**Advance Written Testimony of Cameron Powell**

**VP Strategic Development, Earth Class Mail**

Prepared for

**Hearings before the Postal Regulatory Commission**

**May 21, 2008**

**Flagstaff, AZ**

**Greeting**

Mr. Chairman, Commissioners, thank you for inviting Earth Class Mail to
speak about the future of the U.S. Postal Service. In my testimony today
I will highlight the single most transformative path the Postal
Service's evolution can and should take. I will not be proposing
fanciful notions, but forms of evolution already taking place -- albeit
without the revenue participation of the Postal Service. I use the term
"evolution" willfully, so as to distinguish a dynamic,
market-responsive, competitive form of change from one in which top-down
solutions are imposed upon the market.

What I discuss here are utterly new technologies and business models
that can transform the Postal Service by reducing its costs; increasing
its options to provide universal service; creating new revenue
opportunities for value-added services, at far higher margins; and
totally and finally aligning the Postal Service with the digital economy
and today's natural environment. While the transformative model I will
discuss is applicable to all recipients of mail, I will focus here on
services that empower people who don't live near post offices or can't
easily or regularly get to them. Indeed, such mail recipients can move
from experiencing some of the worst postal service to some of the best.
Finally, what I propose does not replace or threaten the USPS in any
way. It's an empowering, transitional technology that will in fact
guarantee the Postal Service's survival.

**Introduction**

The U.S. Postal Service is in crisis. Why? For the same reason many
market entities get in trouble: because the customers in its existing
and potential target markets are deeply dissatisfied. Why are mail
recipients so unhappy, and why are more and more advertisers voting with
their wallets in other media? Because the Postal Service is failing to
supply services responsive to customer communication demands in the
21^st^ century.

When executives at many postal services hear the word "customer," they
usually picture a large corporate mailer. This is both telling and
unfortunate. Because posts haven't figured out ways to make money from
mail *recipients*, they fail to innovate for or cater to the unique
needs of a market that comprises one-half of every mailing transaction
and is therefore the single largest source of untapped revenue any
postal service could ever hope to discover. To neglect half of all
participants to mail transactions is like having a continent of gold
beneath your feet and being unwilling to look for a shovel.

I am here to describe that shovel and how to start wielding it just in
time. Our Postal Service must not make the mistake of those who twenty
years ago predicted the worldwide cell phone market would comprise a
mere 100,000 subscribers. The wireless industry has proven that
consumers are willing to pay a trillion dollars a year[^1] to receive
communications exactly as they wish to get them -- from anywhere, at any
time.

I will begin by setting out those problems of the Postal Service that
can be readily addressed by technologies and business models we have
already taken the liberty of proving in the marketplace. Then I will
discuss how these new digital and Internet-based technologies and
business models can resolve much of the USPS' pain, today, and I will
give concrete examples of the many real benefits that would arise from
the Postal Service adopting them.

I.  **The Problems with Mail for the USPS and for Consumers**

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A.  **The Pain**

First, the Postal Service's costs are going up, and show every sign of
continuing to rise unsustainably. This is partly due to the number of
delivery points going up by "up to 2 million"[^2] per year, and fuel
prices skyrocketing. Delivery costs account for 43% of all USPS
expenses.[^3] Counting differently, 79% of the USPS' costs are in labor,
which would not on its face be a problem if new technologies were not
making many of the Postal Service's current job descriptions obsolete.
We are not advocating a reduction of positions at the USPS; rather, we
believe many of its job descriptions can and must be changed to reflect
the market's demand for services today. Delivery, labor -- these costs
are so dominant because it is exceedingly laborious to deliver
communications not by satellite or fiber optic cable but via dense
material objects.

Candidly put, the Postal Service employs personnel to perform tasks on
which mail recipients are increasingly placing less value, such as
sorting paper at a cost of \$25 million per hour, and yet it has no
labor providing the services that 21^st^-century mail recipients do and
would highly value, such as digital check deposit, remotely-accessible
mail communications, mail scanning, and optical character recognition of
scanned mail that permits it to be quickly and cheaply searched for when
it's needed.

Second, net income is declining; the Postal Service in the last quarter
of 2007 reached an historic plateau in revenue, net income, and mail
volume and has been headed downward since.[^4] The Postal Service blames
the economy. But references to "the economy" only beg the questions of
*which* economy; of when the Postal Service will introduce bold,
transformative measures for the economy we currently live in, which is a
*digital economy;* and why its sales and revenue are declining while
other communications media in the same economy are seeing at worst a
slowing of hyper-growth rates.

