jurisdiction: US

text: b' The Postal Service Role in the Digital Age\n Part 2: Expanding the Postal Platform\n\n\n\n\n April 19, 2011\n\n\n\n\nPrepared by U.S. Postal Service Office of Inspector General\n Risk Analysis Research Center\n Report Number: RARC-WP-11-003\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n The Postal Service Role in the Digital Age\n Part 2: Expanding the Postal Platform\n\n Executive Summary\n\nThe Internet and the digital revolution are fundamentally changing the worlds of\ncommunications and commerce. The digital economy continues to grow at a rapid rate.\nElectronic substitution of traditional mail is accelerating as both consumers and\nbusinesses adopt electronic processes across multiple domains. Mail users are shifting\nfrom traditional hard copy distribution models to a variety of new ways to digitally\ncommunicate, advertise, or transact. They are attracted to greater convenience, faster\nservice, and lower cost. The digital revolution has become the \xe2\x80\x9cdisruptive innovation\xe2\x80\x9d 1\nto the traditional business of the U.S. Postal Service. With several different\ncommunications channels competing for consumers, the Postal Service needs to\nmodernize its role to accommodate for the digital age.\n\nThe transition to a new digital landscape is already under way, but the path forward is\nundefined. The Postal Service should consider new products and services that reflect\nthe evolving mandate to \xe2\x80\x9cbind the nation together\xe2\x80\x9d in a new world where people are\nincreasingly communicating digitally. Using a foundation that links a physical address to\nan electronic mail box for every citizen and business, the Postal Service can build a\ndigital platform that facilitates communications and commerce for postal, governmental,\nand commercial applications that are available to all.\n\nThe U.S. Postal Service Office of Inspector General Risk Analysis Research Center\n(RARC) has initiated a project to study the impact of the digital revolution on the future\nof the American postal ecosystem. This paper is the second in a series. The first paper\ndescribed the radical changes affecting communications and commerce, identified\ntrends, and discussed the impacts. This sequel identifies a set of applications the Postal\nService should explore as a first step in redefining its mandated role of \xe2\x80\x9cbinding the\nnation together.\xe2\x80\x9d While there is no indicator of how much of our communications and\ncommerce will go digital, the migration is nonetheless creating a lengthening tail of\ndigital refugees, which will only increase as the digital revolution progresses.\n\nThe conceptual framework depicted in the diagram on the next page constructs a\nstrategic positioning for the Postal Service to consider. The framework is developed in\nresponse to three guiding principles:\n\n \xef\x82\xa7 Providing solutions for the communications problems of the digital age.\n\n \xef\x82\xa7 Utilizing the core competencies and assets of the Postal Service.\n\n \xef\x82\xa7 Pursuing applications that are considered proper for the Postal Service.\n1\n Clayton M. Christensen, The Innovator\xe2\x80\x99s Dilemma (Boston: Harvard Business Press, 1997).\n\n\n i\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\n Expanding the Postal Platform\n\n\n\n PROVIDING\n SOLUTIONS FOR\n COMMUNICATIONS\n PROBLEMS\n GUIDING\n PRINCIPLES\n\n\n\n\n UTILIZING USPS\n CORE POLICY\n COMPETENCIES CONSIDERATIONS\n AND ASSETS\n\n\n\n\n USPS PLATFORM \xe2\x80\x93 WITH eMAILBOX FOUNDATION\n TRADEMARKED TO USPS, ESTABLISH STANDARDS AND SYSTEMS, OPEN TO ALL PLATFORM\n\n\n\n\n SPECIFIC INITIAL APPLICATIONS\n\n\n COUPLED SECURITY &\n HYBRID AND DIGITAL\n APPLICATIONS\n USPS\xc2\xa0CORE\xc2\xa0 E-GOVT\n PHYSICAL AUTHENTI-\n REVERSE\n ENABLING E- DIGITAL\n CURRENCY\n AND E-MAIL CATION\n COMPETENCIESSERVICES\n ADDRESS TOOLS\n HYBRID MAIL\n COMMERCE CONCIERGE\n EXCHANGE\n\n\n\n\nThe Guiding Principles\n\nGiven the broad array of applications, we present three guiding principles to help the\nPostal Service in constructing a strategy:\n\n1. Explore applications that provide solutions to communications problems of the digital\n age:\n\n \xef\x82\xa7 The Internet and all of its functionality are not readily available to all citizens,\n some of whom lack skills or bandwidth access, to reap its full benefits.\n \xef\x82\xa7 There is a potential threat to equal and fair access to the Internet.\n \xef\x82\xa7 There remain inadequate levels of privacy, confidentiality, dependability, and\n security in digital communications and financial transactions as desired by\n citizens as well as a risk of involuntary profiling.\n \xef\x82\xa7 The digital infrastructure has a fragility, a susceptibility to viruses, and\n interruptions in service, and is provided by companies that could fail or quickly\n face obsolescence.\n\n\n\n\n ii\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n \xef\x82\xa7 Consumers are experiencing an information overload with an increasing volume\n of electronic communications and applications as well as a lack of tools to\n manage it.\n \xef\x82\xa7 There is still insufficient availability of affordable digital currency exchanges.\n \xef\x82\xa7 Limited choice, or total elimination of the physical option, is an issue as\n companies and governments push consumers into digital-only communications\n and transactions.\n2. Explore applications that utilize the core competencies and assets of the Postal\n Service, which has:\n\n \xef\x82\xa7 A history of acting as a trusted intermediary.\n \xef\x82\xa7 A position of legal standing for postal communications in the courts and\n government, ensuring that their content remains private.\n \xef\x82\xa7 Experience in developing and running a national address management database.\n \xef\x82\xa7 A critical mass of customers, including both businesses and consumers.\n \xef\x82\xa7 Skill in facilitating communications, especially in the first mile (collecting from the\n sender) and last mile (delivering to the recipient).\n \xef\x82\xa7 An effective tradition and experience in being the last resort provider.\n \xef\x82\xa7 A neutral arbiter providing products and services at the lowest combined cost.\n \xef\x82\xa7 A multichannel infrastructure of points of sales and services (retail, collection,\n and delivery) distinguished by comprehensive national coverage.\n \xef\x82\xa7 Experience with currency transactions, both domestic and international.\n3. Pursue applications that are considered proper for the Postal Service. The following\n questions help make such a determination:\n\n \xef\x82\xa7 Is the opportunity in the public interest, linking a wide array of business sectors to\n the American public?\n \xef\x82\xa7 Is the opportunity appropriate for the Postal Service?\n \xef\x82\xa7 Is the opportunity needed to assure the Universal Service Obligation (USO)?\n \xef\x82\xa7 Would a change in policy be required?\n\nThe Postal Service Enters the Digital Space\n\nFirst, the Postal Service should develop a foundation of a permanent one-to-one linkage\nbetween a physical address and an electronic address available to every citizen and\nbusiness. The Postal Service would also establish this \xe2\x80\x9ceMailbox\xe2\x80\x9d to serve as a digital\ncounterpart to the physical mailbox.\n\n\n\n iii\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nSecond, the Postal Service can develop and maintain a secure digital postal platform,\naccessible to all citizens through a website. Private industry would be invited to provide\ncommercial solutions and work with the Postal Service on developing effective postal\nand governmental applications on the platform to serve all. The Postal Service can fill its\nestablished role of providing a trusted communications infrastructure. This represents a\nmodern manifestation and a natural extension of its traditional mandate in the physical\nspace to meet the new requirements of the digital age.\nApple\xe2\x80\x99s strategy of encouraging independent development of applications or \xe2\x80\x9capps\xe2\x80\x9d for\nits iPhone\xc2\xae and iPad\xc2\xae platforms would serve as a relevant model for independent\ndevelopment of digital products on the postal platform. Apple invites all developers to\nbring their applications to its online App Store, as long as they meet the required\ntechnical and content standards. The Postal Service identifies the standards to allow\ninnovation and allows market forces to determine success and failure.\nThird, the Postal Service could develop on that platform seven initial applications that\nadhere to the guiding principles mentioned previously. In addition to the eMailbox with\nthe physical-digital address linkage, the others include:\n\n \xef\x82\xa7 An eGovernment application that promotes the further expansion of government\n services through the postal platform and utilizes the eMailbox to send and\n receive secure and official communication with federal agencies. This could be\n paired with physical kiosks (connected to government department call centers) at\n Post Offices where needed.\n \xef\x82\xa7 Tools for identity validation, privacy protection, and transaction security that allow\n users to verify the individuals and businesses with whom they are communicating\n and ensure the safety of their personal information and security of their\n purchases and financial transactions.\n \xef\x82\xa7 Hybrid and reverse hybrid mail that allow senders and receivers to convert digital\n documents to physical, and physical documents to digital. This hybrid solution\n could foster a healthy symbiotic relationship between printed and digital\n communications and help elevate the value of both media.\n \xef\x82\xa7 Enhancing services for the shipping and delivery of secure online purchases\n through flexible pick-up and delivery options, expanded payment choices, and a\n cost calculation that includes all charges and fees for purchases (even\n international) at the time of sale.\n \xef\x82\xa7 Digital concierge services that utilize the eMailbox to integrate an individual\xe2\x80\x99s\n physical and digital communications in a single place to manage the \xe2\x80\x9cinformation\n overflow,\xe2\x80\x9d as well serving as a curator offering a type of secure \xe2\x80\x9clock box\xe2\x80\x9d for\n important communications and other personal documents (such as medical\n records and wills) that can be accessed quickly when needed.\n \xef\x82\xa7 Develop a network to buy and redeem cash and digital currency both at Post\n Office\xe2\x84\xa2 locations and online. A good example is the leveraging of the vast\n geographic coverage of the Postal Service to allow unbanked citizens the ability\n to redeem cash for digital currency in the form of prepaid cards. Such a network\n\n\n iv\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n could also facilitate payments between government agencies and citizens, such\n as Social Security payments and tax refunds.\n\nInitial Applications to Explore\n\nThe Postal Service could develop the eMailbox foundation as well as eGovernment\napplications as a natural first step. The Postal Service would be expanding on its\ntraditional role, providing secure, authenticated, two-way communication between\ngovernment agencies at every level and citizens. It provides the postal platform with\nalmost instant access to a critical mass of users and makes it attractive to developers\nlooking to reach consumers. Additionally, the application is timely as government\ncutbacks force agencies to explore new and less costly channels for their services.\n\nDeveloping eGovernment services encounters fewer barriers than other applications.\nCurrent law allows the Postal Service to offer nonpostal products and services to other\ngovernment entities. While a number of agencies developed tools for online\ntransactions and communications, no one party has unified the applications on a single\nplatform or linked it with a secure electronic identity for individuals.\n\nAncillary products, within existing legislation, appear to be an area that has not been\nfully explored by the Postal Service. This may provide some added flexibility for these\napplications without the immediate need for legislative action. Other applications will\narise as innovation and market conditions dictate, though the underlying platform will\nremain constant. The paper also suggests a limited role in a much larger ecosystem\nand among many other players. This requires mechanisms and processes for inviting\nand developing business relationships and strategic alliances with the private, public,\nand academic sectors.