BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20266-0001
POSTAL RATE AND FEE CHANGES, 2000
Docket
No. K?OOO-1
DIRECT TESTIMONY OF JUDITH MARTIN
ON BEHALF OF PITNEY BOWES INC.
Communications
regarding this document
should be served on
Ian D. Volner
N. Frank Wiggins
Venable, Baetjer, Howard & Civiletti, LLP
1201 New York Avenue, N.W.
Suite 1000
Washington, DC 200053917
Counsel for Pitney Bowes Inc.
Dated:
M&y 22,200O
TESTIMONY OF JUDITH MARTIN
ON BEHALF OF PITNEY BOWES
Biographical
9
Sketch and Purpose of Testimony
My name is Judith Martin and I am Vice President,
Strategic Marketing
at
I have served
with the company
in
Pitney
Bowes
Inc. (“Pitney
responsible
Bowes”).
10
increasingly
11
position in 1997. My responsibilities
12
marketing
13
States and worldwide.
of postal-related
The purpose
14
positions for the past 12 years and assumed
include the development,
products
of my testimony
and services
enhancement
to customers
is to describe,
my current
in the United
from a business
why Pitney Bowes believes that the Commission
and
person’s
15
perspective,
should recommend
16
the institution
17
(overwhelmingly
18
technology
19
mailings.
20
Haldi (PB-T-2) who demonstrates
21
Dr. James Heisler (PB-T-3) who has performed a market survey to assess mailer
22
reaction
to the proposal.
23
provide
innovative
24
that the evolution of metering technology
25
worksharing
26
encourage
of a one-cent discount applicable to the first-ounce
small
business
and residential
as the means of affixing postage
My testimony
Our evidence
who
use metering
to their single-piece
serves as an introduction
the economic
mailers)
rate for mailers
to the testimony
First-Class
of Dr. John
benefits of our proposal
establishes
and to
that there is a need to
service to small office, home office and residential
mailers,
now makes it possible to recognize
efforts of users of this technology,
the
and that the discount we seek will
small mailers to migrate from stamps -- the most costly method of
1
evidencing
payment of postage --to metering, to the benefit of the mailer and the
2
Postal Service.
3
4
5
6
The Evolution Of Metering Technology
Makes It Possible To Respond
The Needs of Smaller Business and Home Mailers
The Postal Service and this Commission
7
have long recognized
To
that single-
8
piece First-Class
mail is the Postal Service’s most important -- core -- product.
It
9
is, however, the product to which the least attention has been given, particularly
10
as the service is used by smaller business and residential
mailers.
The Postal
11
Service
service
innovations
12
responsive
13
of the presort rates, automation
14
mail products are just some examples of this.
15
has
done
a very
credible
job
in developing
to the needs of its large volume First-Class
mailers.
discounts and of refinements
There is, however, a sizeable population
in its business reply
of small businesses,
home office
16
users and residential
17
for bulk discounts.
18
proportion
of the Postal Service’s
19
amounting
to more than 50 billion pieces per year. Despite its importance
20
mailer community
21
First-Class,
22
certainly since the passage of the Postal Reorganization
23
24
mailers whose individual
The introduction
In aggregate,
this community
rate structure
While the rate structure
use to affix postage
to these
counts for a very significant
core, single-piece
and the Postal Service’s
single-piece
mailings are too small to qualify
current
remains static.
has remained
single-piece
2
First-Class
to the
and future well-being,
the
It has been unchanged
Act thirty years ago.
static, the technology
mailings
mail product,
has not.
mailers can
Technological
in the means of affixing postage have made the stamp the most
1
developments
2
expensive
3
enabling
4
distributing
5
substantial
6
Postal Service.
method that a postal administration
its customers
and
selling
8
postage
9
from an already
is, as Dr. Haldi’s
the Postal Service’s
is evidenced
metering technology
11
now digital meters.
