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A Discount for Internet Postage?

While the price of a first-class stamp is expected to rise to 34 cents, the U.S. Postal Rate Commission is also recommending the development of two new discount rates for first-class: the first to lower the rate for preprinted, bar-coded courtesy reply envelopes used by consumers to pay bills; and the second for letters bearing computer-generated postage.

The promise of discounted Internet postage comes just in time to bolster the concept's viability in the face of struggles by key players like Pitney Bowes and Stamps.com. Plagued by slow acceptance rates as well as overall weakening economic conditions, both companies have failed to capitalize on the efficiencies of an e-commerce, web-enabled platform and appease disgruntled investors.

The decision on discounting Internet postage now moves to the Governors of the U.S. Postal Service (USPS), which could recommend establishing a new, discounted rate category.

In a statement released on Tuesday, troubled online postage company Stamps.com implored the U.S. Postal Rate Commission to create the new discounted rate.

A rate reduction for Internet postage would provide "significant cost-savings to users of the Stamps.com service and is expected to increase the company's customer base," the firm said in a statement.

Stamps.com was trading at mid-day in the $3.20 range, up about 14 percent on the news. At one time, the stock was as high as $98.50. The company has cut 240 jobs, or 40 percent of its workforce. In addition, it is struggling to rebuild after Chief Executive Officer John Payne and three other top execs all left. For the third quarter, Stamps.com lost $38.5 million, or 80 cents a share.

Earlier this year, Stamps.com proposed a similar discount rate structure. The company petitioned the Postal Rate Commission for a four-cent discount for Internet postage, based on the cost-savings provided to the USPS through automated processing of mail.

Meanwhile, a spokeswoman for mailing technology giant Pitney Bowes Inc. said the company would certainly be in favor of a new discount classification and would expect its Internet postage product to benefit if the proposal comes to pass.

Sheryl Y. Battles, executive director of external affairs for Pitney Bowes, told internetnews.com that the company "clearly is in favor of discounts for businesses that invest in mailing technology."

"Internet postage is just part of the next generation of mailing solutions," she said, adding that the company's current conventional postage meter users receive discounts of from 2 to 16 cents depending on the volume processed by their mailing systems.

The Stamford, Conn.-based mail and messaging management giant unveiled its own Internet postage service in March after receiving the necessary regulatory approvals. However, in October, Pitney Bowes said it had to scale back growth projections due to "the weakening economic environment."

Pitney Bowes also announced on Tuesday that it signed a deal with Digimarc Corp. to develop digital watermarking solutions for metered mail.

Over the next six months, the two companies said they will work together to develop the potential of digital watermarking to link the paper envelope with the world of online information. They will also explore ways to use digital watermarking as a security feature for metered postage, such as Pitney Bowes' ClickStamp Internet postage solution.



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