\n\nImplementation\n\nA key element of a digital strategy lies in the creation or designation of a Postal Service\nfunctional area to own and coordinate the resources for the effort. There are\nundoubtedly a myriad of issues (technical, political, and institutional) pertinent to the\nimplementation of a digital strategy. Those issues are outside the scope of this paper\nbut would constitute an interesting topic for follow-up work. The adoption of such a\nstrategy would not only provide a range of new and needed products and services to all\nAmericans, but would help to reinforce the United States\xe2\x80\x99 standing as a leader in\ntechnology and digital infrastructure. It should be noted that this platform is not a\nfinancial panacea for the Postal Service; it should have a utilitarian focus to help all\ncitizens and businesses.\n\n\n\n\n v\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\n Table of Contents\n\nThe Changing World of Communications and Commerce .............................................. 1\xc2\xa0\n\nThe Guiding Principles .................................................................................................... 3\xc2\xa0\n Providing Solutions for Communications Problems in the Digital\n Market .................................................................................................................. 3\xc2\xa0\n Does the Postal Service Have the Pertinent Core Competencies\n and Assets? .......................................................................................................... 5\xc2\xa0\n What Policy Implications Need to be Considered? ............................................... 6\xc2\xa0\n\nThe eMailbox Foundation and the Postal Platform .......................................................... 9\xc2\xa0\n Features of the eMailbox Foundation ................................................................... 9\xc2\xa0\n Developing a Postal Platform ............................................................................. 10\xc2\xa0\n The Three-Layers Approach ............................................................................... 11\xc2\xa0\n\nInitial Digital Applications............................................................................................... 12\xc2\xa0\n Coupled Physical and E-mail Address ................................................................ 14\xc2\xa0\n eGovernment Platform ....................................................................................... 14\xc2\xa0\n Tools for Identity Validation, Privacy Protection, and Transaction\n Security .............................................................................................................. 15\xc2\xa0\n Hybrid and Reverse Hybrid Mail ......................................................................... 17\xc2\xa0\n Enabling eCommerce ......................................................................................... 18\xc2\xa0\n Digital Concierge ................................................................................................ 19\xc2\xa0\n Digital Currency Exchange ................................................................................. 19\xc2\xa0\n\nConclusion .................................................................................................................... 20\xc2\xa0\n\n\n\n\n vi\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\n Tables\n\nTable 1 The Three Layers of the Postal Platform ............................................. 11\xc2\xa0\n\nTable 2 Opportunity Checklist .......................................................................... 13\xc2\xa0\n\n\n Appendix\n\nPublic Policy Implications and Options for the Postal Service to Bridge the\nDigital Divide ................................................................................................................. 23\xc2\xa0\n\n\n\n\n vii\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\n The Postal Service Role in the Digital Age\n Part 2: Expanding the Postal Platform\n\n\nThe Changing World of Communications and Commerce\nThe digital revolution is rapidly changing the worlds of communication and commerce. This\nis triggering fundamental changes in the postal ecosystem and accelerating the electronic\ndiversion of traditional hard copy mail. The Postal Service projects continued volume\nlosses over the course of this decade.2 This phenomenon and other trends have been\nchronicled by the OIG in the first paper of this series entitled \xe2\x80\x9cThe Postal Service Role in\nthe Digital Age, Part 1: Facts and Trends.\xe2\x80\x9d\n\nThe Postal Service has been tracking these trends. In the late 1990s, it experimented with\na number of digital products and services. For example, it teamed with several foreign\npostal operators to launch a web-based message delivery service called the Poste\nElectronic Courier Service or PosteCS. It launched another web-based service in\nconjunction with a large communications company, called NetPost Certified to enable\ngovernment agencies to secure and authenticate electronic correspondence. The Postal\nService discontinued these products in the early 2000s due to a\nslow adoption rate and concerns over their return on investment. The Postal\nCurrent electronic products include a USPS Electronic Postmark \xc2\xae Service is at a\n critical juncture.\nor EPM\xc2\xae, which was licensed to a third party, and Intelligent Mail\xc2\xae\n \xc2\xae\nbarcodes (IMb ), which can track mail from inception to delivery. A\nkey element in surviving business disruption and fostering innovation is drawing lessons\nfrom past and present efforts.\n\nFor instance, Polaroid, once a global supplier of cameras and film, did not adapt quickly\nenough to the force of change in its industry and found itself marginalized as consumers\nswitched to digital alternatives. Leading DVD mailer Netflix (a large postal customer) is\nalready deliberately converting its business model to take advantage of a lower cost online\nmovie delivery method. Craigslist has greatly undermined the multi-billion dollar classified\nnewspaper establishment by providing mostly free classified advertising and charging only\nfor employment and real estate ads.\n\nThe Postal Service is at a critical juncture. It can stick to its declining traditional business or\nevolve and expand its postal platform to the digital realm. It can become a victim of digital\ndisruption and go the way of Polaroid, or it can learn from Netflix, and incorporate the\nadvantages of digital communication into its business operations. The decision to change\nis not without risks, but an even greater risk would be not to change at all. Netflix has taken\n\n\n2\n Boston Consulting Group, Projecting US Mail Volumes to 2020, March 2010,\nhttp://www.usps.com/strategicplanning/_pdf/BCG_Detailed%20presentation.pdf.\n\n\n 1\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\na significant risk that is showing early signs of success, but Polaroid, despite some recent\nsmall-scale success, waited too long to adapt.3\n\nThis paper suggests that the Postal Service should examine entering the digital space and\nthat this would be consistent with its mandate to \xe2\x80\x9cbind the nation together.\xe2\x80\x9d This would\napply a modern interpretation and a natural extension of this role to a new environment.\nMicrosoft has even recognized this position of trust and believes that it should be applied\nto the digital world when the company stated that postal operators such as the Postal\nService could \xe2\x80\x9cmeet the public need for trusted electronic communications in a way that no\nprivate sector organization could rival.\xe2\x80\x9d4\n\nThe paper constructs a strategy for the Postal Service\xe2\x80\x99s positioning in this new space. The\nstrategy is framed by three guiding principles:\n\n \xef\x82\xa7 Promoting solutions for the communications problems of the digital age.\n\n \xef\x82\xa7 Utilizing the core competencies and assets of the Postal Service.\n\n \xef\x82\xa7 Considering the policy implications of the strategy based on the current legal and\n regulatory environment.\n\n\n\n\n3\n \xe2\x80\x9cNetflix now No. 2 video subscription service, earnings impress Wall Street again,\xe2\x80\x9d Los Angeles Times,\nJanuary 26, 2011, http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/01/netflix-now-no-2-video-subscription-\nservice-earnings-impress-wall-street-again.html and Don McCrae, \xe2\x80\x9cMiss the Big Picture, Fade Like Polaroid,\xe2\x80\x9d Bloomberg\nBusiness Week, October 23, 2002, http://www.businessweek.com/careers/content/oct2002/ca20021023_9615.htm.\n4\n Microsoft Corporation, \xe2\x80\x9cReply Comments of Maxim Lesur, Worldwide Postal Industry Managing Director for Microsoft\nCorporation,\xe2\x80\x9d Postal Regulatory Commission Docket No. MC2008-1, August 20, 2008, p. 5.\n\n\n 2\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\nThe Guiding Principles\nAll three sets of guiding principles are equally important to developing a positioning\nstrategy. This analysis makes a case for moving the Postal Service into the digital world.\n\n COMMUNICATIONS PROBLEMS\n\n 1. Internet and consumer tools unavailable to all\n 2. Threats to the concept of equal and fair access\n to the network for all\n 3. Lack of privacy, confidentiality, and security\n 4. Limitations of digital infrastructure\n POLICY CONSIDERATIONS\n 5. Short-lived nature of many companies\n 6. Information overload THE CRITERIA\n 7. Insufficient availability of affordable digital\n currency 1. In the public interest?\n 2. Is it appropriate for USPS?\n 8. Limits of consumer choice\n 3. Related to USO?\n 4. Change in policy required?\n PROVIDING\n USPS CORE COMPETENCIES SOLUTIONS FOR\n AND ASSETS COMMUNICATIONS\n PROBLEMS\n 1. Trusted Intermediary\n 2. Legal standing\n 3. Address management\n 4. Critical mass of senders/\n receivers\n 5. First/last mile experience\n 6. Lowest combined cost\n provider\n\n\n\n\n UTILIZING USPS CORE POLICY\n COMPETENCIES AND CONSIDERATIONS\n ASSETS\n\n\n\n\nFirst, the rapid growth and lack of established standards in providing digital\ncommunications have contributed to an expansive list of communications problems that\nneed attention. Opportunities for the Postal Service in this sphere address unmet market\nneeds stemming from those problems. Second, an examination of Postal Service core\ncompetencies suggests that a natural extension of its trusted intermediary role in serving\nthe American people could help fill these gaps and shortcomings through the introduction\nof an array of new digital services. Finally, the digital strategy requires careful\nconsideration of public policy questions to ensure that pursuing such opportunities\nconstitutes a proper role for the Postal Service.\n\nProviding Solutions for Communications Problems in the Digital Market\n\nWhile hundreds of millions of users already rely on digital communications, the current\ndigital operating platform, provided by the private sector, has shortcomings in both\ncapabilities and access.\n\n\n\n\n 3\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n \xef\x82\xa7 The growing digital refugee population \xe2\x80\x93 While the federal government has\n embraced the goal of universal service for mail and\n telephone service, it has yet to extend a similar goal to the This lengthening\n digital world. The Internet and all of its functionality are not tail of digital\n available to all citizens, which constrains their ability to reap refugees will\n its economic benefits. This lengthening tail of digital continue as the\n digital revolution\n refugees will continue as the digital revolution progresses.\n progresses.\n \xef\x82\xa7 Threats to equal and fair access to the Internet \xe2\x80\x93 The\n principle of \xe2\x80\x9cnetwork neutrality,\xe2\x80\x9d which promotes equal access and fair treatment of\n network traffic, is threatened. Individuals and businesses have no guarantees that\n platforms will provide them the equal treatment without preference and the same\n choice of control over services. A recent American University study on Washington\n D.C.-area residents found that poorer neighborhoods in the city received poorer\n broadband quality per dollar than nearby suburban customers.5\n \xef\x82\xa7 Lack of adequate privacy, confidentiality, dependability, and security \xe2\x80\x93 Many\n citizens remain concerned about adequate levels of privacy, confidentiality,\n dependability, and security in digital communication and transactions. Concerns\n over the control of sensitive information, the potential for involuntary profiling of\n consumers and the placement of tracking cookies, as well as the implications of\n further developments in technology, are issues in developing these standards.