.
RECEIVE11
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
JOL3 12OSPM'00
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OFFICE Ci:’ ‘I :I: SLC,C iA;:>
Docket
POSTAL RATE AND FEE CHANGES, 2000
No. R2000-1
RESPONSES
OF PITNEY BOWES WITNESS MARTIN TO
INTERROGATORIES
OF UNITED STATES POSTAL SERVICE
(USPSIPB-Tl-l5 AND USPSIPB-T2-4, 5,16(a)
USPS-PB-T3-11
(REFERRED)
Pitney
interrogatories
Bowes
hereby
provides
responses
to
the
above
listed
of the United States Postal Service tiled June 15, 2000.
Each
question is stated verbatim and is followed by the response.
The responses
Bowes witness
include USPSIPB-T2-4,
Haldi and USPSIPB-T3-11
5 and 16(a) addressed
addressed
to Pitney
to Pitney Bowes witness
Heisler. referred to Witness Martin for response.
Respectfully
submitted,
__
c,w+L
Ian D. Volner
N. Frank Wiggins
Venable, Baetjer, Howard & Civiletti, LLP
1201 New York Avenue, N.W.
Suite 1000
Washington, DC 20005-3917
Counsel for Pitney Bowes inc.
Dated:
July 3, 2000
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE
OF
USPWPB-Tl-1
On page 2 line 9 of your testimony you state that single-piece
Mail is “the product to which the least attention has been given...”
First-Class
(a)
Please confirm that the Postal Service has added the following
equipment components to its processing facilities during the past decade and
that this equipment has directly affected the costs for single-piece mail, thus
minimizing the need to increase First-Class single-piece
over time.
If not
confirmed, please explain.
(0
Advanced
Facer
Multi
Optical
Canceler
System
Input
Sub
System
Reader ~.tnput Sub
System
(AFCS-ISS)
Lihe
Character
(MLOCR-ISS;ii)
(iii)
(iv)
I::)
Remote Bar Code System (RBCS)
Remote Computer Read (RCR)
Letter Mail Labeling Machine (LMLM)
Mail Pr ocessing Bar Code Sorter
Output
Sub
System
(MPBCS-OSS)
(vii)
Delivery B ar C o d e S o rt er ID e I’rvery Bar Code Sorter Output
Sub System (DBCSIDBCS-OSS)
Please confirm that each of the following equipment components
(b)
would have a bigger impact on constraining the costs associated with processing
First-Class single-piece mail than it would on constraining the costs associated
with processing workshared
mail (presorted and/or prebar6xed
mail). If not
confirmed, please explain.
0)
Advanced
Facer
Multi
Optical
Canceler
System
Input
Sub
System
Sub
System
Sub
System
(AFCS-ISS)
Line
Character
Reader
Input
(MLOCR-ISS;ii)
(iii)
(iv)
(v)
(vi)
Remote Bar Code System (RBCS)
Remote Computer Read (RCR)
Letter Mail Labeling Machine (LMLM)
Mail Processing
Bar Code Sorter
Output
(MPBCS-OSS)
(vii)
Delivery Bar Code Sorter/Delivery
Sub System (DBCSIDBCS-OSS)
Bar Code Sorter Output
Please reference the chart in
30 (Tr. 33/17479).
Please confirm that the
in parts (a) and (b) have reduced the mail
the heterogeneous
single-piece mail types
not confirmed, please explain.
Cc)
Docket No. 97-1, USPS RT-17, page
equipment changes described above
processing cost differences between
over time as shown in the chart. If
Please confirm that the equipment changes described in parts (a)
(4
and (b) above have also contributed to improving the service associated with
First-Class single-piece mail. If not confirmed, please explain.
Response:
The question
testimony
on which it is based.
for First-Class
single-piece
avoid transaction
evidence
suggests
a misunderstanding
of the quotation
The point of my statement
the payment
mail does not provide mailers with any incentive
of postage through the use of stamps.
am aware that various automated
and/or designed
although
or semi-automated
processing
is not necessarily
and, therefore,
objective
presumably,
See response to subpart (a).
components”
in recent years.
pieces-zequipment
limited to, First-Class
this mail.