Most disturbingly, the USPS is losing the most critical war of all, the
war of public perception. Comments like the following are all too
typical, and we have found them to resonate with virtually everyone
outside the mailing industry itself:

> The sad fact is that this historic enterprise \[the USPS\] has become
> a true anachronism; marginalized by new technologies and competitors
> to the point that its net impact on our nation is now a negative one.
> The USPS has devolved into a subsidized deliverer of nuisance mail for
> corporate customers at the expense of taxpayers, consumers and the
> environment. . . .
>
> It continues because the Postal Service is a monopoly protected by law
> and a jobs program protected by its union and Congress.[^5]

We need not look far for reasons why the Postal Service must diversify
its activities and bolster its relevance. In personal communications,
mail has been all but abandoned. In business communications it is
dying.[^6] In business to personal advertising communications,
unsolicited mail has achieved the status of an epithet. And among the
one group of customers it cannot afford to lose, advertisers, mail is
fast diminishing in attractiveness and popularity relative to digital
media. The Postal Service's business model is almost entirely supported
by advertising, and yet the USPS is unsustainably hemorrhaging
advertising dollars from direct mail into online and digital media.
Whereas online advertising is growing at a rate of over 20% per year,
the growth rate of advertising mail had been just above flat even before
the recent downturn.

The Postal Service cannot afford to continue to be perceived as
anachronistic or irrelevant. This is another way of saying it cannot
survive in its current form, but must adapt, and quickly.

B.  **A Glimpse at Evolution**

The Postal Service must adapt by joining the digital and Internet
revolutions in a meaningful way. It has even recognized this fact: "eBay
and DVD rentals by mail," it writes in its 2007 Update to the "Strategic
Transformation Plan, 2006-2010," "have demonstrated that *the
convenience of mail can be successfully combined with the convenience of
online services*. The Postal Service will continue to leverage the
benefits of delivery and pickup at every address to *create new
applications for the mail*."[^7] The Postal Service can most
transformatively combine the convenience of mail and online services by
offering a superior version of what private companies are already
offering today -- 21^st^-century mail-receiving services that put postal
mail online for mail recipients such as:

1.  Rural residents on the most costly rural routes

2.  The 20 million customers of P.O. Boxes

3.  Countless General Delivery customers for whom waiting-lines have
    reportedly been getting longer in recent years[^8]

4.  Highly mobile mail recipients such as college students, road
    warriors, and military personnel

5.  Populations with other types of critical need, such as battered
    women seeking anonymous addresses, the homeless, and both the
    victims of disaster and the relief personnel who relocate
    temporarily in order to serve them. (Our diligent public servants at
    FEMA have already looked into online postal mail as a solution, but
    they need USPS' help).

6.  Legitimate individuals and businesses around the world who would pay
    well for U.S.-based mailing addresses

7.  And eventually, large enterprises for whom moving paper to people or
    people to paper is a mind-boggling waste of direct costs and lost
    productivity (witness corporate America's early adoption of email
    and PDAs).

In order to fully comprehend the benefits of the new model we propose,
let me briefly highlight the contrastingly limited services offered
today.

1.  **Low Revenue**.

Consistent with the economic axiom that people pay for what a service is
worth to them, the Postal Service today earns only \$3 of revenue per
P.O. box per month. The Postal Service does not charge at all for many
P.O. boxes because it requires mail recipients to use them. If users of
a service pay little or nothing for it, the value they attach to that
thing cannot but suffer. To a business analyst, it is a serious problem
that the USPS has no real near-term business plan for providing services
to mail recipients that large numbers of them are willing to pay for.

2.  **Unavailable Boxes**; **Narrowly Restricted Target Market**

Sometimes you can't rent a P.O. box even if you live nearby. P.O. boxes
in many desirable urban locations are available only on a waiting-list
basis. In addition, it's expensive, cumbersome, and complicated for a
customer to have numerous P.O. boxes.

Even worse for the revenues of the Postal Service, its target market for
any given P.O. box does not include the entire world, or even all of the
U.S. Rather, *you can only use one if you live and remain virtually next
door*.

3.  **Inconvenient and Time-Limited**

If you do manage to get a P.O. box and you do live or work near it, the
hours during which you can manage your mail are still limited to certain
business hours -- the hours most people must work. If you work or do
anything else during those hours, you are terrifically inconvenienced in
trying to access your mail.

When all residential or P.O. Box customers must leave town on business
or for personal reasons, they have no convenient and cost-effective way
to manage your mail. In 2008, in the age of the Internet and digital
imaging and a global community, and in the face of existing technologies
already employed in the private sector, these have become inexcusable
limitations. Imagine having a cell phone that works only in your home
and you will have an idea of how obsolete is the enforced choice of
paper that arrives at a particular spot.

4.  **Driving to or Missing Information**.

You have to take up time and money, use fuel, and emit carbon emissions
to drive to a P.O. box or to pick up mail on General Delivery. Sometimes
you drive and nothing is there. Other times you don't drive and
something critical is there, and will continue to sit there until you
find time to drive again. In both cases, the customer is always wrong.

5.  **Mail Forwarding Services: Charge Us to Ship What We Don't Want,
    and Infrequently Ship What We Need**

Mail forwarding services cannot compare to mail delivered online. Many
services will forward mail only once a week. They will either charge the
customer for the cost of shipping unwanted mail or attempt to decide for
the customer what the customer wants. And because the services are
highly manual, they are more expensive than they need to be.