\n \xef\x82\xa7 Digital infrastructure limitations and the transient nature of business \xe2\x80\x93 The digital\n infrastructure has limitations in connectivity and bandwidth and is, in some cases,\n provided by companies that could fail, stranding their customers. Rapid changes in\n technology and consumer behavior can affect the level and breadth of demand on a\n given platform. Consistency and permanence are powerful forces.\n \xef\x82\xa7 Information overload \xe2\x80\x93 A lack of adequate personal information management tools\n makes it difficult to deal effectively with the excess of electronic communications\n and applications. A curator for personal information, storing financial transactions,\n health records, and other key data and providing efficient delivery of information\n when needed, is lacking.\n \xef\x82\xa7 Insufficient availability of affordable digital currency exchanges \xe2\x80\x93 Consumers\n without ready access to online financial tools are at a disadvantage in the digital\n world. They do not have access to affordable digital currency and secure and\n convenient methods to transact online. They must pay predatory fees to convert\n digital money into cash and vice versa. As the eCommerce choices increase for\n consumers globally, there is a corresponding need for seamless cross-border\n payments.\n \xef\x82\xa7 Limited choice of communication and transaction channels \xe2\x80\x93 As companies push\n consumers into digital-only communications, consumers see their choices limited, or\n even face complete withdrawal of the physical option. What might have been\n\n\n5\n Benjamin Orr, \xe2\x80\x9cDo Low-Income Households Get Slow Broadband by Design?\xe2\x80\x9d The New Republic, February 28, 2011,\nhttp://www.tnr.com/blog/the-avenue/84325/do-low-income-households-get-slow-broadband-design\n\n\n 4\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n originally offered as an additional option for the consumer could become a new way\n for companies to control communications.\nThese challenges and gaps present market opportunities for the Postal Service. Over the\npast two centuries, the Postal Service has provided a secure, universally accessible\nplatform for physical commerce and communications. The opportunity exists for the Postal\nService to extend its trusted intermediary role into the digital age and act as a \xe2\x80\x9cbridge\xe2\x80\x9d to\nfacilitate the advancement of access to the Internet and develop a \xe2\x80\x9ctrust portfolio\xe2\x80\x9d of digital\npostal services.\nThis role may take on many different forms, but by working with leading communications\nservice providers and applications developers, the Postal Service has the opportunity to\nshape and enforce industry standards that would fill some of the identified gaps in the\ncurrent digital marketplace. The Postal Service can leverage its assets and work with other\ngovernment agencies and private sector providers to serve as a bridge between the\nphysical and digital worlds.\n\nDoes the Postal Service Have the Pertinent Core Competencies and Assets?\n\nThe Postal Service has delivered correspondence and commercial transactions \xe2\x80\x94 letters,\nperiodicals, catalogs, and packages \xe2\x80\x94 across the domestic and global channels for more\nthan two centuries. These core competencies and assets from its traditional business\noperations could position the Postal Service to enable the distribution of digitized products\nas effectively as it has distributed traditional physical items. It would still fulfill the role as\nthe provider of last resort for those who have fewer choices.\n \xef\x82\xa7 A history as a trusted intermediary \xe2\x80\x93 For the past 236 years, the Postal Service has\n adeptly executed its mission \xe2\x80\x9cto provide postal services to bind the Nation together\n through the personal, educational, literary, and business correspondence of the\n people.\xe2\x80\x9d It has provided \xe2\x80\x9cprompt, reliable, and efficient services to patrons in all\n areas and (has rendered) postal services to all communities.\xe2\x80\x9d6 In the 21st-century\n interpretation of its 18th-century mission, the Postal Service serves as the official\n national platform for the secure distribution of society\xe2\x80\x99s communications and\n commerce throughout the postal ecosystem, linking industries to the American\n public.\n \xef\x82\xa7 A position of legal standing for postal communications \xe2\x80\x93 The Postal Service\xe2\x80\x99s\n position as a standard for communications is recognized by every level of\n government as well as the courts. The postmark placed on mail is commonly\n recognized as a date stamp for everything from tax returns to legal filings. Mail also\n has legal protection, as unauthorized opening or tampering with the U.S. Mail\xe2\x84\xa2 is\n considered a federal offense. First-Class Mail\xc2\xae is considered \xe2\x80\x9csealed against\n inspection,\xe2\x80\x9d a law dating back to colonial times protecting the mail from theft,\n interference, fraud, and forgery. This protection could apply to digital applications,\n ensuring that communications remain private and their content secure from third\n parties.\n\n\n6\n 39 U.S.C. \xc2\xa7 101.\n\n\n 5\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n \xef\x82\xa7 Experience in developing and running a national address management system \xe2\x80\x93\n The Postal Service has established an addressing system that identifies each\n delivery point, or address, in the country so mail reaches its intended recipient,\n whether sent to a household or business. Relying on a set of addressing standards,\n it securely maintains and updates this vast national database. In addition, the\n values of affordability, reliability, universal accessibility, and security as promised\n and provided by the U.S. government, are critical and must be preserved in any\n interpretation of the Postal Service mission.\n \xef\x82\xa7 A critical mass of customers \xe2\x80\x93The Postal Service has the largest customer base in\n the nation. Every household and every business sends or receives mail on a daily\n basis, providing a truly national as well as local presence. In providing this wide\n customer base with a uniform range of products and services, the Postal Service\n has also gained experience in rolling out products from a small scale to the national\n level. While other companies may propose and launch new ideas before the Postal\n Service, few have the capabilities or infrastructure to serve every household and\n business.\n \xef\x82\xa7 Facilitating communications in the first and last mile \xe2\x80\x93 While there is a cost to\n meeting its Universal Service Obligation, the Postal Service also derives benefits\n from its experience in the first mile (receiving mail and parcels) and last mile\n (delivering mail and parcels). As a result, competitors in parcel delivery regularly\n outsource returns and some residential deliveries to the Postal Service.\n Furthermore, daily delivery to every address enables the Postal Service to more\n efficiently maintain and update its address management system.\n \xef\x82\xa7 Acting as the last resort provider at the lowest combined cost \xe2\x80\x93 By outsourcing to or\n collaborating with private companies as well as investing in technologies and\n strategies to improve internal efficiencies, the Postal Service keeps prices\n affordable for mailers and consumers by introducing and adopting \xe2\x80\x9cworksharing.\xe2\x80\x9d\n The Postal Service offers an unbeatable combination of low prices with efficient\n delivery, unmatched anywhere in the world. This experience could be transferred to\n online operations and offerings.\n \xef\x82\xa7 Experience with currency transactions \xe2\x80\x93 The Postal Service has a long history of\n acting as a last resort provider for currency transactions. Domestically, postal\n money orders have been offered for nearly 150 years. Internationally, the Postal\n Service offers money orders to 30 countries and wire transactions to 10. Postal\n Service clerks have amassed significant experience in this line of products over the\n years, enhancing the Postal Service\xe2\x80\x99s role as a trusted intermediary in handling\n currency transactions.\n\nWhat Policy Implications Need to be Considered?\n\nThe Postal Service served as a platform in its traditional role of providing a physical\ninfrastructure to facilitate communications and commerce throughout the United States.\nFrom a policy perspective, the question is whether the Postal Service should play a similar\nrole in the digital space.\n\n\n 6\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nCertainly, there appears to be a national need to provide a digital platform with the\ntrademark characteristics \xe2\x80\x94 affordability, reliability, universal accessibility, and security \xe2\x80\x94\nof the Postal Service physical platform. As part of this strategy\xe2\x80\x99s guiding principles, this\npaper presents the following core questions:\n \xef\x82\xa7 Is the application in the public interest? \xe2\x80\x93 Generally, the government provides\n services as a last resort when the role cannot or will not be easily filled by the\n private sector. If the Postal Service fills one of the many gaps or shortcomings in the\n digital space, would this be an appropriate role for the U.S. government? If so, is the\n Postal Service the best agency for that role or is there another governmental entity\n with sufficient core competencies to fulfill the role or provide the service?\n\n \xef\x82\xa7 Is the application appropriate for USPS? \xe2\x80\x93 Would the Postal Service be in direct\n competition with private companies or is this a product or service not being\n adequately provided in the market currently? Could this be an opportunity for a\n strategic partnership or cooperative effort combining the Postal Service\xe2\x80\x99s core\n competencies with private sector innovation?\n\n \xef\x82\xa7 Is the application needed to assure the Universal Service Obligation? \xe2\x80\x93 Does the\n application support the core mission of the Postal Service, which is to bind the\n nation together through personal, educational, literary, and business\n correspondence? Would the digital application be a natural extension of a product\n or service already provided in the physical world and part of the portfolio of products\n accessible to every American household and business?\n\n \xef\x82\xa7 Would a policy change be required? \xe2\x80\x93 Some services are already offered by the\n Postal Service in some capacity. Would adding additional features require\n approval? Does the application meet the Postal Accountability and Enhancement\n Act\xe2\x80\x99s (PAEA) definition of a postal service (defined as \xe2\x80\x9cthe delivery of letters, printed\n matter, or mailable packages, including acceptance, collection, sorting,\n transportation, or other functions ancillary thereto\xe2\x80\x9d7)? Could some of these\n applications be classified under \xe2\x80\x9cancillary service\xe2\x80\x9d provisions while others could\n perhaps meet the criteria to be tested as experimental products?8 Would the Postal\n Service need changes in policy to pursue the application?\n Two critical questions must be answered by policymakers and the Postal Service, but\n are outside the scope of this paper. They include:\n \xef\x82\xa7 Does the application fit the definition of a postal product or service? \xe2\x80\x93 Current laws\n restrict the Postal Service from providing nonpostal services, which have\n traditionally been associated with the transport and delivery of physical mail. Would\n new applications in the digital space fit a modern definition of a postal product or\n service? Is the application already being pursued by the private sector and is there\n already a product or service commercially available?\n\n7\n 39 U.S.C \xc2\xa7\xc2\xa7102-105.\n8\n The Postal Accountability and Enhancement Act, Section 203, \xc2\xa73641 describes the conditions necessary for carrying\nout a market test for experimental products. Among other requirements, the product must be \xe2\x80\x9csignificantly different\xe2\x80\x9d or\nnovel and cannot create an unfair or inappropriate competitive advantage.\n\n\n 7\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n \xef\x82\xa7 Is the application relatively feasible? \xe2\x80\x93 Would the Postal Service be able to\n implement an initiative in a timely enough manner for it to have a reasonable\n chance of success? Would the application generate revenue or at least break even\n over 5 years? Does the Postal Service have the internal expertise (or organizational\n structure) or could it easily collaborate with a third party to develop the service and\n create a cobranding partnership or private label service? The Postal Service already\n enables and relies on a great number of private entities. Together, they too add\n value to users\xe2\x80\x99 postal transactions with convenience, cost reduction, and speed of\n completion.