This week Postmaster General Jack Potter testified before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security (what a mouthful). Senator Tom Carper chairs the subcommittee and hails from Delaware.

General Potter had two agenda items of serious import:

1. He requested the ability to begin 5-day delivery
2. He requested a restructuring of the USPS requirement to prefund future retiree benefits

These agenda items received a bulk of the allotted time (transcripts) although one quote from Potter struck me as notable. He predicted that "Revenue growth that is based on business growth...is also a key element that is necessary for our long term viability."

Apparently Mr. Carper heard the same quote because near the end of the hearing he asked a series of probing questions about potential business growth opportunities including a very intriguing question about the EPM. Listen to this short segment from the hearing:

You see, Delaware has done some trailblazing when it comes to the EPM. As Senator Carper eluded, earlier this year the Delaware legislature unanimously passed an amendment to their UETA statute giving electronic messages protected by an EPM the legal equivalence to physical mail (stay tuned for a post explaining this in more detail).

The folks from Delaware have identified that this program provides an amazing opportunity to leverage the trust of the USPS outside of the traditional logistics business. I believe that the USPS entered the market incorrectly--twice, but that three is a charm--when they chose single vendors to provision the service. They have finally come up with an industry supported model that promises to overcome the earlier challenges.

I'm happy to hear the General Potter intends to continue pursuing growth of the EPM program. I believe that it represents an ideal way for the USPS to remain relevant in a world where the communications mix skews heavily electronic. What other opportunities are available to grow revenues with such a low cost basis?

I think we'll hear more about this. Senator Carper's closing comments indicated that "mostly I want to focus on opportunities that are out there for growth and growing revenues and some that are going well and maybe a couple that we have touched on here today as possibilities."

The next hearing should take place before March so stay tuned. 

Postmaster General Potter Senate Testimony

I recently participated in a docket before the Postal Regulatory Commission to review all non-postal services as directed by the Postal Accountability and Enhancement Act (PAEA pronounced Paella). This post serves as a short backgrounder for anyone interested in finding out what is going on with this docket and how it will impact the USPS and Epostmarks.

In a speech at the National Press Club in Washington, DC on January 31, 1995, then-Postmaster General Marvin T. Runyon called on the recently elected Republican Congress to enact new laws that would fundamentally change the way the United States Postal Service (USPS) was structured, set postal rates, introduced new services and products, and managed its labor force. "We've got a '70s law that isn't cutting it in the '90s . . . ,” Runyon told his audience. “We need to fix it and fix it now."1

Dubbed Postal Reform prior to its passage PAEA was 12 years in the making. This law was passed in late 2006 during the lame duck session after a resounding change to democratic control of congress. Many organizations had publicly given up on the possibility that the bill would pass amid attacks from the National Association of Letter Carriers and United Parcel Service.

So what did PAEA actually do? One thing it didn't change was the core mission of USPS to provide reliable universal service at affordable rates. It was a rather comprehensive overhaul of USPS operations though and provided the following major changes:

• Established the new Postal Regulatory Commission (PRC) that replaced the old Postal Rate Commission. The new PRC has broader regulatory authority
• Defined Postal and Non-Postal Services for the first time
• Divided USPS business into market-dominant and competitive products
• Established new, flexible, and different pricing systems for each of these product groups
• Replaced break-even financial requirement with one that allows retained earnings (profit)

One of the requirements of the newly formed PRC was to review all non-postal services and for any service that was in operation prior to January 1, 2006 and determine if the service should continue taking into consideration 1) the public need for the service; and 2) the private sector's ability to meet that public need.

The Electronic Postmark is considered a non-postal service under the new definition so fell under this review. While I feel confident that the PRC will allow the EPM program to continue there is some push-back from other industry participants that could influence an alternative decision. Epostmarks would suffer a serious blow if the EPM program were discontinued but this provides us an opportunity to discuss publicly why we believe so strongly in the value of USPS in the electronic realm.