6.  **Environmentally Unfriendly**

On its beautifully-designed new web page,
[www.usps.com/green/](http://www.usps.com/green/), the Postal Service
acknowledges the convenience, cost-reduction, and environmental
stewardship that result from people *not* having to make trips to the
post office:

> *Make the change. Use us online. Use USPS.com and save energy. And
> money too.*

Recipients of mail can use a nifty calculator to tally up the cost and
environmental impact of not driving to the post office. For example, if
you travel 5 miles to the post office, make 20 trips a month, and get 19
mpg on your car, the USPS tells you that:

> *If you used USPS.com and skipped trips to the Post Office™ you would
> save time and over a year an estimated:*
>
> *Pounds of CO2: 2085*
>
> *Gallons of Gasoline: 117*
>
> *In Fuel Costs: 374*
>
> *This small step alone would lower your average carbon footprint as a
> driver by: 17%.*

Unfortunately, this small step to save time, money, and emissions cannot
be taken by any of the USPS' 20 million P.O. box holders, who together
may well make about as many trips to the post office as the rest of the
U.S. combined, or by its many General Delivery customers.

II. **The USPS' Solutions: Overly Incremental**

The Postal Service is taking steps in the right direction, but it is
leaps that are both required and possible.

For example, the Postal Service lists in its Strategic Transformation
Plan several steps it has taken to help consumers "do any number of . .
. common postal transactions --- without leaving their home or office."
An eBay partnership allows "tens of thousands of small businesses" to do
business "without \[being\] require\[d\] to make a trip to the Post
Office." Click-N-Ship allows customers to print postage and labels
online and Carrier Pickup provides online notification. These services
are each indeed a "breakthrough in convenience" that is helping the
Postal Service to "meet its customers' ever-increasing need for
convenient access without relying exclusively on traditional, and
costly, 'brick and mortar' solutions."[^9]

But although "\[c\]ustomers have responded enthusiastically" to such
services, "the Postal Service believes it has only begun to scratch the
surface.[^10] We agree. Compared to what the mighty Postal Service is
capable of, and in light of both the crisis facing it and the
availability of proven new technologies and business models, these
measures bring cocktail umbrellas to a hurricane.

In their introduction to the Plan, Chairman of the Board James C. Miller
III and Postmaster General & CEO John E. Potter write: "We cannot
predict when or how today's technology will be overtaken by more
advanced technologies. . . . But we can do our best to prepare for the
impact of these external factors." To these sentiments I issue an open
invitation: Let private, innovative enterprise help you predict; let us
help you prepare. Let us help you do your best. Give us forums to
display truly novel technology so that your predictions may be based on
or even replaced by reality.

III. **Real-World Solutions from Innovation, Private Enterprise, and
     21^st^-century Technologies**

We propose to simultaneously and elegantly address all of the Postal
Service's pains: the increasing costs, the declining sales and net
income, and the prior-century inconveniences it imposes on P.O. box
holders, General Delivery customers, college students, military
personnel, rural residents, frequent travelers, itinerant workers and
road warriors, foreign-based businesses, and many other mail recipients
-- including enterprises. We even hint at a game-changing online
advertising model that already has European posts in action mode.

We propose that the Postal Service give mail recipients the choice they
demand over how they receive and interact with their postal
communications, just as the digital applications of email and PDAs
empower recipients today. Today, the email revolution, in addition to
being one from which the Postal Service is not profiting, is incomplete
in one respect: email cuts costs and empowers people with convenience
*only when the sender chooses that medium*. But as every rural P.O. box
holder and large enterprise knows, if the sender chooses paper, the
inconvenience and document-management costs begin to mount. Happily, by
virtue of historical circumstance, the Postal Service is better suited
than any company in the world to restore mail recipients' control over
their postal communications, including by giving them the *choice* to
receive and manage their postal mail digitally.

We're optimistic. "Throughout its history the Postal Service has
continually adjusted its mail processing networks as customer needs
changed and new technologies became available."[^11] Mail recipients'
needs began changing decades ago, and the technology that responds to
their needs is online postal mail, with supporting technologies in
digital check processing and automated storage and retrieval sortation
technology.

A.  **Remotely-Accessible, Online Postal Mail**

As used by the U.S. Postal Service, sub-contractors, or private entities
in competition (for the sake of simplicity, I will refer to them
collectively as "the Postal Service"), online postal mail would work as
follows.

First, mailers, still confronting the choice of paper versus electronic,
would choose paper and deposit the mail pieces in a drop box or deliver
them to the post office just as they do today.

Second, the USPS would collect the full stamp revenue on every mail
piece in the system.

