[Federal Register: November 15, 2001 (Volume 66, Number 221)]
[Notices]
[Page 57492-57494]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15no01-105]

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POSTAL SERVICE


Plan for Secure Postage Meter Technology

AGENCY: Postal Service.

ACTION: Notice of final plan.

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SUMMARY: The Postal Service has already completed the first phase of a
plan to remove insecure postage meters from use with the
decertification of mechanical postage meters. The second phase of the
plan, the retirement of manually reset electronic meters, is now
underway in accordance with the notice published in the Federal
Register on December 13, 2000 (Volume 65, Number 240, page 77934-
77938). This notice publishes the final plan for phases III and IV of
the Postal Service's Plan for Secure Postage Meter Technology. There
may be additional phases of the plan beyond phase IV. Upon completion
of all phases of the plan, meters in service will offer enhanced levels
of security, thereby greatly reducing the Postal Service's exposure to
meter fraud, misuse, and loss of revenue. These new meters also provide
advanced customer features and convenience.

DATES: This plan is effective November 15, 2001.

[[Page 57493]]

FOR FURTHER INFORMATION CONTACT: Wayne Wilkerson by fax at (703) 292-
4073.

SUPPLEMENTARY INFORMATION: In 1995, the Postal Service, in cooperation
with all authorized postage meter manufacturers, began a phaseout of
all mechanical postage meters because of identified cases of
indiscernible tampering and misuse. Postal Service revenues were proven
to be at serious risk. The completion of this effort, which resulted in
the withdrawal of 776,000 mechanical meters from service, completed
phase I of the Plan for Secure Postage Meter Technology. Phase II of
the plan, the retirement of electronic meters that are manually set by
Postal Service employees, is now being implemented. Phases III and IV
of the plan are described in the current notice.
    The proposed plan for phases III and IV, describing the retirement
of meters with nondigital or letterpress indicia, was published for
comment in the Federal Register, August 21, 2000 (Vol. 65, No. 163,
page 50723-50724). The Postal Service requested that comments on the
proposed plan be submitted by October 5, 2000. The Postal Service
received four written comments from postage meter manufacturers by the
closing date. One comment, from an industry association, was received
after the closing date but was still considered in our response.
    The Postal Service gave thorough consideration to the comments,
modified the proposed plan as appropriate, and now announces the
adoption of the final plan. It is the Postal Service's intent to make
this an orderly process that minimizes impacts on meter users and the
meter manufacturers. Publication of the final plan for phases III and
IV gives both postage meter manufacturers and postage meter users ample
time to make timely and intelligent decisions on the selection of
postage meters and associated mailing equipment.
    The Postal Service's evaluation of the comments follows. The final
plan, as revised, follows the discussion of comments. The comments are
organized to reflect common topics addressed by the commenters.

Discussion of Comments

1. Timetable for Meter Retirement

    Manufacturers questioned the timetable for withdrawal of
letterpress meters, suggested various alternatives, and requested a
``date certain'' by which meters already placed with customers must be
removed from service.
    The Postal Service reviewed the various suggestions and revised the
withdrawal timetable to ensure that all users will have appropriate
technology available to meet their mail processing needs. The plan adds
dates for customer notification to ensure ample time for customers to
make timely and intelligent decisions on replacement meters and adds a
date by which meters already placed with customers must be removed from
service.

2. Realizing Return on Investment in Meter Technology

    Meter manufacturers and the mailing industry association expressed
concern that the early retirement of meters using letterpress
technology would prevent them from receiving adequate return on their
investments. The comments noted that the proposal must be sensitive to
the requirements of users of high-volume/high-speed meters and the
unique relationship these mailers have with the Postal Service, since
these users tend to make longer-term determinations regarding postage
and metering technology needs.
    The retirement plan schedule gives customers 5 years from the date
of notification to the date that nonenhanced, letterpress (phase III)
meters already placed must be removed from service. Any newly placed
phase III meter placed in accordance with the schedule may remain in
service for at least 4 years before it must be removed. Users of
enhanced letterpress (phase IV) meters have 5\1/2\ years from the date
of notification to the date that phase IV meters already placed must be
removed from service. Any newly placed phase IV meter placed in
accordance with the schedule may remain in service for at least 4\1/2\
years before it must be removed. For manufacturers, publication of this
notice provides at least 5 years to recover investments on nonenhanced
letterpress technology, and over 7 years to recover investments on
enhanced letterpress metering technology before the units must be
removed from service.

