The post office has a variety of problems. Commercial mail discounts are not the most significant among them and in fact an increasing amount of their business comes from junk mail overall. On an operational basis the USPS is profitable. The biggest problem they face is that mail volume has fallen by 20% in the last 10 years and is showing little sign of stopping. People simply don't send as many letters as they once did thanks to email and other new technologies. The USPS is a shrinking business but since they in actuality are a government agency they aren't truly given the freedom to behave like one. They are forced to serve unprofitable locations, they cannot close unnecessary post offices, they are limited in their ability to reduce their workforce, etc.
What? they are a government agency but not given the freedom to act like one? And yes, they have closed or are closing unnecessary post offices.
The bulk mail and so on is insignificant other than if they are not making money, they simply need to increase the rates a bit. But they lower the rates for businesses sending spam and up the private postage fee which is declining. Now, you really do not need to be the headmaster at the University of Austin (* the best accounting school last I checked) to see a disconnect here. Let me spell it out, Business rates are too low and private rates are too high. If they did something about that, they would have both business and private customers again.
It's not that government "can be part of the answer". Government HAS to be part of the answer. I agree that except on very small scales, government owned ISPs are probably not the best idea. But large ISPs without any government oversight is probably an even worse idea. There are certain industries (postal services, utilities, infrastructure, communications services) that simply will not work effectively on a large scale without a significant amount of government involvement and oversight.
I disagree on the industries that do not work well without government but that is neither here nor there. Government does not have to be part of the answer, if they weren't involved in the first place, they wouldn't need to be involved in the answer either. Companies like Comcast, Time Warner, ATT/SBC got their big jump in being large ISPs because they had the government give them monopolies in other areas in which they now piggyback their internet service offering onto. With very little effort, existing government regulation can be used to solve problems like net neutrality and so on. We already have consumer protection laws on the books about not receiving what you are being charged for. We already have these large telecoms receiving benefits for broadband roll outs and if they block or limit any services, their access doesn't meet broadband definitions. What is needed is strict enforcement of existing regulation and perhaps a little consolidations or inter-agency abilities with existing government agencies.
That said if the citizens of my local town wanted to have municipal gigabit ethernet controlled by the local government and collectively voted to indicate they were fine with the cost of doing this, I cannot think of a logical reason to prohibit it either. If the local telecom/cable monopolies aren't providing what people want they should be able to utilize their government to make it happen.
Governments who can tax people not wanting the service in order to fund it should never be in competition with private entities. The correct way for the town to get gigabit Ethernet is to bid out access to right of ways provided a certain coverage area on specific types of lines. Treat it like a cable company or the telephone company in which a company does the roll out and then leases the lines at cost to competitors or provides the service together. There is absolutely no reason why your local telecom/cable monopolies need to stay monopolies or that another (lets call it an internet coop) cannot start up. Well, that is unless there are existing contracts the local government was stupid enough to make which prohibits it. Municipal broadband is a bad idea. Granting access to private citizens working in a coop is an excellent idea. The local government can even bid on service to help initially fund it.