1. General Issues

The US Postal Service provides the American people with a secure and efficient connection that binds our nation together and is the universal gateway to the American household.⁽¹⁾ Universal service and universal access - We deliver to every household in the United States and every American has access to our services. Based on 1999 statistics, we delivered over 200 billion pieces of mail to 134 million delivery addresses, including 20 million post office boxes. Approximately 1 million new addresses are added each year. We carry more mail to more people over a larger geographic area than any other country. Collect mail from more than 312,000 street mail collection boxes. Serve 7 million customers daily at one of 38,000 postal retail outlets.

The US Postal Service delivered over 207.8 Billion pieces of mail in 2000. First Class Mail consisted of 103.5 Billion or 50%, Priority Mail 1.2 Billion or .5%, and Express Mail 70 Million or .03%. ⁽²⁾ We deliver Express Mail on Sunday in most locations.

Physical and electronic mail both have inherent limitations and capabilities. Physical mail is:

· easy to archive and retrieve without worrying about technology obsolescence,

· has limited privacy exposure threat as there is only one content piece that can have access easily controlled,

· requires low energy/no energy use for retention and storage,

· has a national system for managing address changes,

· enjoys nationwide legal acceptance, and

· no special devices are needed to let someone read it.

However, physical mail has limitations in that:

· It is seldom delivered as fast as electronic mail,

· requires more energy consumption for the physical pick-up, transport and delivery,

· has a higher variable cost per unit, and

· requires more space for storage.

Electronic mail:

· is easy to create and mail,

· can be delivery worldwide very fast,

· has a very low variable cost, and

· can include a rich variety of digital content.

Electronic mail however does have

· privacy/security concerns,

· retention and storage issues,

· legal acceptability problems,

· digital divide challenges,

· may not be uniformly available across disparate technology platforms, and

· lacks a national change of address capability.

The US Postal Service has launched a system, NetPost Mailing OnLine, that enables mail to be submitted electronically for printing, mailing and delivery by the Postal Service that brings most of the advantages of physical mail and electronic mail to the Nation. Such cross-media capabilities are expected to be a standard option for messaging and commerce in the 21^st Century.

2. Business Issues

A fundamental business issue when comparing electronic to hard-copy service is the simple fact that a substantial portion of the American public will not have access to electronic messaging services for some time.⁽³⁾ Therefore, most businesses will have to maintain at least a two-tier messaging system (electronic and hard-copy) for many years.

However, the Postal Service must be prepared for at least three different futures that would be created depending upon the preferences and actions of customers: Baseline - Significant reductions in First-Class mail Volume and Moderate Standard A Growth; Rapid Diversion - Faster reductions in First-Class mail volume and reductions in Standard A; or Historical - Traditional moderate growth trends continue.⁽⁴⁾

The benefits in providing postal customers with a choice between electronic transmission via the Postal Service and traditional mail, means survival. The US Postal Service, based on 1999 statistics, has significant operating costs associated with the delivery of hard copy mail. Therefore, cost is a large factor in our decision to offer more than one method of delivery. For example, We employ 797,795 career employees, invest billions of dollars annually in leased, new or improved buildings and mail processing equipment, operate a transport and delivery fleet of 202,000 vehicles driving 1.1 billion miles a year, and transport mail by airplane (15,000 commercial airline flights/daily) truck, railroad, boat and even by mule to/from the bottom of the Grand Canyon.

The US Postal Service provides six traditional products lines - correspondence and transactions, business advertising, expedited delivery, publications delivery, standard package delivery and international mail delivery. Besides our traditional method of paper mailings, the US Postal Service is beginning to venture out in the electronic world. Our offerings located on USPS.com consist of several NetPost™ applications, such as, Mailing Online™, USPS eBillPay™, CardStore, Certified Mail, PosteCS™ along with our customers being able to purchase stamps and philatelic items 24 hours a day.

Mailing Online lets mailers electronically (and cost-effectively, too) transmit their documents, correspondence, newsletters and other First-Class Mail and Standard (A), along with their mailing lists, to the US Postal Service via www.usps.com. The electronic files are securely distributed to printers who print, insert, address, apply postage, sort and transport the mailing to the nearest post office for processing and delivery.