\n\n\n\n\n 8\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\nThe eMailbox Foundation and the Postal Platform\nCritical to the postal strategy is the development and deployment of an \xe2\x80\x9ceMailbox.\xe2\x80\x9d The\neMailbox would serve as a foundation to capitalize on the range of possible initial\napplications outlined in the succeeding section.\n\n\n\n USPS PLATFORM\n WITH eMAILBOX FOUNDATION\n\n\n\n\n Established\n Trademarked to Standards and\n USPS Systems Open to All\n\n\n\n\nFeatures of the eMailbox Foundation\n\nThe eMailbox would serve as a single official U.S. Mail branded e-mail box at a secure\nwebsite. Individuals could collect all daily mail from their eMailboxes. The standard\nfeatures of the eMailbox would include:\n\xef\x82\xa7 Every individual would have a permanent single eMailbox address.\n\nThe eMailbox \xef\x82\xa7 Linkage to other government initiatives, such as the National\nwould serve as a Strategy for Trusted Identities in Cyberspace (a federal\nsingle official cybersecurity-focused identity management vision and strategy).\nU.S. Mail branded\ne-mail box at a\n \xef\x82\xa7 eMailbox addressing standards would be officially established and\nsecure website. maintained in the same manner as current Postal Service ZIP\n Code addressing standards.\n\xef\x82\xa7 With the eMailbox as the foundation for the electronic platform, the Postal Service\n would then have the ability to deliver both physical and electronic items and facilitate\n the receipt of the messages in both electronic and physical formats.\n\xef\x82\xa7 The eMailbox allows the receivers to choose to receive mail from individual senders by\n either physical or electronic delivery. The receivers would have the opportunity to opt in\n and transition to full electronic delivery at their own pace.\n\xef\x82\xa7 Using the link to the physical mailing address, commercial mailers would maintain\n uninterrupted customer contact.\n\xef\x82\xa7 Most individual physical delivery addresses would have multiple residents, each\n requiring a unique eMailbox address.\n\n\n\n 9\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\xef\x82\xa7 With anywhere, any device access, it provides those without a permanent address the\n ability to move into the digital economy and avoid the additional costs associated with\n paper mailings.\n\xef\x82\xa7 Mail recipients would be provided with the online tools to easily manage their mail\n delivery options and channels, such as changing physical addresses when moving or\n holding and forwarding mail when away.\n\xef\x82\xa7 Mail recipients could express channel preferences to mailers for mail content received.\n For example, a customer interested in receiving coupons from a local grocery store\n could choose to receive them electronically at their eMailbox rather than in paper form.\n\xef\x82\xa7 eMailbox users would be offered secure storage solutions for electronic documents,\n preference-based filters, and solutions to help manage communications, community\n connections for notices and community activities, as well as government and city\n connections.\n\xef\x82\xa7 Address-coupling technology, which connects physical and e-mail addresses, exists\n and applications are currently available in the U.S. mail market, as offered by Zumbox.\n Other solutions from postal service providers and foreign postal operators will soon be\n available. Pitney Bowes has announced its \xe2\x80\x9cintegrated\xe2\x80\x9d addressing concept called\n Volly\xe2\x84\xa2, while Hearst is rolling out Manilla. Norway Post recently launched its Digipost\n digital mailbox service as well.\n\xef\x82\xa7 The Postal Service will need to analyze and determine the type of nomenclature or top-\n level domain name for the eMailbox. E-mail addresses could use the well-known .com\n or .gov or the new top-level domain name .post, which was approved for use by postal\n operators and managed by the Universal Postal Union (UPU), a technical agency of the\n United Nations responsible for the regulations and standards of international mail.9\n While the .post project has multiple applications in eGovernment and eCommerce, the\n domain name could serve as a critical component of the overall platform.\n\nDeveloping a Postal Platform\n\nThe first step in platform development is trademarking. Such a step is necessary to ensure\nfull protection and preserve its exclusive designation as a trusted intermediary and enabler\nfor the businesses and individuals utilizing it. The Postal Service has a great deal of\nexperience in registering and enforcing trademarks for a wide range of products and\nservices. This \xe2\x80\x9cUSPS Platform\xe2\x80\x9d would be universally recognized just as the iPhone App\nStore is trademark\xe2\x80\x93protected by Apple\xc2\xae Inc.\n\nThe second step is establishing standards and systems for operating on the platform. The\nstandards requirements would need to be approved by Postal Service management and\nconform to U.S. regulatory bodies and national and international standards organizations.\nThese could encompass everything from cyber security to Internet Protocol addressing\nrequirements to adhering to Payment Card Industry Data Security Standards. The Postal\n\n9\n Universal Postal Union, \xe2\x80\x9cICANN Grants UPU .post top-level domain,\xe2\x80\x9d news release, December 11, 2009,\nhttp://www.upu.int/en/media-centre/news/union-postale-emag/underway-news/category/technology/article/52/icann-\ngrants-upu-post-top-level-domain-1.html.\n\n\n 10\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nService would also determine the types of systems and applications suitable for the\nplatform. Finally, the platform would be open to all. The cooperative outsourcing spirit of\nworksharing on the physical mail platform should expand to the digital platform.\n\nThe Three-Layers Approach\n\nThe applications would be developed within three layers (see Table 1). The Platform\nInfrastructure layer is the core of the approach providing the hardware and tools that are\nopen for others to leverage. For Apple, this would include its all-important iPhone and iPad\nplatforms, while for the Postal Service this would mean such core assets as its address\nmanagement database, the retail network, and track and trace systems. The\nEntrepreneurial layer forms a stratum atop the platform infrastructure and allows\nindividuals and businesses of all sizes to utilize existing infrastructure to create new value.\nApple\xe2\x80\x99s vast array of 350,000-plus iPhone apps provides the best example. Comparable\nexamples for the Postal Service would be Intelligent Mail barcodes and worksharing.\n\nThe Strategic Alliance and Network layer makes up the last component, which creates a\nbroad system of alliances and networks between the owner of the core assets and the\nplayers on the platform. In Apple\xe2\x80\x99s case, this is illustrated through its maintenance of the\nApp Store, where users, entrepreneurs, and other players partner with Apple and amongst\nthemselves to develop an entire subsystem of applications, accessories, and other\nofferings composing an entire community. For the Postal Service, this would include\nsenders and addressees as well as third-party players from across industry and\ngovernment collaborating, partnering, and even cobranding applications.\n\n Table 1: The Three Layers of the Postal Platform\n Layer Characteristics Examples\nPlatform The Postal Service provides the foundation as iPhone, iPad, and\nInfrastructure well as defines the standards and types of iPhone App Developer\n systems that can be used Kit\nEntrepreneurial Businesses of every size and individuals create iPhone Apps\n value on top of the provided platform\nStrategic The Postal Service partners with key industry Apple community of\nAlliance/Network players in creating mutually beneficial products businesses and\n and services through business relationships that consumers\n grow the ecosystem through outsourced,\n cobranded, and private label products\n\nIf services such as these were enabled on the postal platform and endorsed, facilitated,\nand promoted by the Postal Service, consumer adoption would likely be achieved at a\nhigher rate. Not only would the powerful promotional reach of the Postal Service brand be\nsignificant, its official endorsement and authorization would serve as the stamp of approval\nand extension of the all-important element of trust.\nThe highly successful, fast-growing online postage program offers a precedent for the\nPostal Service to license applications from third parties. Consumers and small businesses\nalike are buying postage online from applications provided by approved vendors such as\neBay, Endicia\xc2\xae, Pitney Bowes, and Stamps.com\xc2\xae.\n\n 11\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\nInitial Digital Applications\nThis section identifies and analyzes the seven applications the Postal Service could\ndevelop, in addition to its established suite of electronic services, to extend its physical\npostal platform into the digital realm. Some should be seen simply as responses to\ncustomer-service demands. Others may amount to new revenue opportunities. Several\nmay fall outside of its current allowable operating authority, but still should be considered.\nFinally, some applications may be provided by other government agencies, private\nbusinesses, and emerging entrepreneurs. In this case, the Postal Service could act as an\nimpartial enabler, collaborator, or advocate. All would be contingent upon connecting an\nindividual\xe2\x80\x99s physical address to an e-mail address for each registered individual.\n\n\n\n\nTable 2 provides an overview of the initial applications discussed in this paper. It also\nprovides a summary of our analysis (based on the guiding principles) on why the Postal\nService is in the best position to pursue these applications. The public policy implications\nand options are discussed in detail in the Appendix. Those require critical deliberations.\nUnlike a private company, the Postal Service is not free to design and implement an e-\nbusiness strategy as it deems fit. Any strategies or services must be consistent with\nexisting public policy and regulatory constraints, or must await changes to allow the Postal\nService to undertake them.\n\nWhile the Postal Service has offered some of these products on a smaller scale in the\npast, others are new and would require development and cooperation with third parties.\nOverall, the digital initiatives that appear to be the best fit for the Postal Service can be\ncategorized into three groups: those related to the Postal Service\xe2\x80\x99s physical delivery of\nmail, those that would address gaps in the digital space, and those that would deliver\ngovernment services and information through a combination of physical and electronic\nmeans.\n\n\n\n\n 12\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nSection 101 of the PAEA defines postal services as \xe2\x80\x9cthe delivery of letters, printed matter,\nor mailable packages, including acceptance, collection, sorting, transportation, or other\nfunctions ancillary thereto.\xe2\x80\x9d The term ancillary has not yet been fully defined through the\nregulatory filing process so that many of the proposed digital products and services may\nsupplement or be a natural extension of current products and services. For other\ninitiatives, new statutory authority may be necessary. Ongoing legislative debates provide\nthe Postal Service with an opportunity to make its case to policymakers to seek the\nnecessary changes.\n\n Table 2: Opportunity Checklist\n Public Policy Criteria\n\n\n\n\n In the public\n\n\n\n Appropriate\n for USPS?\n\n\n Related to\n\n\n\n Requires\n interest?\n\n\n\n\n change?\n policy\n USO?\n Opportunity Description Why use the Postal Service?\n Coupled Enable individuals with \xef\x82\xa7 Address data Yes Yes Yes Possibly\n Physical and an authorized U.S. Mail \xef\x82\xa7 Identify individuals & establish Yes\n e-mail physical address to electronic connection\n Address: have an eMailbox \xef\x82\xa7 Brand/Reach\n \xe2\x80\x9ceMailbox\xe2\x80\x9d address.\n eGovernment Enable a common \xef\x82\xa7 First & Last mile connection Yes Yes10 Yes No\n Platform transaction platform for \xef\x82\xa7 Physical locations\n government services. \xef\x82\xa7 Identity Validation\n \xef\x82\xa7 eMailbox\n Identity Enable identity \xef\x82\xa7 Address data Yes Possibly Yes Yes\n validation, validation by linking the \xef\x82\xa7 Physical locations Yes\n privacy physical identity to the \xef\x82\xa7 eMailbox\n protection, eMailbox.