An important
testimony
of revenues
occurred
and
very
collected
by the
revenues
when
to decline
innovation
field, including migration from mechanical
innovation
shows,
has and continues
This is the result of technological
metering
revenues
The cost of creating,
net cost of collecting
through metering technology
low base.
10
12
stamps
payment of postage.’
in absolute terms and as a percentage
By contrast,
7
to evidence
has for collecting
in the
to electronic
and
in the late 1960s and early
13
1970s.
14
as computerized
15
name Postage By Phone@. Computerized
16
a convergence
17
technology
initially
18
telephone.
CMRS has become more efficient and easier to use as the result of
19
the development
20
user to reset the meter at any time of the day or night, seven days per week,
21
without leaving his home or office. CMRS makes it unnecessary
Pitney Bowes developed
the technology
that is now generally
referred to
meter resetting and that Pitney Bowes offers under the trade
of telecommunications
made
possible
of the computer
meter resetting (or CMRS) represents
technology
by the
modem.
1
with
development
postage
of the
evidencing
touch-tone
Simply put, CMRS enables a meter
for customers
to
See, Haldi and Schmidt “Transaction
Costs of Alternative Postage Payment and
Evidencing Systems” and “Controlling Postal Retail Transaction Costs and Improving Customer
Access to Postal Products.”
Copies of these articles are being submitted as Pitney Bowes
Library Reference 1 in this case.
3
1
take their meter to a post office to be reset or to request onsite meter resetting by
2
Postal Service employees.
3
it also yields substantial
4
data shows that about 92% of meters in the field today are reset without Postal
5
Service involvement.
Although
6
This is not only a great convenience
cost savings to the Postal Service. The Postal Service’s
CMRS enables the Postal Service to avoid huge costs, it is not
7
free to either the meter company
8
By Phone@, our company
9
separately
or its customers.
maintains
In order to provide Postage
a telecommunications/data
center (and a
located back-up center) to which all reset requests are routed.
10
Service regulations
11
that the customer
12
the meter and to reconcile
13
supports the Postal Service’s CMRS revenue collection function.
14
Bowes has made and continues
15
voice
16
process.
17
account
balance
18
meter
resetting
19
postagebyphone.com.
20
to meter users;
response
require us to perform all of the accounting
Postal
functions to ensure
has on deposit with the Postal Service sufficient funds to reset
our records
with those of the lockbox
to make substantial
units and fully computerized
We also provide toll-free
inquiries
is
The development
21
had three very important
22
this case.
23
terms of the availability
numbers
and assistance
also
accessible
investments
technology
Further, Pitney
in automated
to speed
and live operator
the reset
attendants
in the resetting
process.
through
Internet
the
bank that
for
Remote
now
at
of the electronic meter and of Postage By Phone@ have
consequences
First, recognizing
that bear directly upon our proposal
that the smaller mailer has been under-served
of efficient means of obtaining
4
and evidencing
in
in
postage,
1
Pitney Bowes has developed
2
ClickStamp@
3
Second, we have developed
4
meter while at the same time benefiting the Postal Service.
5
products
6
other things, Smart Mailer@, which is a CASS-certified
7
National
8
accuracy,
9
the Postal Service’s
and Personal
is a computer
Address
and is actively marketing meter models -- including
Post TM -- expressly
products that complement
software
Databases
updates
and enhance the use of a
An example of these
recommended
Among
program, provides
USPS
six times each year to insure address
detects and corrects addresses
and zip codes, converts addresses
format and enables
apply delivery
point barcode to their mailpieces.
11
variety of financial packages,
12
for postage
13
mailers to reset their meters and thereby
14
despite fluctuations
which facilitate
to serve that market.
program that we call Smart Mailer@.
10
1s
designed
mailers to create and
Third, Pitney Bowes offers a
including, in appropriate
use of the mail.
to
cases, extensions
These financial
continue
offerings
of credit
enable
to make use of the meter
in their own cash flow.