Next, for users of online postal mail who would have chosen one of
thousands of P.O. Box addresses or street addresses offered by the
Postal Service, things would change a bit. Either at the destination
post office (prior to the final mile of delivery) or, better yet, at the
point of mailing (or the U.S. entry of an international piece), the
sealed envelopes would be run through a unique high-speed mail processor
and scanned in full color on both sides, and a bar-code affixed. The
envelope images would then be piped to a secure Internet or email
account that is accessible anywhere in the world, and at any time of
day, by paying recipients all over the world. The recipients would then
have a degree of convenience, and power of choice, for which they would
pay per-piece rates many times the price of a First-Class stamp. I know
this because, from 157 countries around the world, they are already
paying my company. Like PDAs, a digital interface for handling mail
communications is a cash machine of customer-empowering options.

![](media/image1.jpeg){width="6.496527777777778in"
height="3.877083333333333in"}

Using the unique feedback loop that is the Internet, the recipients
could then inform the Postal Service in real-time that the mail be
delivered physically as planned or, if the recipients are temporarily
elsewhere, they can ask for it to be conveniently forwarded to wherever
they are -- all for additional revenue to the Postal Service and private
couriers. Similarly, recipients can also request that the contents of
the mail be scanned by security-cleared personnel[^12] operating in a
video-witnessed, clean-room environment, for additional revenues related
to scanning, faxing, or storage of such digital media. The recipients
can then act on the information immediately, just as they have come to
demand following the digital revolution: they can respond, forward by
email, upload, print, sign with an electronic signature, archive, and so
on.

Or the recipients can do what they do today, and what, frankly,
technology and mailing-list removal services are increasingly allowing
recipients to do with their mail with or without leave of Congress or
state legislatures: dispose of the mail piece without opening it. That
ability is here now, it is real, and no amount of legislating or surveys
will turn back the tide.

But with online postal, the Postal Service and mail advertisers could
reap benefits simply unavailable in recipients' offline trash disposal
today. First, allowing poor prospects to digitally opt-out could help
marketers target prospects better and increase their response rates.
Second, the Postal Service could actually begin to solicit opt-ins to
desired advertising, so that future ads in the recipients' online
mailboxes would all be solicited and attract higher response rates.
Third, the Postal Service could offer real-time data on the success of
campaigns, including who does not view ads and even why. Further details
are in the margin and in our book.[^13] Fourth, the Postal Service could
offer advertisers and mail recipients highly effective digital and video
advertising in a push format that scales beyond anything search engines
can do. Fifth, when envelopes are scanned at the point of mailing, the
USPS will not have had to put the pieces through the additional dozen or
so sortation passes of the average mail piece, nor truck and fly and
drive the mail to its addressee. Finally, the mail can be disposed of
with hyper-security through shredding; or the mail can be recycled at a
rate many times higher than the 22% of the time it is recycled today.

B.  **The Impact of Online Postal Mail on Consumers and the Postal
    Service**

What would an online postal mail service, as sponsored, facilitated, or
even run by the USPS, mean for consumers and the Postal Service?

-   An unlimited supply of "mail boxes" at the most desirable addresses
    -- even street addresses -- in the most desirable cities in America.
    The Postal Service could begin to leverage one of its greatest
    unused assets, the downtown real estate it owns in every city in
    America.

-   Dollars per *piece* in revenue to the USPS, at far higher profit
    margins than today.

    -   Or, for the same reason the USPS decided to give away P.O. boxes
        to rural residents -- in order to reduce delivery costs -- the
        USPS could markedly reduce the price of online postal mail for
        some customers, perhaps in exchange for their accepting more
        advertising (that is, simultaneously cut costs and increase
        revenue).

-   A reduction of the USPS' upwardly-spiraling delivery costs. How? Our
    customer behavior data show that just as people rarely print out and
    save emails, mail recipients rarely require their mail physically.
    The scan is usually enough. If envelopes and contents are scanned by
    USPS or contract labor at the drop-off point, the Postal Service
    would rarely need to physically move the mail beyond the post office
    of origination. Even if the envelopes were scanned at the
    destination post office (as we effectively do today as a CMRA), the
    last-mile savings would be tremendous.

-   By using automated storage and retrieval technologies that we
    designed while thinking way outside the typical sorter box, the
    Postal Service could cut by at least half the \$25 million per hour
    it spends on sorting letters over and over and over. For many
    postcards, letters, and flats, only one (if intra-city) or two (if
    inter-city) sorts would be necessary.[^14]

-   The USPS could attract customers in over 230 countries around the
    globe who want a presence or address in the U.S., for a variety of
    legitimate reasons.

-   Homeless people and General Delivery customers with Internet access
    (from home, a neighbor's, a library, or *even a Postal Service*
    *lobby*) could access their mail, in many cases without a trip to
    the post office.

-   Rural residents could avoid many trips to the Post Office. I have
    relatives in rural northwestern Colorado ("It's not the end of the
    word, but you can see it from here") who must drive 40 miles to find
    out if they have anything in their P.O. Box worth driving for. These
    people have their own affairs to attend to. If they're
    Internet-connected, they can do so, while the Postal Service
    provides a level of service previously undreamed of.