3. Security of Meters

    One industry association asked for information to support the
Postal Service claim of increased security benefits from postage meters
that have a timeout feature and use digital indicia, and for
information on the actual risk to Postal Service revenue from meters
that print indicia using letterpress technology, with or without a
timeout feature.
    The presence of a feature that disables letterpress meter
operations when certain preprogrammed criteria are met increases its
security but does not compensate for the insecurity inherent in
letterpress technology. The printing die used for letterpress indicia
is open to tampering in ways that the process used to print digital
indicia is not. Digital printing technology also enables the printing
of unique indicia, which permits the Postal Service to establish
enhanced processes to identify counterfeit indicia.

4. Communications with Meter Users

    One postage meter manufacturer was concerned about inadequate,
misleading, or confusing communications to meter users, and suggested
that phases III and IV be combined to avoid possible confusion that
might arise from having multiple retirement dates.
    The retirement schedule for phase III meters will differ from that
for phase IV meters. The Postal Service is working to ensure the
integrity of the meter retirement process with expeditious, accurate,
and informative communications to postage meter users, Postal Service
employees, and postage meter manufacturers, and it expects
manufacturers to provide accurate, clear, and timely information to
their customers.

5. Multiple Dates for Completing the Retirement of Letterpress Meters

    One manufacturer suggested that the plan be sensitive to the needs
of those mailers with multiple meters with different lease expiration
dates.
    The plan provides for one date by which all nonenhanced letterpress
meters must be withdrawn from service, and one date by which all
enhanced letterpress meters must be withdrawn from service.

6. Increased Cost

    One industry association expressed concern with the increased cost
of printing digital postage indicia compared with the cost of preparing
mail using letterpress metering technology, as well as increased
equipment costs, especially the need for new mailing equipment if the
new digital meter is incompatible with the mailer's existing mailing
equipment.
    The Postal Service recognizes that there may be a slight increase
in cost initially but believes this increase in cost will diminish as
competition increases. Any additional costs for users are determined on
a manufacturer-by-manufacturer basis and not by the Postal Service.
Customers have choices in a competitive meter marketplace if they are
not satisfied with the costs of a given manufacturer's technology.
Individual

[[Page 57494]]

meter manufacturers can provide detailed information about their
products and services.

7. Classification of Meter Models as Nonenhanced or Enhanced

    Some meter manufacturers questioned whether specific meter models
would be classified as nonenhanced (phase III) or enhanced (phase IV)
based on the presence of a feature that disables meter operations when
certain preprogrammed criteria are met.
    These issues involve company proprietary information. The Postal
Service responded directly to the manufacturers concerned.

8. How the Retirement Plan for Letterpress Meters Will Be Enforced

    One manufacturer asked about the enforcement of the retirement plan
for letterpress meters.
    After the date by which a meter must be withdrawn from service, the
Postal Service, in coordination with the meter manufacturers, will
prevent postage resets, and manufacturers will be required to take
possession of the meter.

Final Postal Service Plan for the Retirement of Letterpress Postage
Meters

    Phases III and IV of the Postal Service proposed Plan for Secure
Postage Meter Technology affect nondigital, or letterpress, meters that
are remotely reset under the Computerized Meter Resetting System
(CMRS). If such a meter has a feature that automatically disables the
meter if it is not reset within a specified time period or when certain
preprogrammed criteria are met, it is called an enhanced meter. Phase
III of the proposed plan requires that the users of nonenhanced CMRS
letterpress meters are notified of the schedule for the retirement of
their meters by December 31, 2001. The placement of nonenhanced CMRS
letterpress meters must cease by December 31, 2002, and these meters
must be off the market by December 31, 2006. Phase IV of the proposed
plan requires that the customers of enhanced CMRS letterpress meters
are notified of the schedule for the retirement of their meters by June
30, 2003. The placement of enhanced CMRS letterpress meters must cease
by June 30, 2004, and these meters must be off the market by December
31, 2008.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 01-28553 Filed 11-14-01; 8:45 am]
BILLING CODE 7710-12-P