Taking Control of the Board of Governors

My first reaction to President Obama’s announcement of his intention to appoint Paul Steven Miller and Dennis J. Toner to the Postal Service Board of Governors was that the appointments violated the spirit if not the letter of the Postal Accountability and Enhancement Act (PAEA). The PAEA modified the qualifications for the Board of Governors to add the requirement that at least four members Board “shall be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) that employ at least 50,000 employees.” 39 US Code Sec. 202 (a)(1)  Neither of the two appointees have that experience.. Both of these proposed appointments meet [...] Read more »

Taking Advantage of Regulated Rates

The Globe and Mail today has an article that indicates that Canadian mailers are taking advantage of lower Postal Service rates to mail letters and parcels across Canada. “For a small but growing number of this country’s eBay vendors, the cheapest path across Canada lies through the heart of America.  Canadians are showing up in increasing numbers at U.S. Postal Service outlets with parcels and letters destined for other provinces – and, in at least one case, a neighbouring town.” Later in the article, it is clear why this is happening, the rates for the Postal Service’s money-losing Media Mail service are so low, it is worth it for Canadians [...] Read more »

Could the Budget Kill Efforts to Save the Postal Service?

In the next few days, President Obama will deliver the State of the Union Address and reveal the 2011 budget.   White House spokesman have already announced that the budget will include a freeze in discretionary spending in fiscal years 2011 through 2014.    The spending freeze creates an additional barrier on top of the normal budget scoring process to efforts to find a solution to the Postal Service’s financial problems.    The budget scoring process put the retiree health care payment schedule in place in order for the Postal Accountability and Enhancement Act (PAEA) to pass.   The budget scoring process derailed the normal legislative process as a method to deal with [...] Read more »

Regulating the USPS into Financial Stability

In a previous post, “Re-Regulating the Postal Service?“, I noted that the Postal Regulatory Commission’s (PRC) interest in examining the Postal Service’s FY 2009 Annual Compliance Report represents the potential for a mini rate case.    Now that the PRC has chosen to proceed, this has happened.   In addition, the PRC has chosen to enter uncharted territory, examination of the Postal Service’s financial and business plans by asking whether the Postal Service generated sufficient revenue in 2009 “to assure adequate revenues, including retained earnings, to maintain financial stability.” [39 U.S.C. § 3622(b)(5)] Overhanging all of the specific areas of inquiring discussed below, postal stakeholders face a concern that hangs over the [...] Read more »

The Direct Mail Market: Structure and Success Factors

The Chinese Post Office currently has 20 executives touring the United States, trying to figure out how to grow direct mail industry in China.   They are interested in the United States direct mail industry because it is one of the most vibrant, if not the most vibrant direct mail industries in the world. I was fortunate to make a presentation to lay out my thoughts on 1) the industry structure; 2) why it has been so successful; and 3) the prospects that direct mail marketing will return to a growth trajectory.    Below is a summary of some of the key ideas presented  on the first two topics.  The last topic [...] Read more »

Enshrining a Twentieth Century Postal Service

The Postal Regulatory Commission in a decision announced last week illustrates how the Postal Accountability and Enhancement Act (PAEA) freezes the Postal Service in the 20th Century.   The Commission ordered the Postal Service to terminate two non-postal services and issued guidelines for the sale of licensed CDs and DVDs.   [Press Release] [Decision]  This decision follows the requirements of the PAEA that the Postal Service not offer any non-postal service that were not offered prior to January 1, 2006.   While the PRC may have had little choice in its decision, the impact is likely to be much more significant that limited loss in revenue and net-income.     The decision will stifle [...] Read more »

Leaving the Mailstream (Follow-up)

The previous post, Leaving the Mailstream One Customer at a Time, discussed Netflix’s plan to switch from a DVD distribution company to a content streaming company.   Advertising Age just published an article describing the wider implications of streaming media for legacy broadcast, cable, and satellite modes for distributing video content. While the readers of this blog may ask, why should I care if people get their videos over the Internet rather than through a cable box?   The answer is, every customer that switches from cable or satellite to the web reduces the number of customers that receive cable or satellite bills, the number of bills paid by mail, and mail [...] Read more »

Leaving the Mailstream One Customer at a Time

In an interview with All Things Digital, Netflix CEO Reed Hastings stated that its DVD by mail business will continue until around 2030.  The importance of the mailed DVD will rapidly diminish over the next 20 years.  “Pretty soon, we’re going to be a streaming business that rents some DVDs,” Hastings told the All Things Digital reporter.   There are numerous signs that the end of the mailed DVD is coming.   Netflix has already put the “Watch Instantly” tab first so to encourage Netflix to try the download service.   Netflix has announced that all three major game consoles, the Sony PlayStation 3, Microsoft Xbox 360 and Nintendo Wii, can all [...] Read more »

Changing Culture and Contracting Violations

The Federal Times reported today on three sole source contracts issued by the Postal Service’s Shipping Service to three consultants that had close professional links to Robert Bernstock, the president of the shipping services division.   The story reads like the standard government employees wasting taxpayer money story that most reporters covering the Federal Government can write blindfolded. The reporter, however, missed the real story which is how difficult it is to change the culture of the Postal Service, and in particular the culture at the Postal Service’s headquarters.   In the private sector, if a new division president is hired, and in particular hired to grow a moribund business that should [...] Read more »