-   Emergency relief workers and disaster victims can greatly benefit
    even from temporary access to their postal mail online.

-   The Postal Service can vastly improve and attract far more to
    customers its Premium Mail Forwarding service, and in exchange, earn
    far more than the \$60 per year per customer it has earned so far,
    and at far lower cost and higher margins. Should the Postal Service
    offer a service costing \$10 per week so that customers can have all
    physical mail reshipped on airplanes once a week -- including the
    large percentage not wanted in paper form at all -- or \$10 per
    month to have much of it scanned? The Postal Service claims a
    reduction in its free mail forwarding is a hidden upside, but if
    people had one address forever, like their one cell number or email
    address, the Postal Service could save \$2 billion a year in mail
    forwarding and billions more in UAA mail.

-   Slash the USPS' environmental impact. When less mail must be
    physically delivered, or not as often, the Postal Service uses less
    gas (and electricity) and its emissions go down. And when mail is
    recycled on command, recycling rates zoom from around 22% to over
    90%. Then the Postal Service can *really* put some teeth into
    messaging such as this, from its 2007 Annual Report:

> How can our customers go green with us? Save the trip. Our online
> options bring the Post Office to any home or business . . . When it
> comes to the last mile to the front door, we can take care of delivery
> and pickup, helping to create healthier neighborhoods.

IV. **Discussion of Selected Benefits Available in the Near-Term**

There are so many advantages of online postal mail that space permits
elaboration of but a few.

A.  **Fulfilling the Postal Service's Commitment to Align with Consumer
    Behavior**

The Postal Service's Plan sets out, with some concern, trend after
trend, but stops well short of transformative solutions to address them.
Internet-accessible mail is the inevitable, transformative solution.

For example, the Postal Service points out that the U.S. has a high
Internet penetration and is likely to witness an increase in "the use of
online alternatives to mail".[^15] "\[T\]he Internet is fast becoming
\[consumers'\] primary source of information," it observes.[^16] Under a
section in its Plan called "Strategic Challenges and Trends," the Postal
Service says, "More households are comprised of single heads of
households or working couples, often with longer work hours, uncertain
schedules, longer commutes, and frequent travel. *Convenience is a
critical service factor in accessing and receiving products and
services*."[^17] Customers, it adds later, are "time-starved."[^18]

"Customers are more likely to seek and compare information from a number
of sources, increasingly using the Internet. *They expect to be able to
access information and manage their relationships with businesses, at
least in part, on the Internet*." They expect "readily accessible,
relevant information to make better decisions" and want "enhance\[d\]
access and ease of use."[^19] "The 'Baby Boomer' generation will be
healthier, wealthier, live and work longer, *and be more mobile* than
previous retiree generations."[^20]

Every one of these trends is fully and solely answered by putting postal
mail online. The good news is that the Postal Service says it is
committed to responding to actual market demand:

> To stay abreast of rising customer expectations, the Postal Service is
> committed to incorporating new features and technologies to further
> enhance customer access. It will pursue strategic alliances where
> partners can help speed development and/or reduce shared costs. It
> will continue to place special emphasis on enhancing online and
> self-service capabilities to further reach out to customers where they
> live, work, and shop.[^21]

B.  **Slashing Costs by Centralizing Deliveries -- and a
    Counter-Productive Process**

As noted, even if the Postal Service scanned envelopes only near their
final destination, the resulting consolidation of destination addresses
would act as a powerful counter to the increasing number of delivery
points. But scanning envelopes at the post office of origin would create
unprecedented savings in sortation costs, trucking, flying, and fuel.

Whether the Postal Service performs these tasks or simply removes
unreasonable barriers to Commercial Mail Receiving Agencies performing
them, the Postal Service benefits enormously. The Postal Service itself
"has previously recognized the value of outsourcing last-mile delivery
(albeit with political ramifications). *CMRAs can do this job far
better*: at no cost to the postal service, which must pay nothing for
what is effectively "outsourcing", and without any political cost
whatsoever, because no USPS jobs are implicated. It's a win-win."[^22]

What is decidedly *not* a win-win is the Postal Service's Form 1583
process, which requires would-be CMRA customers to designate the CMRA
their mail-receiving agent. In the age of the Internet, digital
signatures, and identity verification technology far beyond the
capability of any notary, the Form 1583 requires, inconsistently with
the mandates of the federal E-SIGN Act, that CMRA customers print out
paper, leave their home or office to find a notary who will glance at
their ID, and apply ink signatures before that notary. Unfortunately,
the process withholds the conveniences of the Internet from law-abiding
customers who could have their identity more quickly and yet
dispositively authenticated by identity-verification technologies. At
the same time, as any CMRA can tell you, any college student or
credit-card thief with Photoshop can create before breakfast the IDs
necessary to hoodwink even a diligent notary.

