. Private industry serves the electronic time stamp market without draining resources and government programs that are financed by patrons of traditional postal services.
14.
Electronic Postmark continues to lose money today.
15.
The current operating expenses of Electronic Postmark
exceed current operating revenues.
16.
Electronic Postmark has incurred a large net loss since
its inception.
First
Claim: The Postal Service's Failure
to
Request a Recommended Decision
Under
Sections 3622 and 3623
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17.
Electronic Postmark is a class of mail or type of mail
service which may be established by the Governors of the Postal Service only
"in accordance with the provisions of [Chapter 36)" of the Postal
Reorganization Act. 39
18.
As a result, the Postal Service's provision of Electronic
Postmark constitutes a change in the mail classification schedule.
19.
Before the Postal Service may establish a new class of
mail or mail service, or make a change in the mail classification schedule, it
must first request the Commission to submit a recommended decision on the
change. 39 U.S.C. §§ 3623, 3641.
20.
Before the Postal Service charges a new rate or rates
for a class of mail or type of service, it must first request the Commission to
submit a recommended decision on the new rate or rates, 39 U.S.C. §§ 3622,
3641.
21.
Although EPM is largely an electronic service, it
functions as a type of mail (and a service ancillary to mail), using recent
technology, to provide evidence of the time and date of a document transmission
and security against tampering with the contents of the document.
22.
EPM is a “mirror” mail service such as described in the
attached press release.
23.
EPM substitutes for hardcopy mail.
24.
EPM is mail.
25.
EPM is not a “nonpostal” service in that such services
consist solely of services provided by the Postal Service to the public on
behalf of other governmental agencies.
Since EPM is not a nonpostal service, it is necessarily a postal service
– it is a retail service offered to the public for the purpose of raising
revenues for the Postal Service.
26.
The Postal Service may only establish new retail
services offered to the public by requesting a recommended decision from the
Commission under 39 U.S.C. §§ 3622 and 3623.
27.
The Postal Service has not requested the Commission to
submit a recommended decision on an Electronic Postmark classification or on a
rate or rates for that service.
28.
As a result, the Postal Service's provision of
Electronic Postmark is not in accordance with the policies of the Postal
Reorganization Act and the factors set forth in the Act, 39 U.S.C. §§ 3622, 3623.
29.
Accordingly, the Postal Service's provision of
Electronic Postmark violates the Postal Reorganization Act.
Second Claim: The
Postal Service's
Failure to Charge a
Rate that
Complies with Section
3622(b)
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30.
Section 3622(b)(3) of the Act establishes "the
requirement that each of class or type of mail service bear the direct and
indirect postal costs attributable to that class or type plus that portion of
all costs of the Postal Service reasonably assignable to such class or
type." 39 U.S.C. § 3622(b)(3).
31.
When the Postal Service provides a class of mail or
type of mail service at no charge, the users of that class or service are
cross-subsidized by other postal users.
32.
When the Postal Service provides a class of mail or
type of mail service at a charge that does not fully recover all of that class’
incremental costs and a reasonably assignable share of the Postal Service’s
institutional costs, the Postal Service has violated 39 U.S.C. §3622(b).
33.
The Postal Service has never demonstrated to the Postal
Rate Commission or the mailing public that EPM is not being cross-subsidized by
other postal services.
34.
The Postal Service has never revealed to the Commission
or the mailing public all of the start-up costs of EPM.
35.
The Postal Service has never revealed to the Commission
or the mailing public all of the operating costs of EPM.
36.
The Postal Service has never revealed to the Commission
or the mailing public all of the revenues of EPM.
37.
The Postal Service has never revealed to the Commission
or the mailing public the total net loss generated by the provision of EPM.
38.
When the Postal Service provides a class of mail or
type of mail service that has not been demonstrated to bear all of the direct
and indirect postal costs attributable to it, plus a reasonably assignable
portion of all other costs of the Postal Service, it provides such a class of
mail in violation of 39 USC § 3622(b)(3).
39.
Even if the Commission were to determine that EPM is
not a jurisdictional service, the Postal Service has never demonstrated that
past and current EPM losses are not being borne by jurisdictional ratepayers.
40.
The Postal Service has never revealed to the Commission
or the mailing public how it allocates costs of EPM that are incurred jointly
with other services, especially jurisdictional services.
41.
The Postal Service provides its own federal employees
to promote the sales of the electronic postmark and their partner’s sales. Exhibit C and D hereto, which is incorporated
herein by reference.
42.
As a result, the Postal Service provides the Electronic
Postmark by venturing into a risk-based marketplace with funds from the
monopoly-based postal patron in violation of Section 3622(b) of the Act,
including (but not limited to) Sections 3622(b)(3) and 3622(b)(4).