\n and financial\n security\n Hybrid and Convert digital \xef\x82\xa7 First & Last mile connection Yes Possibly Yes Possibly\n Reverse documents to physical \xef\x82\xa7 Physical locations Yes Yes\n Hybrid Mail and vice versa for \xef\x82\xa7 eMailbox\n senders and receivers.\n Enabling Connect senders and \xef\x82\xa7 First & Last mile connection Yes Possibly Yes Possibly\n eCommerce receivers physically and \xef\x82\xa7 Physical locations Yes Yes\n electronically to offer \xef\x82\xa7 Brand/Reach\n returns, landed cost, \xef\x82\xa7 Identity Validation\n and payment solutions. \xef\x82\xa7 eMailbox\n Digital Provide tools to help \xef\x82\xa7 First & Last mile connection Possibly Possibly Possibly Yes\n Concierge individuals manage their \xef\x82\xa7 Brand trust No Yes Yes\n communications across \xef\x82\xa7 Physical locations\n all channels. \xef\x82\xa7 eMailbox\n Digital Mechanisms to conduct \xef\x82\xa7 First & Last mile connection Yes Possibly Possibly Yes\n Currency financial transactions at \xef\x82\xa7 Brand trust Yes Yes\n Exchange post office locations and \xef\x82\xa7 Physical locations\n online. \xef\x82\xa7 Identity Validation\n\n\n\n\n10\n Though an eGovernment services platform is not defined under PAEA, the Postal Service is allowed to provide\nservices to other government agencies.\n\n\n 13\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nCoupled Physical and E-mail Address\n\nConnecting a physical address to an e-mail address is the underpinning of the overall\ndigital platform expansion. The key features of the coupled address and creation of an\neMailbox are explained in detail in the preceding section on the eMailbox Foundation and\nthe Postal Platform.\n\neGovernment Platform\n\nA natural domain for the Postal Service to establish itself is within the U.S. Government. It\nshould begin with binding government entities with each other as well with their\nconstituencies. Federal departments and programs, such as the Internal Revenue Service,\n Social Security Administration, Medicare, Veterans\n A natural domain for Administration, and U.S. Census Bureau, depend upon the\n the Postal Service to Postal Service to reliably deliver confidential communications,\n establish itself is with personal data, and financial transactions to residents. However,\n the U.S. Government\n government agencies are initiating digital communications\n itself.\n strategies to both cut costs due to growing budgetary constraints\nand enhance customer service. If government entities were to invest in separate digital\nplatforms, taxpayer funds would be wasted. The Postal Service enjoys a high level of trust\namongst hundreds of millions of recipients of government-originated mail, not to mention\nthe government agencies themselves. These essentials would continue as part of the\ndigital postal platform available to all entities.\n\nSecure National Database\n\nIn addition to facilitating communications and managing the flow of data between agencies\nacross the postal platform, the Postal Service is the ideal agency to store the personal\ndigitized data of the nation\xe2\x80\x99s citizens. Through its hosting of the physical address files for\nevery business and household in America, it has proven the value of a consolidated\ncentralized national database securely managed according to strict standards.\n\nAs the most trusted federal agency11, the Postal Service should serve its citizens as the\nsecure connection to other centralized federal government personal databases, such as\nsocial security, law enforcement, veterans, passport, etc., as well as state voting, driving,\neducation, and real estate records. A trusted centralized access point to personal\nconsumer data, such as credit and health records, would also be appealing to many on an\nopt-in basis.\n\nGetting started with eGovernment\n\nA Postal Service platform strategy would synchronize well with an overall eGovernment\nstrategy. Given the current absence of such a plan, the Postal Service could seek the\ncreation of an interagency task force charged with defining a comprehensive eGovernment\napproach. The Postal Service could be at the forefront of implementation efforts with\n11\n Ben Bain, \xe2\x80\x9cFor privacy protection, survey says this agency delivers,\xe2\x80\x9d Federal Computer Week, June 30, 2010.\nhttp://fcw.com/articles/2010/06/30/web-federal-agencies-privacy-trust-survey.aspx.\n\n\n 14\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nrespect to reaching the U.S. population. In particular, the Postal Service could assist other\nagencies in determining the appropriate mix of digital and hard copy outreach to\nAmericans, and could be the vehicle for delivering those communications, perhaps pairing\nonline efforts with kiosks that would be located in Post Offices in areas with limited\nbroadband access.\n\nOf course, in developing an eGovernment-wide strategy, it would be important to work in\nconcert with other government agencies in developing their outreach strategies and with\nthe existing agencies that already have some jurisdiction in the digital space, such as the\nFederal Communications Commission, Federal Trade Commission, and the National\nTelecommunications and Information Administration.\n\nA lengthy analysis of eGovernment services is unnecessary; PAEA\xe2\x80\x99s definition of postal\nservices, as detailed in a recent study by the Institute for Research on the Economics of\nTaxation (IRET), states, \xe2\x80\x9cThe law permits the [Postal] Service to provide nonpostal\nservices to other government entities.\xe2\x80\x9d12\n\nFurthermore, an eGovernment initiative could be a major component of an overall\ngovernment services strategy \xe2\x80\x93 something that several observers have suggested as a\nlogical opportunity for the Postal Service to pursue. For example, Postal Regulatory (PRC)\nCommission Chairman Ruth Goldway, in December 2, 2010, testimony noted: \xe2\x80\x9cIn general,\nPostal Service \xe2\x80\x98federal\xe2\x80\x99 agreements have increased the availability of government services\nfor residents, added operational flexibility for government agencies, and provided\nincremental revenue to the Postal Service. Appropriately applied, such arrangements\npromise to be similarly beneficial at the state and local level.\xe2\x80\x9d\n\nSeparately, the IRET study concluded the Postal Service could pursue a number of\nnonpostal government services under PAEA, stating, \xe2\x80\x9cThe Postal Service would be wise to\ntake several steps. Internally, it should examine its operations and resources, looking for\nactivities that it thinks would assist other government agencies, help the public, be\nprofitable for the Postal Service, and not impair mail delivery. It should also seek ideas\nfrom the postal community. Additionally, the Postal Service should consult with federal,\nstate, and local governments about possibilities for cooperation.\xe2\x80\x9d This is particularly true as\nmany state and local government officials continue to seek ways to cut costs and services\nto close budget deficits.\n\nMoving beyond eGovernment to serving as a digital platform open to all users raises\nadditional questions that the Postal Service and other stakeholders would have to address\n\xe2\x80\x94 but the dialogue could start while the eGovernment platform is under development.\n\nTools for Identity Validation, Privacy Protection, and Transaction Security\n\nThe Postal Service has earned its reputation as the most trusted federal government\nagency by being a reliable delivery partner for 236 years. Customers will regularly drop\n\n12\n Michael Schuyler, \xe2\x80\x9cOpportunities for the Postal Service to Deliver Nonpostal Government Services,\xe2\x80\x9d IRET\nCongressional Advisory No. 270, Institute for Research on the Economics of Taxation, November 30, 2010,\nhttp://iret.org/pub/ADVS-270.PDF.\n\n\n 15\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\ntheir most personal secrets and prized possessions \xe2\x80\x9cin the mail\xe2\x80\x9d without reservation.\nMoreover, federal law protects the items they send.\n\nIdentity Validation\n\nSecurity is fundamental to the current postal platform and must be a significant part of the\ndigital platform. Given the current gaps in the digital world, the digital postal platform can\nbe part of an overall solution to close these gaps. Working with the Department of\nCommerce, the Postal Service could help enable the National Strategy for Trusted\nIdentities in Cyberspace, a federal initiative designed to improve the security and\nconvenience of online transactions. By leveraging the existing assets \xe2\x80\x94 namely the\naddress database and physical post offices across the country \xe2\x80\x94 in combination with\nfuture assets such as the eMailbox, the Postal Service could enable both identity\nauthentication and identity validation. With capabilities for end-to-end identity assurance,\nthe platform will facilitate individual identity management and, with the right partners,\nincrease the potential for privacy and financial transaction security. This authorization can\nthen be used to enable financial transactions and further enhance the digital economy.\n\nPrivacy\n\nPrivacy is another physical world attribute that does not yet exist with full assurance in the\ndigital world. The Postal Service could use its reputation to influence the development of\ntrusted privacy applications while advocating for consistent consumer rights across the\nplatforms. In a December 2010 decision,13 a federal appeals court ruled that there are\nfundamental similarities between e-mail and traditional forms of communication such as\npostal mail and telephone calls and declared that e-mail should be afforded the same\nFourth Amendment protections against unreasonable searches and seizures.\n\nYet, for some people, the lack of adequate privacy when communicating on the Internet\ntops their list of concerns. In fact, as a key element of digital postal platform, security\nrepresents the widest gap in the digital divide.\n\nTransaction Security\n\nWith all its acknowledged and proven advantages such as cost, convenience, and speed\nof execution, the Internet presents significant risks for users. Many commercially available\nInternet security tools exist to protect against a growing market in \xe2\x80\x9ccyber crime\xe2\x80\x9d and they\nare largely effective. However, they do not hold the level of trust that consumers have in\nthe Postal Service.\n\nThere remains a struggle between those who develop secure financial transaction\nsoftware and those who try to exploit its weaknesses. In order to evolve into a cashless\nsociety, the infrastructure requires innovations in both currency and security of payments.\nNew developments in e-currency will need to combine ease of use with the security\nfeatures demanded by consumers. The fear of having credit card data stolen remains an\nissue for all Americans whether a Baby Boomer or a member of Generation Y.\n13\n For more information, see United States v. Warshak, Sixth Circuit Court of Appeals, December 14, 2010,\nhttp://www.ca6.uscourts.gov/opinions.pdf/10a0377p-06.pdf.\n\n\n 16\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nIn cooperation with private-sector innovators, the Postal Service already has enabled the\ndevelopment of online postage payment applications; in fact, these have become one of\nthe most popular retail postal applications. The Postal Service has the opportunity,\ninfluence, and credibility to advocate for the development of security tools for its digital\npostal platform by entrepreneurs, established private businesses, and other government\nagencies.\n\nHybrid and Reverse Hybrid Mail\n\nEchoing investments and the direction of other posts, the Postal Service should consider\nexpanding hybrid mail applications as an early step on the bridge across the digital divide.\n\n \xef\x82\xa7 Digital to physical \xe2\x80\x93 Hybrid mail typically begins as a digital document, such as an\n invoice, that is securely transmitted to one of many remote printers located closer to\n the recipient\xe2\x80\x99s address (its final destination). There it becomes a physical document\n and is inserted into an envelope, presorted, mailed, and delivered conventionally by\n letter carrier. Another approach allows a consumer or small business to access a\n web-based template for printing and mailing photo postcards or direct marketing\n pieces from a central location. The Postal Service maintains strategic partnerships\n with a number of companies in this area including Click2Mail\xe2\x84\xa2, Cardstore.com, and\n PremiumPostcard. Other third-party providers of these services include Pitney\n Bowes 1ntegrate, Immediate Mailing Services, and DigitalToPrint, which specializes\n in distributing hybrid mail overseas.