(b)
facilities”
to expedite the processing
mail) and that the Postal Service’s
expedite
mailers
the answers are:
that the Postal Service has added to its “processing
been installed
to
Without waiving
I am not familiar with the specifics of the “equipment
(4
rate design
costs that the Postal Service incurs when single-piece
any relevance objections,
includes,
is m&the
from my
I
have
of letter mail (which
single-piece
in making this investment
letter
is to
reduce the cost of processing
(c)
I have no knowledge
chart referenced
been presented
unable, therefore,
of the matters purported
in this interrogatory
to be depicted
or of any other evidence
by the Postal Service or by intervenors
in the
that may have
in Docket R97-1.
to confirm or deny the accuracy of the information
I am
contained
in
such chart.
I have no information,
(4
Postal Service establishing
and
(b) of this
associated
that the equipment
interrogatory
specifically
nor have I seen any studies produced
changes described
“contributed”
to “improving
the service”
with First-Class
single-piece
mail. However,
as explained
and that of Dr. Haldi, the discount
unrelated
to the quality
processing
Service
of First-Class
avoids
in the
metering technology
in subparts (a)
have
in my testimony
either
by the
of service
single-piece
manufacture,
is employed.
we have proposed
or the cost associated
with
is
the
mail but, rather, to the costs the Postal
distribution
and sale of stamps
when
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE
OF
USPS/PB-Tl-2.
On page 6 lines 21-24 you state that “the proposed discount will
enable the Postal Service to offset the loss of single-piece
First-Class mail
volume that would otherwise result from the rate increases proposed in this case.
It will also empower the Postal Service to capture and retain mail that is highly
profitable but increasingly susceptible to electronic diversion.”
Did you conduct
any market research or other studies that sought to determine how the Pitney
Bowes and/or PC Postage discount proposals would affect the extent to which
First-Class single-piece mail would be prevented from diverting to other (e.g.,
If so, please provide copies of all documentation
electronic) alternatives?
associated with those studies and discuss the conclusions you reached.
If not,
upon what evidence do you base your claim?
Response:
This is a compound
question
relates to “the loss of single-piece
which
First-Class
result from the rate increase” proposed,
the testimony
establish,
Service’s
separate
answers.
volumetric
is based
witness,
market research
the statement you quoted is based upon
upon the analysis
Dr. Tolley.
and workpapers
provided
We did not, the&re,
to determine
by the Postal
conduct
any
the extent to which the proposed
discount would enable the Postal Service to offset the loss of single-piece
Class mail volume that would otherwise
As it
mail volume that would otherwise
of Dr. Haldi at page 25. As Dr. Haldi’s testimony
his conclusion
independent
requires
result from the rate increases
First-
proposed
in this case.
As to that part of the statement
Service to capture
electronic
diversion,
that the discount
will enable the Postal
and retain mail that is highly profitable
please
see the article
by Robert
but susceptible
Reisner,
USPS
to
Vice
President
testimony.
for Strategic
Planning
See also PB-LR-4.
metering
technology
reference
in the interrogatory
proposals”).
discount
quoted
and cited at page 19 of Dr. Haldi’s
This response
proposal;
is confined to the Pitney Bowes
I do not understand
to other proposals
(“and/or
the apparent
PC Postage
discount
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE
OF
USPSIPB-Tl-3.
Have you conducted any market research or other studies that
sought to determine whether the general public actually wants de-averaged FirstClass single-piece rates (compared to the one current 33-cent rate for a firstounce mail piece)? If so, please provide copies of all documentation
associated
with those studies and discuss the conclusions you reached.
Response:
No. The only study that we performed
presented
by Dr. Heisler.
Testimony
in conjunction
with this case is that
of Dr. James Heisler, PS-T-3.
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE
OF
USPS/PB-Tl-4.
On page 7 lines 18-19 of your testimony you state that the
increased use of metering technology will result in “an increase in what is widely
recognized to be cleanest type of mail in the First-Class mailstream.”
(4
(b)
recognized
Please explain what you mean by the term “cleanest type of mail.”