43. The USPS is establishing the Electronic Postmark in competition with companies already existing in the private sector; a role that is not appropriate for a government entity. A purpose of government is to encourage economic growth and to enforce a level playing field, not to take profit from an industry that has been developed by the private sector.
44.
Electronic Postmark competes with a similar service
provided by DigiStamp.
45.
The Postal Service provides the Electronic Postmark as
a government service financed, backed and enforced with Federal law officers,
constituting unfair competition in violation of Section 3622(b)(4) of the Act.
46.
The Postal Service's provision of Electronic Postmark leverages
the assets of the monopoly business with providing a government service. This is contrary to Section 3622(b) of the
Act and may deprive DigiStamp of customers for its similar service, with a
consequent loss of revenues to DigiStamp.
47.
The Postal Service’s cross subsidies of EPM with
monopoly revenues may inhibit competition to the detriment of consumers of all
such services. The Postal Service may
not be the most efficient provider of an EPM-type service, but the ability of a
$70 billion enterprise to cross-subsidize its entrepreneurial ventures can
discourage lower cost or higher quality private entrepreneurs from offering
EPM-type services.
Third Claim: The
Postal Service's Failure
to Request an Advisory Opinion on Electronic
Postmark.
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48.
Electronic Postmark is a postal service.
49.
Electronic Postmark could also have an impact on the
use of other mail services, including first-class, registered or certified
mail, Express Mail, and Priority Mail.
This is evident in that potential first-class, Express, and Priority
mailers may not use the third-party evidence that the Postal Service provides
when it accepts a hardcopy letter, postmarks the outside envelope, keeps the
letter sealed against inspection, and transmits it to the recipient. Also, the security and evidentiary features
of special services such as Certified, Return Receipt, Registered, Delivery
Confirmation, Express Mail, Priority Mail and Signature Confirmation may be
eschewed in favor of EPM. In other
words, EPM cannibalizes other postal services so that first-class, Express
Mail, Priority Mail, Certified, Return Receipt, Registered, Delivery
Confirmation, and Signature Confirmation revenues are reduced. The Postal Service has never quantified and
revealed this impact on other classified services.
50.
As a result, the institution and rendition of
Electronic Postmark represents a change in the nature of postal services which
will generally affect service on a nationwide or substantially nationwide
basis. As example, a single day of public news shows numerous users of a
postmark for time and date stamping.
Exhibit E hereto, which is incorporated herein by reference.
51.
Section 3661 (b) of the Act provides:
"When the
Postal Service determines that there should be a change in the nature of postal
services which will generally affect service on a nationwide or substantially
nationwide basis, it shall submit a proposal, within a reasonable time prior to
the effective date of such proposal, to the Postal Rate Commission requesting
an advisory opinion on the change."
39 U.S.C. § 3661 (b).
52.
Before providing Electronic Postmark, the Postal
Service did not submit a proposal, within a reasonable time prior to the
effective date of' Electronic Postmark, to the Commission requesting an
advisory opinion on the change.
53.
Accordingly, the Postal Service's provision of
Electronic Postmark violates Section 3661 of the Act, 39 U.S.C. § 3661.
Persons or Classes of Persons Affected
54.
All postal customers are believed to be affected by the
Postal Service's provision of Electronic Postmark, since the rates paid by all
postal customers are cross-subsidizing the Postal Service's provision of
Electronic Postmark. Likewise, all persons who compete or who may desire to
compete with the Postal Service, both in rendering a service such as Electronic
Postmark or in rendering any service competitive with a service provided by the
Postal Service, are similarly affected by the Postal Service's failure to
observe the requirements of the Act in launching a new competitive service.
Moreover, users of the Postal Service's certified mail, registered mail, return
receipt, delivery confirmation, and signature confirmation services may be
affected as the result of a diversion of volume from those services.
Statement Regarding Relevant
Correspondence
55.
There is a letter written by Rick Borgers to General
Potter of the USPS and an inquiry to Electronic Postmark user support. Exhibit F and G hereto, which is incorporated
herein by reference. There were no
responses from these communications.
There is no additional correspondence nor are there any other written
communications between DigiStamp or its agents, representatives, or attorneys
and the Postal Service or any officer, employee, or instrumentality thereof
which relates to the subject matter of this complaint.
Relief Requested
56.
Under Section 3623(b) of the Act, the Commission
"may submit to the Governors on its own initiative, a recommended decision
on changes in the mail classification schedule." 39 U.S.C. § 3623(b).
57.
By not requesting a recommended decision from the
Commission, the Postal Service has failed to make any showing that the
provision of Electronic Postmark on the terms required or provided by the
Postal Service is in accordance with the policies and factors set forth in the
Postal Reorganization Act.