\n\n \xef\x82\xa7 Physical to digital \xe2\x80\x93 Reverse hybrid mail begins as a conventional letter received at\n a central location, where it is scanned and made available to the addressee on a\n secure website or delivered to the e-mail address. The recipient can then view,\n forward, discard, or store it like other document files. A service like this is\n commercially available in the United States from Earth Class Mail and offered in\n Europe by SwissPost.\n\nHybrid and reverse hybrid mail are applications that are facilitated by having both physical\nand electronic platforms and further encourage innovation to pair physical mail with its\ndigitized counterpart and electronic mail with its physical equivalent. When paired with an\neMailbox, this hybrid focus would further enhance the value of the electronic platform and\nconnect more people to the network.\n\nIn these applications, hybrid mail employs the convenience, low cost, perceived\nenvironmental benefits, and speed of digital transmission and display, with the desired\nappeal and familiarity of conventional letters and cards. Reverse hybrid mail empowers the\nconsumer, particularly those that have made the full leap to digital, to receive their physical\nmail in digital form. This is particularly attractive to traveling executives and for businesses\nattempting to reduce mailroom costs.\n\n\n\n\n 17\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nEnabling eCommerce\n\neCommerce and mobile commerce (mCommerce) markets are growing globally. For many\nconsumers and businesses alike, this market has several key barriers that are curtailing its\nfull development.\n\nFor potential e-tailers developing an end-to-end solution can be a challenge even though\nthe eCommerce value chain is well understood and many companies offer services for:\nmarketing and merchandising; on-line ordering and payment; warehousing, pickup, pack,\nand ship operations; residential delivery; customer service; and returns. However, many\nsmaller e-tailers face serious challenges in integrating multiple services efficiently.\n\nFor both consumers and businesses, international transactions are complex and costly.\nMost U.S. websites do not accept orders for delivery to international addresses or payment\nby foreign credit card. Fewer offer efficient and cost-effective\nsolutions for \xe2\x80\x9cfully landed\xe2\x80\x9d or true cost pricing, which includes The growth for global\n eCommerce depends\npaid duty, taxes, customs fees, insurance, and residential\n on the seamless\ndelivery charges. Even for domestic orders, several issues integration of ordering\nchallenge consumers: inadequate visibility into the status of and payment across\ntheir order, lack of real-time notification and options to redirect borders.\ndelivery, and finally, limited ability to effectively and efficiently\nmanage returns. The growth for global eCommerce depends on the seamless integration\nof ordering and payment across borders.\n\nThe Postal Service platform is well positioned to connect the dots between senders and\nreceivers both physically and electronically. The platform can host applications that\nremove some of the barriers to effective eCommerce and mCommerce. Outside third\nparties will best provide some applications, but in other instances, the Postal Service may\nbe in a position to provide the solution itself.\n\n \xef\x82\xa7 The Postal Service currently facilitates convenient parcel return services, including\n pick up by carrier and acceptance at retail outlets. Valuable consumer data about\n returned merchandise would enhance returns management solutions.\n\n \xef\x82\xa7 The Postal Service would facilitate the incorporation of landed cost applications and\n solutions as a component offered to its business customers, thus enabling growth in\n parcel exports on the digital postal platform. Several applications already exist such\n as Borderfree and Clearpath.\n\n \xef\x82\xa7 The most significant hurdle to further eCommerce growth is online payment.\n Fearing identity theft, consumers are reluctant to share personal financial\n information on the web.14 The Postal Service is in a position to offer a variety of\n solutions bridging the physical and electronic worlds. It could emulate Itella\xe2\x80\x99s\n (Finland Post) NetPosti and have electronic invoices sent to eMailboxes for secure\n online payment. Australian Post, which recently acquired a payment platform\n\n14\n Chloe Albanesius, \xe2\x80\x9cStudy: Generation Y Taking Online Privacy to Heart,\xe2\x80\x9d PC Magazine, May 27, 2010,\nwww.pcmag.com/article2/0,2817,2364227,00.asp.\n\n\n 18\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n provider, offers another model for developing this critical function. The Postal\n Service has already demonstrated its expertise in managing secure online\n payments through millions of online transactions daily, many of which are facilitated\n on its platform by licensed third parties.\n\nDigital Concierge\n\nWith the vast amount of information available on the web and the explosion of e-mail,\ntexting, Tweets, and other communications, users have been bombarded with information.\nIn addition, as many utilize web applications for personal business, they are increasingly\nconcerned about limiting the amount of information they share online15 and with whom.\nIndividuals are seeking some sort of balance between sharing information, filtering\nmessages, and the ability to protect privacy.16 Some recent innovations are focused on\ndeveloping applications and services that help people decipher the \xe2\x80\x9cgood from the bad\xe2\x80\x9d\nand organize electronic data in a way that increases their Internet productivity.\n\nThe Postal Service has an opportunity to enhance its relationship with these individuals. It\ncan leverage its trust in establishing a safe \xe2\x80\x9clock box\xe2\x80\x9d which would serve as a type of\ncurator for personal information ranging from financial payments and health records to\nlegal documents and electronic backups of personal papers. While most payment sites,\nbanks, and other online sites leave critical data on the providers\xe2\x80\x99 sites, the lockbox would\nallow consumers to maintain personal records on a personal site. The lockbox would not\nonly provide a high level of security, but also the means to share information efficiently and\nquickly when needed.\n\nIn the physical world, many postal services offer a \xe2\x80\x9cPreference Service\xe2\x80\x9d (Belgium and\nGreat Britain, for example), which enables individuals to identify the advertising they want\nto receive. It helps the advertiser target individuals who are likely to buy, thus eliminating\nwasteful mailings to those who are not. For example, Poste Italiane\xe2\x80\x99s EMailbox serves as\nan agent for the individual and ensures that private information is not shared directly with\nthe advertiser.\n\nActing as the Digital Concierge, the Postal Service would leverage its experience with\nindividual consumers to ensure they receive what they want, when and where they want it.\nThis role leverages the trust, brand, and first mile/last mile presence. The Postal Service is\nin an ideal position to serve as a trusted gatekeeper that preserves identity and privacy\nwhile simultaneously facilitating personalized and targeted messages.\n\nDigital Currency Exchange\n\nOpportunities may also exist for the Postal Service to aid secure financial transactions on\nits digital postal platform, moving beyond its historical role of issuing money orders and\nproviding electronic international money transfer services through Sure Money (Dinero\nSeguro) with its partner, Bancomer. The Postal Service has experience with reloadable\n\n15\n Ibid.\n16\n Organisation for Economic Co-operation and Development, The Economic and Social Role of Internet Intermediaries,\nApril 2010, http://www.oecd.org/dataoecd/49/4/44949023.pdf.\n\n\n 19\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nstored value cards, though it discontinued them in 2003. Additionally, billions of dollars in\npostage payments are already electronically transferred between commercial customers\nand the Postal Service each year. Businesses and consumers trust that their financial\ntransactions with the Postal Service are secure.\n\nDigital technologies could allow the Postal Service to expand its trusted role as a provider\nof online currency transactions to underserved markets. Facilitating international\neCommerce transactions have been discussed in the Enabling eCommerce section.\n\nHelping the Unbanked\n\nIn the spirit of its serving as the postal \xe2\x80\x9cprovider of last resort\xe2\x80\x9d ensuring that \xe2\x80\x9cno-one is left\nbehind,\xe2\x80\x9d the Postal Service would help to facilitate financial transactions on its platform for\nindividuals without bank accounts or credit cards. Offering financial transactions both at\nPost Office locations and online would provide a valuable service to this segment of\nsociety that is often overlooked. A growing proportion of U.S. citizens are unbanked,\nincluding working families, new immigrants, unemployed, homeless, or noncreditworthy\nindividuals. They need easier access to payment systems in order to transfer funds on\nprepaid debit or stored value cards to cash or vice versa. The Postal Service would use its\nidentification verification skills, as it does with passport The Postal Service\napplications, to facilitate authenticated cash or prepaid debit would help to facilitate\ncard disbursements from state and federal agencies to these financial transactions\nindividuals at local Post Offices. on its platform for\n individuals without\nOne somewhat surprising disruptive digital phenomenon is bank accounts or credit\nthat while many individuals may be unbanked, they often cards.\nhave mobile phones. In some African and Asian countries,\nmobile phones have already become the primary means of payment and access to cash.\nExamples of this service include M-Pesa, Kenya\xe2\x80\x99s highly successful mobile money transfer\nservice, and Obopay, a similar service now offered in the United States. While these\nservices facilitate the transfer of funds from one phone to another, they require retail\nfacilities for receiving and disbursing cash. Post Offices, already well experienced in\nhandling money orders, would provide convenient and trusted outlets to facilitate such\nfinancial transactions.\n\n\nConclusion\nThe Postal Service should consider addressing the inevitable digital disruption and radical\ntransformation of the postal ecosystem in America. It has the legacy of serving the nation\nas a communications platform and it can continue to serve all of its customers with access\nto physical as well as digital postal products. Given the rapid changes in technology and\nconsumer behavior, the Postal Service would benefit from identifying a lead functional area\nwhere it could devise and implement a digital strategy. It can start by studying the\nfeasibility of some of the prospective applications identified in this white paper, particularly\nthe eMailbox foundation and eGovernment applications. Some of the other applications\nmay meet the criteria of an \xe2\x80\x9cancillary service\xe2\x80\x9d though this classification process remains\nopen to interpretation.\n\n 20\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nThe Postal Service has the opportunity to extend its national platform into the digital world\nand enable traditional service providers, as well as new entrepreneurial \xe2\x80\x9capplications\ndevelopers,\xe2\x80\x9d to generate a wide array of additional physical and digital postal services to\nmeet the present and future needs of digital natives and digital migrants. The framework\noutlined in this paper is not a cure-all for solving the Postal Service\xe2\x80\x99s ongoing financial\ndifficulties. However, by embracing a digital strategy, the Postal Service would be\nproviding needed solutions through a suite of digital products and services. It would\nmodernize a vital part of our national infrastructure and ensure that all Americans have the\nopportunity to access an innovative postal platform that reflects America\xe2\x80\x99s position as a\ntechnology leader.\n\n\n\n\n 21\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\n\n\n Appendix\n\n\n\n\n 22\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nPublic Policy Implications and Options for the Postal Service to\nBridge the Digital Divide\n\nUnlike a private company, the Postal Service is not free to design and implement a\ndigital strategy as it deems fit: any e-business strategies or services adopted must be\nconsistent with existing public policy, or must await changes in policy to allow it to\nundertake them. The Postal Service operates under a mandate from Congress, as\ncodified under Title 39 of the U.S. Code, and within a well-developed and still evolving\nregulatory framework.