In sum, the identification requirements do not adequately stop the fraud
they were intended to prevent, and yet erect hurdles and delay for
legitimate customers seeking to centralize their mail delivery. This
counter-productive bureaucracy is preventing scalability of the very
outsourcing of last-mile deliveries rightfully sought by the Postal
Service. We have extensively studied a superior solution that responds
to the USPS' real interests behind the Form 1583 process, and we look
forward to presenting it to the right people there.

C.  **Reduce COA and UAA Costs**

The Postal Service experiences significant costs of dealing with
change-of-address orders and undeliverable mail:

> Each year, 45 million change-of-address (COA) requests are submitted,
> roughly equivalent to the combined populations of New York, New
> Jersey, and all of New England.[^23]
>
> Estimates of the amount of mail that is undeliverable-as-addressed
> (UAA) are in the billions of pieces, resulting in well over \$1
> billion in postal costs each year and enormous waste and unnecessary
> expense for mailers.[^24]

Putting postal mail online would eliminate these costs for mail
addressed to participating mail recipients. As long as customers have an
email address or a place to log in, they will receive their mail, and
they will be able to effortlessly communicate, via their profiles, their
current physical address.

For example, we have a network of over 20 addresses around the country.
Our customers travel the world and move frequently, yet never, from one
of our customers, does the USPS need to see a COA, nor lose track of
mail recipients' current address -- because our customers' addresses are
always *our* addresses, which do not change. As mandated by the Plan, in
our system address hygiene is optimized, undeliverable mail in our
system does not exist, and distribution performance is greatly enhanced.

D.  **Online Postal Mail Cuts Costs for Mobile Workers: A Military Case
    Study**

Picture our soldiers in Iraq. Every week this country sends 12 Jumbo
747s or equivalent, chock-full of packages and letters, to Bahrain. Some
of it is morale-boosting. Some is financial and time-sensitive. The rest
is unwanted in any form. The mail is unloaded from the 747s in Bahrain
and transferred to private courier jets. Then the courier jets fly to
Baghdad. In Baghdad, the mail is again unloaded and reloaded onto
convoys, which are guarded by expensive military contractors all the way
to the front lines. And then, unbelievably, 30% of that mail must be
reloaded, trucked, and flown all the way back to the United States. The
expense of back-and-forthing this redirected mail is astronomical.
Moreover, of the mail that remains behind, our statistics of consumer
user behavior over a period of 25 months suggest that half to two-thirds
of the letter mail is thrown out as unwanted without being read (another
25-50% could be scanned, and therefore still not delivered physically).

Why is 30% of the mail wastefully sent overseas and then back again?
Because the soldiers have been redeployed, and of course, lacking an
Internet feedback loop, had no way to inform the Postal Service or
anyone else. The result is that soldiers receive important notifications
late, and are continually hit with late fees and nicks on their credit
reports that make re-entry into civilian life unduly difficult. Our
troops deserve better, our taxpayers deserve better, and online postal
mail is the solution. A soldier can wield his mouse to say, "Thanks for
the notice, but I'm back at Ft. Bragg. Can you ship that care package
and my credit card bills here, before the cookies go stale and the late
fees and interest start to pile up?" I'm pleased to report that
dedicated personnel at our Department of Defense are actively studying a
solution on their own initiative, but like FEMA, they could use the
USPS' help.

E.  **Variable Speed of Delivery Permits Both Fewer Deliveries Per Week
    and Value-Added Speeded-up Delivery**

We have observed every click on the mail usage of thousands of customers
for over two years. We see that most mail is (1) unwanted in paper form
and (2) not wanted in any form as quickly and therefore as frequently as
the USPS delivers it. When the technology exists to let informed
recipients provide instructions for the Postal Service to deliver that
physically-unwanted mail *fewer* than six times a week, it is enormously
wasteful for the USPS to continue to deliver all pieces six times a
week. Let's look at rural residents' behavior toward mail delivered in
an online format:

-   Some pieces would be recycled upon a view of the envelope image

-   Some pieces would be opened and confidentially scanned into a PDF
    and over 90% of the leftover paper recycled

-   A small minority will be desired in physical, paper form; that is,
    the rural resident will want the paper delivered -- *but almost
    never, according to our statistics, do they want such mail
    [urgently]{.underline}*. The average consumer or small business user
    in our customer base takes four to five days even to tell us what
    they want done with a piece in their inbox!

The implication? The Postal Service need not be locked into a certain
frequency of delivery in hard-to-reach areas, while mail recipients
could actually have service superior to what they have today. For
example, rural residents or offshore workers could select whether they
wanted a piece overnight (for extra revenue), in 2 days' time -- or,
more likely, in 3 or 5 or more days' time, thus resulting in fewer stops
and deliveries per week, less vehicle idling time, lower fuel costs, and
lower emissions. Why only let *mailers* decide how fast they want
communications to be received and how much they're willing to pay for
varying service levels? The Postal Service could offer *recipients*
service levels that vary from those for which it may charge more to
those that are slower but come with incentives such as free or
reduced-price monthly subscriptions and the satisfaction of helping the
environment.