The most recent technological
innovation of metering technology
referred to as PC Postage.
is the IBI
16
device generally
The IBI device is simply a form of
17
metering
technology
18
dedicated
computerized
19
Pitney Bowes was authorized
20
internet-based
21
ClickStamp@
22
convenience
23
is that -- whether offered by Pitney Bowes or others -- PC postage systems share
that relies upon a multi-purpose
postage
computer
unit as the engine for applying postage.
rather than a
Earlier this year
by the Postal Service to market ClickStamp@,
evidencing
gives small business
system, and the company
and residential
mailers
its
is now doing so.
the capability
and
of metering their mail. For purposes of this case, what is important
5
an essential
and indistinguishable
characteristic
in common with CMRS meters:
2
These forms of postage technology
do not burden the Postal Service with the
3
cost of manufacturing,
distributing
4
be reset or recharged
without taking the device to a post office.
5
would apply to all metering regardless of the technology
and selling postage stamps and they all can
employed
Our discount
by the mailer.
A Metering Technology
Discount for Single-Piece First-Class Mail Would
Enable the Postal Service to Better Serve its Core Customers
Pitney Bowes believes that the metering technology
10
11
justified because
12
Service itself.
it serves the interests of single-piece
An examination
13
is the
case.
of the testimony
As
discount we seek is
mailers and of the Postal
of Dr. Haldi and Dr. Heisler shows why
14
this
Dr. Heisler’s
market
research
shows,
the
discount
15
encourages
16
and cost effective
17
Postal Service will realize substantial
18
metering technology.
19
who for years have incurred the cost of obtaining
20
that helps reduce the Postal Service’s cost, but have never received recognition
21
for the worksharing
22
proposed
23’
First-Class
24
proposed
smaller mailers to convert from stamps to the vastly more efficient
metering
Dr. Haldi’s analysis
technology.
shows
that the
cost savings when stamp users switch to
Fairness is also due to existing metering technology
efforts
they provide
users
and using a metering device
to the Postal
Service.
Thus,
the
discount will enable the Postal Service to offset the loss of single-piece
mail volume
in this case.
that would
otherwise
It will also empower
6
result from the rate increase
the Postal Service to capture
and
1
retain mail that is highly profitable
2
diversion.
In advancing
3
our proposal,
but increasingly
we have deliberately
4
Haldi points out that the one-cent
5
measured
cost savings the Postal Service
6
Similarly,
the
7
estimates
the extent to which the metering
8
migration from stamps to metering technology.
9
that our economist
market
research
discount
Dr.
of this metering discount
11
piece First-Class
12
to, take advantage
13
proposed discount.
represents
Heisler
performed
technology
very
discount
technology.
conservatively
will stimulate
The very conservative
will not unreasonably
approach
mailers who, for whatever
of the evolution
burden the population
in metering
16
benefit from it. The collateral benefits of increased
17
reduced pressure
technology
18
what
19
mailstream
20
acceptance,
to be cleanest
that underlies
First-Class
mailers
use of metering technology
type
and an increase
of mail in the
and delivery of all single-piece
For these reasons, as more fully developed
Bowes-sponsored
witnesses,
in
in the
First-Class.
in the testimony
we urge the Commission
7
--
First-Class
-- will serve to improve the Postal Service’s overall efficiency
processing
the
of the discount will nonetheless
on the Postal Service’s window operations
recognized
of single-
reason, choose not to, or are unable
who continue to use stamps after the introduction
is widely
Dr.
less than half of the
realizes from metering
15
22
been conservative.
There is a very real sense in which those single-piece
14
to electronic
and market analyst have taken assures that the introduction
10
21
susceptible
of the Pitney
to recommend
the
*
1
adoption
2
technology
of a discount
of one-cent
applicable
to pay the First-Class/First-Ounce
8
to mailers
single-piece
who use metering
rate.