Friday, November 14, 1997

Electronic postage meter switchover delayed by suit

By VIRGINIA BALDWIN HICK / St. Louis Post-Dispatch

By March 1999, every mechanical postage meter in the United States must be replaced with an electronic meter.

Many meter users may not know that yet because of a lawsuit between the leading meter manufacturer and the U.S. Postal Service over what the Postal Service can tell about the change.

Pitney Bowes, which has about 85 percent of the U.S. postage meter market, has filed suit in U.S. District Court in Bridgeport, Conn., to block Postal Service plans to mail a letter and brochure to customers. Pitney Bowes objects to the Postal Service's plan to tell customers about the four companies authorized to lease and service meters.

A hearing is scheduled Nov. 24. John Hughes, lead trial counsel for the Postal Service, said the two sides are trying to negotiate a settlement before the hearing.

Small users pay about $25 a month for to mechanical meters and about $30 for electronic ones. The Postal Service sells postage in advance and the meters keep track of what's been used. When the postage is used up, the meter holder has to renew postage. This once had to be done at a Post Office, but many meters -- even mechanical ones -- now can be renewed over the phone to the manufacturer.

Three years ago the Postal Service decided that it could eliminate millions of dollars in fraud each year if it discontinued mechanical meters in favor of electronic ones. Computer chips are harder to alter than the wheels and gears of mechanical meters.

Mailing shops and high-volume mailers already have converted. More than 60 percent of meter users now use electronic meters, the Postal Service says.

The fight is over the remaining two-thirds of the mechanical meter users, who use low-speed meters.

The Postal Service had planned to send a letter last month telling mechanical postage meter customers of the required change. It had intended to use manufacturers' mailing lists, and the brochure it proposed to send included the names and addresses of all four manufacturers: Pitney Bowes, Ascom Hasler Mailing Systems, Francotyp-Postalia Inc. and Neopost.

Pitney Bowes balked at having the Postal Service tell its customers how to contact its competitors. It sued the Postal Service at the end of September, blocking the mailing.

Pitney Bowes' mailing list is proprietary information, the suit says, and any efforts by the Postal Service to "level the playing field" among meter manufacturers would cause Pitney Bowes to lose business. The suit calls inclusion of the information "punitive."

Pitney Bowes wants to block the Postal Service from publicizing the other companies, or even suggesting that customers look in the Yellow Pages, in any information it distributes -- in Post Offices or trade shows or by any other means.

Hughes said the Postal Service has not filed a reply because both sides agreed to negotiate first. He declined to discuss the merits of the case.

But the other manufacturers are not so circumspect.

"In our view, it's restraint of trade," said Anthony Adkins, vice president of marketing for Neopost, which has about 7 percent of the U.S. meter market. "The Post Office has a right to write to their customers."

A trade group, the Business Technology Association, has entered the case as an interested party. In a statement to its members, the association says, "Pitney Bowes' position ignores the fact that postage meters are licensed by the USPS to the customer."

"If you look in the Yellow Pages, we're all there," Adkins said. In his experience, "People are quite relieved that there's someone other than Pitney Bowes they can get a meter from."

Jim Rose, controller for Fleming Printing in Fenton, was one of those customers. A Neopost sales rep called on his company last year. The firm spends about $16,000 a year on mail and shipping.

"We had an older machine we were going to upgrade," Rose said. The Neopost representative told the company about the Postal Service's phase-out of mechanical meters. "We got quotes from Pitney Bowes and Neopost and we went with Neopost," he said.

Aside from the cheaper rental -- about $5 a month -- Fleming went with Neopost because it debits Fleming's account directly when it adds more postage. Pitney Bowes had required the company to keep a balance on account.

"Whether the meter's electronic or mechanical, the postage meter basically works the same way," Rose said. "The biggest difference is how we reset and where we keep our funds -- if we have to have it tied up in an account, or have someone debit our checking account."

(Distributed by Scripps Howard News Service.)