F.  **Improved Disaster Recover and Enhanced Business Continuity**

Disasters are truly catastrophic not just for individuals but for the
economy. Half of companies without business continuity plans *go out of
business* within 2 years of a disaster.[^25] In the digital era, mail
communications must be able to survive damage to Postal Service
facilities as well as to recipient locations. Yet today, mail
communications totally lack such resilience.

-   On September 11, 2001, the terrorist acts in New York City
    significantly disrupted mail delivery to the world's financial
    center, arguably costing the economy billions of dollars.

-   In 2005, Hurricane Katrina wiped out mail delivery to 820,000 homes
    and businesses. In today's mail system, if a recipient location
    becomes unusable, the USPS is simply unable to adapt quickly to the
    new location of the addressees.

-   A full month after Hurricane Katrina, 126 post-office facilities in
    four states were still partially or fully offline.

-   We were informed by FEMA personnel, but have not verified, that in
    warehouses outside New Orleans, 25 million pieces of mail piled up
    every day, never to be delivered, but shredded instead.

The number sounds high, but whatever the actual figure, for the same
reason you won't ever hear disaster survivors complain that their emails
are inaccessible or lost forever, online postal mail solves *all* of
these problems for participating users. Online postal mail delivery
facilities and data centers are fault-tolerant and redundant --
designed, like the Internet, with "nodal topology" and hot failover
features. Delivery points are instantly changeable. The Postal Service
would have total visibility into every piece, like complete air-traffic
control. Participating recipients could access their mail from any
location. The result is that businesses would become productive again.
Invoices, checks, and contracts would be received. The economy would
move forward. Survivors of a disaster in a place like New Orleans could
log on in Houston or Atlanta and continue to get their FEMA checks,
their Social Security checks, and other documents critical to their
lives.

*This* is mail security. *This* is national security.

G.  **24-Hour Automated Mail Kiosks**

Recipients of online postal mail sometimes do want the physical piece --
a package, say, or, for a few more years, physical DVDs. From their
online command center, recipients can direct that the mail be delivered
to automated kiosks at fixed sites or franchise or contract locations,
all equipped with automated storage and retrieval systems similar to
those one sees in a software vending machine. These kiosks can be
conveniently accessed at any time of day, any day of the week -- a win
for consumers who have difficulty with the hours of post offices -- and
yet would reduce last-mile deliveries for the Postal Service.

H.  **The U.S. Postal Service: Trusted Provider of Secure
    Communications**

The next-generation of online postal mail would allow postal mail to be
received into any email client, whether Outlook or gMail, and allow the
Postal Service to transfer its trust brand online. By means of encrypted
connections between customers and even other posts, the Postal Service
could charge a small fee to deliver confidential documents securely
between participating users, whether email or scanned postal mail, and
arguably much more securely than placing paper in mailboxes.

**Conclusion**

As the many privatized posts are coming to realize, postal services can
evolve and even survive only by ceasing to view themselves strictly as
logistics and transportation enterprises. Instead, they must adopt the
mindset that they are trusted carriers of *communications* -- of any
form desired. Of course there's a transitional period. Just as auto
manufacturers cannot go all-electric overnight, posts cannot jump
straight to a digital paradigm. To get from gas to electric, or paper to
digital, you must go through a hybrid stage during which you offer both.

Fortunately, the Postal Service has available to it, today, a hybrid
paper-digital technology far more viable than the analogue available to
auto manufacturers. All it need do is take action on the commitments to
innovation and transformation expressed in its own Strategic Plan and
public mission statements. Those of us in the blast furnaces of
innovation will be waiting.

We have tested online postal mail already -- for every type of mail,
every mail recipient from individuals to enterprises, and customers in
157 countries and counting -- but the USPS may wish to study the
viability for itself. Pilot projects could be set up in high-tech areas
full of early adopters, for oil derrick workers, the military, merchant
marines, and geographic locations that are extremely expensive to
deliver to six days a week. Is there any reason the Postal Service could
not start today?

[^1]:
    # NOTES

    # **^?^** "Mobile Set to Become a Trillion Dollar Industry in 2008," *Cellular News*, March 5, 2008 ([**http://www.cellular-news.com/story/29725.php**](http://www.cellular-news.com/story/29725.php)). 

[^2]: *Strategic Transformation Plan 2006--2010* ("Plan") at 6.
    "Delivery remains the largest cost center and will be the focus of
    intensive efforts to find new savings." *Id*. at 2.

[^3]: Plan at 27.

[^4]: "Total mail volume in the second quarter of FY 2008 was down 3.3
    percent," and 3.1 percent for the fiscal year. Statement of Postal
    Service CFO Glen Walker to the Mailers Technical Advisory Committee
    (MTAC), May 2008, cited in Postcom, "Postcom Postal Policy Report,"
    Issue No. 02-08 May 6, 2008.

