# Additional Comments to the President's Commission on the United States Postal Service

Submitted By:

Lockheed Martin Distribution Technologies

1801 State Route 17C

Owego, New York 13827-3998

## Use of Technology to Increase USPS Top-Line Revenue

**Introduction:**

The President's Commission on the USPS has requested amplification of
suggestions presented to the Commission at the recent public forum held
in Austin Texas on March 18, 2003. This paper provides a brief review of
recent uses of technology to increase revenue that has been undertaken
by European Postal Systems facing some of the same pressures faced by
the USPS.

Lockheed Martin is familiar with several examples of how technology can
be used to increase the top-line revenue for the USPS. We briefly
discuss five in this paper:

-   Physical/Electronic Delivery Selection

-   Automated Revenue Protection

-   Online Postage and Intelligent Mail

-   Hybrid and Reverse Hybrid Mail

-   Stamps as Payment Vehicles

# 

The onset of structural market change, including the erosion of physical
mail by the use of electronic media, has prompted posts to seek
alternative value streams from both the core mail market and from
diverse activity in the eBusiness area. A key driver in the search for
value-add postal services is based on the strategic premise that one
size no longer fits all and that posts should develop a more customer
focused business.

The development of a customer-focused business relies to a great degree
on a post's ability to target both the individual customer and the
individual mail item within the mail stream. The ability to do this
relies heavily on a strategic recognition platform with the ability to
use the recognition function for things other than pure address
resolution (e.g. the recognition of license numbers, stamps, glyphs or
other specified markings on the mail piece).

# Physical/Electronic Delivery Selection

**Denmark Post** has implemented the Mailswitch value-added service. The
sender forwards data or a print stream to Denmark Post, the Mailswitch
distributes mail based on the recipient's preferences. The decision is
made via a recipient profile database where the customer has specified
individual delivery instructions. Mail is then delivered in the format
specified by the customer that can be through electronic distribution
(e-Box), email or physical mail.

The concept that every customer in Denmark has a personal post-code has
been brought into reality through the e-Box system. Each individual
customer registers for e-box delivery and is given a lifelong personal
electronic document archive based on his or her equivalent social
security number. This system will be migrated for business customers
based on company tax file numbers.

Top line growth is achieved by charging for a subscription to the
service, charging for advertising through the service, deriving revenue
from bolt-on products (for example, charging for print-outs of
electronically delivered items) and through increased mail volume
generated through generous discounts for using the service. A similar
approach is being used by Canada Post and other Scandinavian posts.

**Kinek Technologies** is a developer of e-commerce fulfillment
solutions for logistics targeted at retailers, parcel delivery firms and
alternative delivery locations. Royal Mail has incorporated Kinek's
offering into the Decide and Deliver service to offer the customer a
choice of parcel related delivery options and notifications. While this
service is presently available at no charge to the delivery customer,
the sending customer achieves a significant benefit through its use
thereby improving brand loyalty, downstream repeat purchases and traffic
to the delivery service.

# Automatic Revenue Protection

**Royal Mail** has developed two adaptive services based upon the
concept of revenue protection. The International Revenue Protection
program is being developed to perform advanced recognition tasks to
identify underpaid items within Royal Mail's outbound international mail
stream. The service is being applied to the majority of product streams
including Letters, Flats and Packets.

The Business Response Service (BRS) is being deployed to identify unique
license numbers on BRS mail items. The service will enable Royal Mail to
ensure that all BRS items are tracked and billed to the appropriate
account holder. This is a second example of generating additional
revenue from the existing mail stream.

Automated revenue protection services offer significant top-line growth
to all posts.

# Online Postage and Intelligent Mail

Online Postage is a value-added service that has already been launched
in the USA and Germany. **Swiss Post** is presently in trials and Royal
Mail is also planning to launch an online postage service in 2003. In
the UK, the service allows small business users to create stamps via a
standard office based PC and printer using popular Microsoft desktop
applications including MS Word. Users will register with Royal Mail via
its eCommerce Portal to open an Online Postage account. Stamps can then
be purchased directly over the Internet at any time. Online Postage
offers the business user added convenience through 24/7 availability
without leaving the office. It also offers Royal Mail a potential
channel for additional advertising revenues.

Personalization of mail can be achieved by adding a company slogan, logo
or an image alongside the stamp, giving mail a more professional image.
The Online Postage Service has the ability to create stamps that can be
used for parcels and letters suitable for all UK and international
destinations. Postage can be printed from an office PC directly onto a
standard envelope, sheet of labels, or a letter for use in conjunction
with a windowed envelope. A single stamp can be printed or a mailing
list imported to print an entire mail shot.

Online Postage systems also typically produce a two-dimensional barcode
within the indicia. This code often contains sender, receiver, service
and account information that is the essential building block for
intelligent mail. USPS could derive further top-line growth from
value-added services based on information included within these indicia.

### Hybrid Mail and Reverse Hybrid Mail

**Finland Post** has developed an electronic document management and
printing service for business customers. The new value added hybrid mail
service allows the customer to supply an electronic file and Finland
Post (via Atkos Capella Eurocom) then digitally prints the document and
inserts a physical mail piece downstream into it's pipeline, or selects
electronic distribution or electronic archiving as additional options
dependent on customer choice.

Finland Post also connects third party companies to their suppliers via
its portal for product catalogues, orders and invoicing. Finland Post
has also taken this one step further by linking this to electronic
invoice processing. Finland Post now has a 'complete logistics loop',
from order (mobile coupon, digital iTV, Internet and contact Center) to
warehousing (Service warehouse, material management), to Delivery (last
mile, courier services and SMS delivery notification) to payment
(mobile, pay on delivery invoice). Customers pay for this service.

Customer demand and technology have recently matured to a level where
additional top-line growth from hybrid mail may be possible in some
markets.

# Stamps as Payment Vehicle

With the advent of high-speed stamp reading software and modern
transports, mail piece processing can be centralized and automated.
Information extracted from the mail could potentially be provided as a
chargeable service to the generating customer. Specifically, stamps
become a unit of economic currency that can be used for business
response, small purchases and non-profit donations, for example. While
the stamp as payment vehicle concept is not new, technology is now a key
enabler to additional revenue generation.

We believe that a continued steam of technology insertion into the USPS
is a key component of postal reform. Technology investments will allow
the USPS to potentially expand current service and provide additional
opportunities for revenue generation.