\n\nThis appendix considers whether the Postal Service can pursue a digital strategy in light\nof existing public policy. It first provides an overview of the postal policy environment\nincluding a review of the Postal Service Mission, USO and nonpostal products and\nservices. Finally, it analyzes specific digital applications according to the checklist\noutlined in the main body of the paper.\n\nPostal Policy\n\nThe prevailing U.S. postal statute is the Postal Accountability and Enhancement Act of\n2006 (PAEA). It was enacted after roughly a decade of stakeholder debate over the\nfuture of the Postal Service. Shortly after its passage, the first hints of the current\neconomic downturn surfaced. This helped accelerate a volume decline that had already\nbegun with the trend toward digital communications. These developments threatened\nthe financial viability of the Postal Service, instigating new efforts by postal stakeholders\nto consider substantial additional changes in the law. Notwithstanding current legislative\nproposals, today\xe2\x80\x99s provisions of Title 39, as amended by the PAEA, remain the key\npolicy guideposts for the Postal Service. They set the existing policy framework within\nwhich Postal Service digital initiatives must be considered.\n\nPostal Service Mission and Universal Service Obligation\n\nSections 101(a) and 403(a) of Title 39 specify that the Postal Service shall be operated\nas a basic and fundamental service provided to the American people. Its core obligation\nis to provide postal services \xe2\x80\x9cto bind the nation together through personal, educational,\nliterary, and business correspondence.\xe2\x80\x9d The Postal Service is to provide adequate and\nefficient postal services at fair and reasonable rates, and is to serve \xe2\x80\x9cas nearly as\npracticable the entire population of the United States.\xe2\x80\x9d This universal service obligation\nis at the heart of our nation\xe2\x80\x99s postal system. However, it is not explicitly defined in law,\neither in the PAEA or in previous postal statutes. Universal service has generally been\ninterpreted to mean the Postal Service will deliver to all parts of the country at a\nreasonable price.\n\nThe PAEA directed the Postal Regulatory Commission (PRC) to identify the scope and\nstandards of universal service based on a comprehensive review of its history and\n\n\n\n\n 23\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\ndevelopment.17 The PRC issued its resulting Report on Universal Service and the\nPostal Monopoly in December 2008, which concluded in part:\n\n The USO is not specific. The Postal Service is to achieve the best possible\n balance of these service features [geographic scope, product range, access,\n delivery, pricing, service quality, and an enforcement mechanism] consistent with\n efficient and economic practices. Congress has rarely established rigid,\n numerical standards of minimally acceptable service for each of these features.\n Rather, throughout its history, the Postal Service has been expected to use its\n flexibility to meet the needs and expectations of the Nation while balancing the\n delivery of service against budgetary constraints. This long-standing policy has\n worked well.\n\nThe report was completed before the full impact of the economic crisis hit the Postal\nService. Even so, the Commission\xe2\x80\x99s December 19, 2008, letter accompanying the\nreport noted that a changing landscape might require new thinking about the USO:\n\n Had this report been issued several months ago, these factors would have\n led the Commission to recommend that no near-term changes be\n contemplated to universal postal service, the USO, the postal monopoly,\n or the mailbox monopoly. Although no immediate changes are called for,\n recent events require the Commission to recommend that Congress\n closely monitor the Postal Service\xe2\x80\x99s financial situation as the possibility\n now exists that significant changes may become necessary to preserve\n effective and efficient postal services for the Nation.\n\nThe PRC report notes repeatedly that the USO is flexible. It further notes that the Postal\nService must balance overlapping requirements, such as meeting the needs of citizens\nand maintaining an efficient and economical system. It concludes, \xe2\x80\x9cAs history has\ndemonstrated, what is necessary to bind the nation together changes over time.\xe2\x80\x9d\n\nFlexibility by policymakers in defining the USO will be essential as the Postal Service\nfinds its place in the digital world. Whether or not the Postal Service becomes a full\nplayer in the digital world, many types of physical mail are likely to continue their decline\nand erode profitability. This may necessitate a fresh look at universal service, with\nperhaps a greater emphasis on the efficient and economic portion of the USO. Access\nto retail services may not need to be the same as it is today. It might become too\nexpensive to support the current level of delivery service or the current service\nstandards. However, history indicates it is possible to redefine the universal service\nobligation over time. Conceivably, this could be done as part of a strategy for moving\nthe Postal Service increasingly into the digital world. For example, universal service\nmight come to mean some complementary combination of physical and electronic\naccess.\n\n\n\n17\n PAEA also directed the PRC to conduct a similar analysis of the postal monopoly.\n\n\n 24\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nDefinition of Postal Products and Services\n\nSection 101 of PAEA defines postal services as \xe2\x80\x98the delivery of letters, printed matter, or\nmailable packages, including acceptance, collection, sorting, transportation, or other\nfunctions ancillary thereto.\xe2\x80\x9d It also defines \xe2\x80\x9cproduct\xe2\x80\x9d as \xe2\x80\x9ca postal service with a distinct\ncost or market characteristic for which a rate or rates are, or may reasonably be,\napplied.\xe2\x80\x9d The Postal Service has discretion to define its products. For purposes of\nratemaking, the products are categorized as either \xe2\x80\x9cmarket dominant\xe2\x80\x9d or \xe2\x80\x9ccompetitive.\xe2\x80\x9d\n\nIn defining postal products and services, PAEA went beyond previous postal statutes,\nwhich had remained silent on this subject. This was largely in response to criticism that\nthe absence of a definition allowed the Postal Service to conduct nonpostal activities\nthat competed directly and, at times, unfairly with private companies. The Postal Service\nalso had a poor track record and incurred significant losses in its earlier nonpostal\ninitiatives (including those related to eCommerce).18 However, early failures often\nindicate a culture of innovation. There are a growing number of postal observers who\nbelieve the Postal Service should diversify to become more relevant in the digital age.\nHowever, concerns about the Postal Service\xe2\x80\x99s ability to break even and competition with\nprivate sector providers will remain relevant to any debate about the Postal Service and\ndigital initiatives.\n\nNonpostal Products and Services\n\nPAEA restricts the Postal Service from introducing new nonpostal services. It required\nthe PRC to review each nonpostal service the Postal Service already offered, to\ndetermine whether it should continue based on (1) the public need for the service and\n(2) the ability of the private sector to meet the public need for the service. The PRC\nultimately authorized 14 nonpostal services to continue, which the Postal Service has\nsince reduced to 10.19\n\nUnder the rules set out in PAEA, the Postal Service can conduct tests of experimental\nproducts. To qualify, a product must be significantly different from any current Postal\nService product, not cause market disruption to any mailers, and be classified as either\nmarket dominant or competitive. Anticipated revenues from the product must be below\n$10 million annually.\n\nCongress has recently taken up postal legislation, addressing many issues, including\nthe provision of nonpostal services. As part of that process, there may be some\nloosening of current constraints on Postal Service activities. For example, Senator Tom\nCarper\xe2\x80\x99s bill, S. 3831, introduced in fall 2010, would allow the Postal Service to offer\n\n18\n See, for example, U.S. Government Accountability Office, U.S. Postal Service: Legislation Needed to Address Key\nChallenges, Testimony No. GAO-11-244T, December 2, 2010, http://www.gao.gov/new.items/d11244t.pdf and\nU.S. Congressional Research Service, Postal Accountability and Enhancement Act, by Kevin R. Kosar, Report No.\nRS22573, January 22, 2007,\nhttp://waxman.house.gov/UploadedFiles/The_Postal_Accountability_and_Enhancement_Act.pdf.\n19\n See PRC Docket No. MC2008-1 (often referred to as the \xe2\x80\x9cnonpostal services case\xe2\x80\x9d) and \xe2\x80\x9cReview of Nonpostal\nServices Language,\xe2\x80\x9d Federal Register 75, No. 93 (May 14, 2010), pp. 27375\xe2\x80\x9327377 for a list of the nonpostal\nservices the Postal Service offers.\n\n\n 25\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nnonpostal services. However if such new authority is eventually granted, it might come\nwith constraints. For example, both the Government Accountability Office (GAO) and\nthe PRC chairman raised concerns about granting the Postal Service an unregulated\nreturn to nonpostal activities at a December 2010 Senate oversight hearing. They both\nurged some sort of safeguards in the Carper legislation.\n\nThe GAO raised similar concerns about allowing the Postal Service to enter nonpostal\nareas in an April 2010 report:\n\n Allowing the Postal Service to diversify into nonpostal activities would\n raise a number of issues, including whether it should engage in nonpostal\n areas where there are private-sector providers and, if so, under what\n terms. Other issues relate to concerns about unfair competition; whether\n the Postal Service\xe2\x80\x99s mission and role as a government entity with a\n monopoly should be changed; as well as questions regarding how it would\n finance its nonpostal activities, what transparency and accountability\n provisions would apply; whether the Postal Service would be subject to\n the same regulatory entities and regulations as its competitors; and\n whether any losses might be borne by postal ratepayers or the taxpayer.\n\nThese concerns are juxtaposed with worries about what could happen to the Postal\nService without changes in postal policy, as also noted by the GAO:\n\n As communications and the use of the mail evolve, Congress will need to\n revisit policy issues related to the Postal Service, the services it provides,\n and how to best position the organization for the future. The current crisis\n presents the opportunity to act and position this important American\n institution for the future. If no action is taken, the risk of the Postal\n Service\xe2\x80\x99s insolvency and the need for a bailout by taxpayers and the U.S.\n Treasury increases.20\n\nTwo policy imperatives, which are possibly in conflict, have informed the debates over\nwhether the Postal Service should offer nonpostal services. On one hand, there are\nconcerns that the Postal Service could unfairly tap its monopoly benefits and protections\nwhen launching new services, since its infrastructure and workforce are primarily paid\nfor by revenues from its monopoly products and services. On the other hand, the Postal\nService is facing a new environment in which its monopoly revenues are no longer\nsufficient to cover its fixed costs, and revenues from nonpostal services, including digital\nproducts, might be needed to fund universal service. Therefore, the financial situation\nframing the debate could be significantly different from earlier discussions of this issue.\n\n\n\n\n20\n U.S. Government Accountability Office, U.S. Postal Service: Strategies and Options to Facilitate Progress toward\nFinancial Viability, Report No. GAO-10-455, April 12, 2010, http://www.gao.gov/new.items/d10455.pdf.\n\n\n 26\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nThe Postal Service as a Digital Platform\n\nAs detailed in the paper, the Postal Service has functioned as a platform in its traditional\nrole providing a physical infrastructure throughout the United States \xe2\x80\x93 even though its\nrole has not typically been understood as such. From a policy perspective, can the\nPostal Service play a similar role in the digital space? This section first analyzes this\nquestion from a general policy perspective and then applies the policy checklist to\nassess the digital platform.