    The USPS has seen four straight quarters of volume decline in
    Standard Mail and seven in First Class Mail. The decline of Standard
    Mail and flats is actually accelerating. Mr. Walker says, "There is
    no turnaround in sight." Says Postcom: "There is simply no way to
    sugar-coat it." Source: Postcom, "Postcom Postal Policy Report,"
    Issue No. 02-08 May 6, 2008.

[^5]: Greg Autry and Brian Bishop, "Do not call, do not spam, do not
    mail," Friday, May 9, 2008
    (<http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/08/ED3J10ISAN.DTL>).

[^6]: Today, two-thirds of all non-cash payments are made
    electronically, and the number is declining at 6.4% per year.
    Source: Federal Reserve Financial Services Policy Comte.
    (<http://www.federalreserve.gov/newsevents/press/other/20071210a.htm>).
    In Europe already, almost no checks are sent by mail.

[^7]: 2007 Update the Strategic Transformation Plan at 2-3 (emphases
    added).

[^8]: "The U.S. Postal Service doesn\'t track how many people get
    general delivery, but local mail officials say the general delivery
    lines have been getting longer in the past few years - and so are
    the stacks of mail for the service." Kathleen Lucadamo, *Daily
    News*, "Homeless get mail with general delivery," December 16th 2007
    (<http://www.nydailynews.com/news/2007/12/16/2007-12-16_homeless_get_mail_with_general_delivery-4.html>).
    Unfortunately, General Delivery is not addressed at all in the
    latest Plan.

[^9]: ^?^ Plan at 17.

[^10]: Plan at 17.

[^11]: ^?^ *Id.* at 36.

[^12]: ^?^ These personnel may be private contractors. Our own
    video-witness technology, Documentary™, ingeniously allows every
    customer to log-on to a secure Internet site to view the entire
    process of his or her mail being scanned, and the scanning employees
    know it.

[^13]: ^?^ In fact, to look just a few more years into the future, the
    USPS holds within its hands the power to staunch the flow of its
    advertising-related revenue to other media once it begins to give
    advertisers exactly what they want, according to the new
    expectations carved in stone by online media:

    A **pay-per-action model** in which, rather than paying for
    advertising whose efficacy and response are largely untrackable,
    advertisers will pay for *results*, and will pay more for better
    results.

    **Total transparency in A/B splits** so that advertisers may
    *quickly* test and optimize ad campaign images, colors, and text.
    [It's already happening]{.underline}: e.g., Google "hopes to turn
    YouTube from an online video site into a place where marketers can
    test their messages." -- *The New York Times*, March 27, 2008

    **Time of day targeting** that only inserts ads when they will get
    peak response.

    **Fine targeting of mail recipients** who have already recently
    accepted ads in same product class for higher response rates.

    **Shorter sales cycles**.

    **Environmental-friendliness of the media**. For all the efforts of
    some to paint servers as energy hogs, there is simply no comparison
    between the energy to distribute and store digital images and the
    energy required to plant, water, grow, and harvest trees, to make
    paper of them, to put ink on them, to sort letters at a cost of \$25
    million per hour, to transport paper hundreds or thousands of miles
    (wanted or not), to move that paper around an organization that
    usually prefers to receive media in digital form, and to truck that
    paper to a landfill or recycling center.

    Once the USPS begins delivering postal mail online, it can fulfill
    every single one of these expectations. See "Earth Class Mail: Save
    Time, Money, and Our Planet by Bringing Postal Mail Online," at
    [www.earthclassmail.com/earthclassmail](http://www.earthclassmail.com/earthclassmail),
    for more details.

[^14]: ^?^ This is explained in more detail in our book, "Earth Class
    Mail: Save Time, Money, and Our Planet by Bringing Postal Mail
    Online," available in print from Earth Class Mail or on our website
    at
    [www.earthclassmail.com/earthclassmail](http://www.earthclassmail.com/earthclassmail).

[^15]: ^?^ "The Internet now reaches more than 71 percent of households
    and penetration is expected to increase. High-speed broadband makes
    Internet-based services easier to use and will likely increase the
    use of online alternatives to mail." Plan at 7.

[^16]: *Id*. at 8.

[^17]: *Id.* at 55 (emphasis added).

[^18]: *Id*. at 61(emphasis added).

[^19]: *Id.* at 9 (emphasis added).

[^20]: *Id*. at 8 (emphasis added).

[^21]: *Id*. at 60.

[^22]: *Id*. at 27 (emphasis added)

[^23]: ^?^ *Id*. at 62. In addition, millions more are not filed that
    should be, with expensive results.

[^24]: 2007 Update at 35.

[^25]: ^?^ Source: Timothy Crowe, Department of Homeland Security, COOP
    Conference, August 2007.