WHEREFORE,
DigiStamp respectfully requests the Commission to:
(a)
Submit to the Governors of the United States Postal
Service a recommended decision rejecting as unsupported the Postal Service's
provision of Electronic Postmark; and
(b)
Grant DigiStamp such other and further relief as the
Commission deems appropriate.
Respectfully
submitted,
Rick Borgers
Lead Technologist, CEO
DigiStamp, Inc.
Exhibit A
Exhibit
B
Exhibit C
Exhibit D, page 1
Exhibit D, page 2
|
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Exhibit E
From: Rick Borgers
[mailto:rick.borgers@digistamp.com] Sent: To: leo.campbell@email.usps.gov Cc: audit@digistamp.com Subject: RE: USPS EPM questions Hello Leo Campbell, Maybe you missed this email? Could you take a few moments and respond to the questions
below. Thank you -----Original Message----- From: Rick Borgers [mailto:rick.borgers@digistamp.com] Sent: To: leo.campbell@email.usps.gov Subject: USPS EPM questions Hello Leo Campbell, I got your name and email address from the web site:
http://www.usps.com/electronicpostmark/contact.htm Please, a few questions about the USPS EPM service: 1. Are the timestamps that your service provides
constructed as described in IETF RFC3161 ? 2. Is the signature of the timestamp using RSA, DSA or
another algorithm? 3. What is the key length for your timestamp signing key?
For example 1024, 2048? 4. Is your signing key kept in NIST-certified
hardware? Is the certification level
2, 3 or 4? Thank you for your
time, Rick Borgers Lead Developer DigiStamp, Inc. www.DigiStamp.com 1-817-428-8872 |
Exhibit F
Rick Borgers
CEO and Lead Developer
rick.borgers@DigiStamp.com
DigiStamp, Inc.
1-817-428-8872
Postmaster General John "Jack" Potter
Postmaster General and CEO
United States Postal Service
475 L'Enfant Plaza
Washington
RE: Electronic Postmark service
Dear Mr. Potter,
The new product that the USPS calls the “Electronic Postmark” is the same service that my company has provided to the public for more than 5 years. This service is an IETF, standards-based “Time Stamp.” We have always accepted there would be competition, but the implied legal standing of the USPS in this market space will be a challenge for our customers to evaluate. In fact, given a level playing field, we can compete very well with the USPS.
From what we understand, the postal service is not a private-sector business and does not function as one. By giving the name USPS to my time stamp competitor Authentidate and then Microsoft, the USPS has become a commercial market enterprise with special advantages that no other private company enjoys.
By entering this market, the USPS is going against the direction of many government agencies including the President’s Commission on the USPS. I would like to discuss this situation with you before we go public with our concern. I will follow up with you in the next two weeks; however, feel free to reach us at the contact information above.
Private industry serves a different purpose than the government (or government-sanctioned monopolies). In the long run, fair competition is best for the American public, but it appears the USPS is leveraging its monopoly to pursue my line of business.
Read excerpts from important documents that concur with my premise “the USPS should not be competing in the time stamp business”:
- Excerpt from the analysis paper from the Computer & Communications Industry Association (CCIA): [1] “…we would like to reiterate our deep concerns about the Postal Service’s forays into electronic commerce and other commercially competitive ventures,” “…Encouraging the USPS to use its monopoly government position to subsidize unfair competitive ventures against free enterprise cannot be reconciled…”
- Excerpt from the United States General Accounting[2] “Some stakeholders have expressed concerns that USPS is establishing e-commerce products and services in competition with those already existing in the private sector, a role they regard as not appropriate for a government entity.”
- Excerpt from President’s
Commission on the United States Postal Service[3]
“…Contemplated offering e-mail and other data transmission
services. These ventures have produced largely disappointing results. Also
of concern, each of these markets is served by private companies who do
not have the backing of the
This is what makes the USPS an unfair competitor because of image and not quality:
Ø The monopoly granted by federal law has allowed the USPS the funds and momentum to enter this new market. The USPS was granted a monopoly in its charter for mail delivery; the charter went on to say that they cannot compete in other commercial ventures.
Ø The postal inspectors are a large organization of federal agents who are armed and have the authority of law enforcement. The special authority is now extended to the time stamp service.
Ø
When the postal service has budget shortfalls,
the
Ø
The
Here at DigiStamp, we would like to acknowledge the value that the USPS has brought to the American public over its many years of service by delivering the mail. This appreciation extends to the USPS for recognizing the value of digital time stamps for electronic evidence. As an alternative to operating a competitive offering, DigiStamp proposes that the USPS and other government bodies work to license private businesses that provide this service, raising public trust and quality levels. Or work with groups like the American Bar Association to define the rules of evidence related to electronic data.
I look forward to speaking with you. This is a business that my team and I have invested years of our lives in building so you can imagine our concern.
Sincerely,
Rick Borgers
Exhibit G