\n\nGeneral Considerations\n\nThere appears to be a need for some entity to provide a digital platform with the\ntrademark characteristics \xe2\x80\x94 affordability, reliability, universal accessibility, privacy,\nconfidentiality, and security \xe2\x80\x94 of the Postal Service physical platform. In many ways,\nproviding a platform to enable distribution of digitized products freely and effectively\nwould be a logical extension of the Postal Service\xe2\x80\x99s traditional role in the physical world.\n\nThe Postal Service Continues Its Role as a Physical Platform\n\nAs noted earlier, affordability has been a hallmark of the Postal Service, both to\ncustomers utilizing the system, and to American taxpayers in general. During the\ndecade or so in which postal reform was debated and PAEA passed, the twin concerns\nof affordability of service to consumers and the cost to the nation of providing postal\nservices played key roles. They resulted in the decision to make the Postal Service a\nself-sustaining entity that did not rely on public monies to operate. Today, with chronic\nPostal Service losses and endemic strains on the U.S. budget that could make new\npostal subsidies an unlikely prospect, affordability concerns are again playing a key role\nin discussions of the Postal Service\xe2\x80\x99s future. Creating a digital platform and introducing\nmore digital products could be one way to generate new revenues, while avoiding the\nneed for government subsidies. Revenues from a digital platform could offset some of\nthe costs of the physical network the Postal Service will need to maintain to reach core\nsegments and provide needed traditional services.\n\nThe Postal Service Is Both a Digital and Physical Platform with Positive Synergistic\nEffects\n\nTaken together, these factors make a compelling case that it is in the public interest for\nthe Postal Service to pursue a broader digital strategy complementing its physical\nnetwork. For the near future, the Postal Service mission will remain binding the nation\ntogether by acting as a low-cost, efficient platform for facilitating correspondence and\ncommerce. To accomplish that mission, the Postal Service\xe2\x80\x99s physical infrastructure will\nbe needed. This could be augmented with a digital platform offering the same core\ncharacteristics \xe2\x80\x94 affordability, reliability, universal accessibility, security \xe2\x80\x94 the Postal\nService has provided in the physical world.\n\n\n\n\n 27\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nEvaluation of Digital Applications\n\nEach of the prospective digital applications must be evaluated based on the public\npolicy criteria described in the guiding principles of the overall strategy. These include\ndetermining whether the opportunity is in the public interest, considering whether the\nPostal Service would be in direct competition with the private sector, how it relates to\nthe USO, and if a policy change would be necessary. Two other questions, including an\nassessment of whether the application fits the definition of a postal service under\ncurrent law and analyzing the feasibility of the application, are not part of this study,\nthough policymakers and postal executives will need to consider them.\n\nDigital Application: eMailbox Coupled Physical and Digital Addressing\n\nPublic interest \xe2\x80\x93 As the foundation of the postal platform, coupled addressing would\nfurther the efficient delivery of communications and commerce and would create a\nmechanism for bridging the physical and electronic worlds. Such a service might also\nhelp bring nondigital denizens into the digital world.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 As\ndescribed in the paper, there have been some private attempts to couple physical and\ndigital addresses. These have not yet been commercially successful. The Postal\nService maintains the U.S. physical address database and has sole access to every\nU.S. mailbox, so there appears to be a legitimate role for it in a coupled addressing\ninitiative.\n\nThe Postal Service mission and USO \xe2\x80\x93 Coupled addresses would support the Postal\nService mission and USO, in particular, by creating a bridge between the physical and\nelectronic worlds.\n\nPossible changes in policy \xe2\x80\x93 As noted, the definition of \xe2\x80\x9cancillary\xe2\x80\x9d has not been tested\nlegally with respect to postal services. Therefore, it is unclear whether any changes in\nstatute would be required for the Postal Service to pursue coupled physical and digital\naddresses.\n\nDigital Application: eGovernment Services\n\nPublic interest \xe2\x80\x93 Development of an eGovernment platform would serve the public\ninterest in multiple ways. It would augment and support the Postal Service\xe2\x80\x99s continuing\nphysical operations, provide a vehicle for effectively reaching all U.S. denizens with\nnecessary communications and services, and contribute to overall government\nefficiency.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 Arguably,\nthere are no private sector companies providing a comprehensive digital platform\ncharacterized by affordability, reliability, universal accessibility with the reach and\n\n\n\n\n 28\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nsecurity of the Postal Service. While there are several government agencies with some\njurisdiction over digital matters, none fills this role.\n\nThe Postal Service mission and USO \xe2\x80\x93 The eGovernment platform, supported by the\nPostal Service\xe2\x80\x99s continuing physical network, would help bind the nation together. It\nwould provide affordable access to all Americans through a combination of digital and\nphysical outreach. The Postal Service already provides eGovernment services in the\nform of passport applications, which combines providing a government service with\nidentity validation.\n\nPossible changes in policy \xe2\x80\x93 No statutory changes would be needed for the Postal\nService if it were to pursue eGovernment services offering.\n\nDigital Application: Tools for Identity Validation, Privacy Protection, and Financial\nSecurity\n\nPublic interest \xe2\x80\x93 The \xe2\x80\x9cWild West\xe2\x80\x9d nature of the digital world creates significant risks for\nusers. Minimizing some of the greatest risks would be in the public interest. The Postal\nService\xe2\x80\x99s protection of identity management, privacy, and financial transactions in the\nphysical world has clearly served the public interest. There is a perceived need for\nthese same protections digitally.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 Some\nprivate companies provide security tools for the electronic world. There are also many\nadvocates for maintaining the current unregulated digital environment. Notwithstanding\nthese facts, security is generally a government function and a public good, so there may\nbe a role for the Postal Service in enforcement. However, other federal agencies (such\nas the Federal Communications Commission) have more experience dealing with these\nissues. Thus, it is unclear whether the Postal Service is the sole U.S. agency that could,\nor should, play this role.\n\nThe Postal Service mission and USO \xe2\x80\x93 Security tools could support the Postal Service\nmission and USO if these concepts are extended to the electronic sphere and if the\ntools were to maintain or increase access to the digital world.\n\nPossible changes in policy \xe2\x80\x93 It appears that the Postal Service may need new authority\nto proceed with identity validation, privacy protection, and financial security tools.\n\nDigital Application: Hybrid and Reverse Hybrid Mail\n\nPublic interest \xe2\x80\x93 Hybrid mail and reverse hybrid mail services would further the efficient\ndelivery of communications and commerce. They would also support the coupling of\nphysical addresses with e-mail addresses using a top-level domain name such as .gov,\n.com, or the Universal Postal Union\xe2\x80\x99s new .post nomenclature.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 Private\nproviders, including a number of Postal Service strategic partners, are already supplying\n\n\n 29\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nhybrid mail services. Further expansion into reverse hybrid mail seems to be a logical\nnext step and could be accomplished through partnerships with existing providers.\n\nThe Postal Service mission and USO \xe2\x80\x93 Hybrid mail services could support the Postal\nService mission and USO, particularly if these concepts are extended to embrace a\ncombination of physical and electronic means of communication.\n\nPossible changes in policy \xe2\x80\x93 It is unclear whether any changes in statute would be\nrequired for the Postal Service to pursue this initiative, as the Postal Service already\noffers a form of hybrid mail services.\n\nDigital Application: Enabling eCommerce\n\nPublic interest \xe2\x80\x93 There are many gaps in eCommerce fulfillment, which redounds to the\ndetriment of consumers and businesses. Filling these gaps would benefit both.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 There are\nmany private sector companies providing various tools designed to minimize\neCommerce gaps. However, none provides the type of platform the Postal Service\ncould offer \xe2\x80\x93 one that would lend itself to multiple applications for filling gaps.\n\nThe Postal Service mission and USO \xe2\x80\x93 A digital platform, supported by the Postal\nService\xe2\x80\x99s continuing physical network, would help bind the nation together. In particular,\nit would allow the Postal Service to collaborate with existing providers to further the\ngrowth of eCommerce. This would benefit both businesses and consumers.\n\nPossible changes in policy \xe2\x80\x93 A statutory change is probably necessary to allow the\nPostal Service to undertake this initiative. However, if policymakers accept the rationale\nof a physical Postal Service platform that should be complemented by a digital one, they\nmay be inclined to grant such authority.\n\nDigital Application: Digital Concierge\n\nPublic interest \xe2\x80\x93 Many Americans feel overwhelmed by the volume of online information\nand may want to manage the present digital communication onslaught. However, if the\nPostal Service were to propose digital concierge services, it might provoke a debate\nsimilar to that over \xe2\x80\x9cdo not mail\xe2\x80\x9d efforts in the physical world, with opponents and\nproponents adopting arguments similar to that debate. This makes it difficult to conclude\nthere is a clear-cut public interest in this initiative.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 As noted in\nthe paper, some private companies provide certain digital concierge capabilities.\nHowever, none offers the comprehensive suite of services discussed, nor do many\nprivate providers enjoy the level of trust accorded the Postal Service.\n\nThe Postal Service mission and USO \xe2\x80\x93 As in the case of the public interest question, it\nis unclear whether digital concierge services would be perceived to support the Postal\n\n\n 30\n\x0cU.S. Postal Service Office of Inspector General April 19, 2011\nPart 2: Expanding the Postal Platform RARC-WP-11-003\n\n\nService\xe2\x80\x99s mission and USO. On the one hand, proponents could argue that these\nservices, which would be available to anyone, would increase the efficiency and efficacy\nof online communications. On the other hand, opponents could argue that digital\nconcierge services would limit the ability to communicate online.\n\nPossible changes in policy \xe2\x80\x93 The Postal Service would likely need new authority to\npursue digital concierge services.\n\nDigital Application: Digital Currency Exchange\n\nPublic interest \xe2\x80\x93 There is arguably a public interest in assisting the \xe2\x80\x9cunbanked\xe2\x80\x9d to\nconduct financial transactions.\n\nCompetition with private sector and appropriate role for the Postal Service \xe2\x80\x93 There are\nalready many providers of financial services, some of which are targeted towards\nsegments of the population that tend to be unbanked. Thus, there is a legitimate\nquestion whether this is an appropriate role for the Postal Service.\n\nThe Postal Service mission and USO \xe2\x80\x93 Providing financial services to underserved\nsegments through the provision of prepaid debit or stored value cards could support the\nPostal Service\xe2\x80\x99s mission of binding the nation together and its obligation to reach all\nAmericans. These services can be an extension of current money order and\ninternational money transfer (IMTS) product offerings and past offerings of stored value\ncards.\n\nPossible changes in policy \xe2\x80\x93 The Postal Service would likely need new authority to\npursue currency exchange services.\n\n\n\n\n 31\n\x0c'