USPS eBillPay allows our customers to receive and pay their bills online. A consumer can pay anyone in the US, view and pay bills from anywhere, pay bills automatically, download transactions to personal Financial Management Software and pay from multiple bank accounts.

CardStore is an ideal way to customize the consumers business or personal message. They are able to pick their favorite design, fonts, colors and the first class stamp or they can use their own photo, logo, or artwork for a completely custom card. Once they are personalized the USPS prints and mails the next business day.

Certified Mail the traditional way is now offered via the internet. This service verifies the address, adds the barcode, prints, folds, and completes the certification forms with just a few clicks of a mouse. All the customer has to do is create a document, pay online and send.

PosteCS provides secure online Electronic Courier Service. It augments electronic messaging services to deliver documents across multiple systems to business partners and clients outside the customers corporate Intranet. PosteCS global capabilities allow for universal electronic communications across diverse messaging systems, gateways, and clients.

Market evolution - In 1992, about 5 million Americans had access to the Internet. That number had grown to over 100 million by 1999, an increase of 1,900 percent. To look at that another way - It took 38 years for the telephone to penetrate 30 percent of United States households. The Internet, by contrast, took only 7 years.⁽⁵⁾ Most surveys show that at least 60 percent of Americans are now online.
 

3. Consumer Issues

The US Postal service is mandated by law to deliver mail to every household in the United States. Even though studies show 60 percent of Americans have access to the Internet, there are still that 40 percent who do not. As the applications associated with electronic mail evolve, a hybrid mail is emerging. People are realizing that combined use of both hard-copy and electronic mail ensures a balance of cost effectiveness, universal delivery and effective message content delivery.

In this environment, the issues of consumer choice are complex. While some customers may prefer all of their relevant messages to be in a single format, that segment is likely to remain a small minority. In fact, most consumers will prefer to receive some messages in one format and will prefer other messages in a different format. These preferences may even change for the same customer, depending on circumstances. Research indicates that electronic and hard copy messages are not perfectly substitutable, and depends largely on the specific nature of the application and the context of the message.⁽⁶⁾

Recent press reports have highlighted the reluctance of consumers to give up familiar and trusted mechanisms, such as the Postal Service, for critical transactions and information flows. Issues of privacy and security are increasingly important to the public, and a variety of sources suggest that they are many and uncertain about the electronic environment.

There are also issues emerging about the ability of electronic mechanisms to serve as long-term storage for transactions or documents. Regular planned obsolescence of electronic programs, software and media will place tremendous burdens on traditional archival, research, and legal practices.

The US Postal Service has a very high degree of customer satisfaction. The favorable ratings, according to the USPS Customer Satisfaction Studies conducted by an independent contractor, are currently about 92%. The Postal Service is rated as one of the best values for the dollar in comparative surveys of a wide variety of services - including telecommunications - regularly conducted by the Roper Organization. The American Service Quality Center reports that US Postal Service regular mail and counter service as receiving the same ratings as the telecommunication industry, and in fact, the parcel delivery and express mail service (including postal services) is ranked significantly higher than telecommunications services (2000 ACS Index rate of 81 compared to 72 for the telecommunications sector).⁽⁷⁾

The US Postal Inspection Service is the law enforcement arm of the Postal Service responsible for investigating criminal acts involving the mails, thus assuring postal customers of the "sanctity of the seal" when entrusting their money, messages and merchandises to the mails.

Mail is still relevant for a wide variety of important applications for most businesses and consumers. It has strong benefits of familiarity, ease of use, privacy, security, image resolution, and storage. The US Postal Service is a trusted and neutral intermediary, with a network that allows low cost universal service.

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1. Paraphrase of a quote from William J. Henderson, Postmaster General & Chief Executive Officer. Information provided via Postal Facts on USPS.com.

2. United States Postal Service 2000 Annual Report

3. This obviously does not include mobile communications, such as wireless devices, with limited capacity for detailed messaging. While pagers, cell phones, and personal data assistants can display information, most such messages are substitutes for phone rather than for hard-copy messages.

4. US Postal Service Five-Year Strategic Plan FY 2001-2005

5. Source: John Tierny, The US Postal Service (1988); US Internet Council, State of the Internet (1999).

6. See, for example, The Future of Global Mail 2000, The Institute for the Future, 2001.

7. American Customer Satisfaction index, American Society for quality, June 2000