Please provide the basis for your assertion that this mail is “widely
to be the cleanest type of mail in the First-Class mailstream.”
Please provide or reference some quantitative data that you feel
(c)
supports this statement. If no data is provided or referenced, please explain how
your assertion is valid.
Response:
In context, my statement that the use of metering technology
an increase in the “cleanest type of mail in the First-Class
understood
(4
to refer to single-piece
Use of metering
printed addresses
produces
computer
--
applied
when used in conjunction
(see page 5 of my testimony),
“dirty”
mail featuring
applied to the mail piece.
handwritten
or pre-
display a high degree
The contrast,
and more frequently
in the
with products
address and zip code accuracy in the Postal Service’s recommended
delivery point barcode
should be
mail that is “clean”
feature typewritten,
and that, particularly
such as SmartMailer@
mailstream”
First-Class mail.
technology
sense that the pieces generally
will produce
incorrect
of
format with
therefore,
is to
or incomplete
addresses.
(b)
“cleanest
My conclusion
type of First-Class
that the use of metering
technology
mail” in the sense described
produces
in my response
the
to
subpart (a) is, I believe, consist with the views expressed
witnesses
(4
percentage
However,
by the Postal Service
in this case.
I do not know
of metered
that quantitatively
measure
the
mail that is clean in the sense described
in subpart
(a).
since my conclusion
of any studies
to be consistent
with the views of the
Postal Service and those of the Postal Rate Commission,
I believe it to be both
widely recognized
and valid.
appears
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE
OF
USPSIPB-Tl-5.
On page 7 of your testimony, you state that . ..“the market
research Dr. Heisler performed very conservatively estimates the extent to which
the metering technology
discount will stimulate migration from stamps to
metering technology.”
Please provide the basis for your statement that Dr.
Heisler’s estimates are very conservative.
Response:
As Dr. Heisler explains
survey
and applied
estimates.
(PB-T-3
the adjusted
at 8-9) he adjusted
intent
estimates
In my opinion, using 80% of the “extremely
estimate of the user population
is very conservative.
the results of his
in ‘converting
to volume
likely” respondents
as the
that would likely migrate to metering technology
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE (REFERRED)
OF
USPSIPB-T2-4.
Identify and describe all factors other than changes in postal rates
which would motivate mailers to use meters to affix postage instead of stamps.
(a)
Have any studies, surveys, or market research been conducted by
(b)
or for Pitney Bowes on this subject?
If so, please provide copies of all
documents related to such studies, surveys, and research.
Response:
(a)
changes
It is impossible
to “identify
and describe
all factors”
other than
in postal rates which would motivate mailers to use metering technology
to affix postage instead of stamps.
(b) of this interrogatory,
Bowes witnesses
The studies provided in response
as well as other interrogatories
propounded
provide some indication of the considerations,
given by mailers to the considerations,
to metering technology.
to subpart
to Pitney
and the weight
that might prompt stamp users to migrate
Dr. Heisler’s testimony
certainly est%fishes
that a rate
incentive is a significant factor to mailers in making this choice.
(b)
Pending).
See Library Reference
4, and 5-7 (Motion for Protective
Conditions
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE (REFERRED)
OF
USPSIPB-T2-5.
What percentage of current users of postage meter technology
use it, in part, to minimize their own costs associated with obtaining and
maintaining a stamp inventory and affixing stamps to mail pieces?
Response:
I know
addressed
of no studies
in this interrogatory.
well take into account
maintaining
that are directly
Certainly,
responsive
one of the factors a mailer may very
in electing to use metering technology
(and securing)
to the two issues
is the problem of
stamp inventory and the inconvenience
affixing stamps to mail pieces.
See my response to USPSIPB-T2-4
of individually
(a).
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE (REFERRED)
OF
USPSIPB-T3-11.
At page 7 of his testimony, Pitney Bowes witness Martin
very conservatively
states, “...the market research Dr. Heisler performed
estimates the extent to which the metering technology discount will stimulate
migration from stamps to metering technology.”
Please describe all the ways in
which your estimates are “very conservative.”
Response:
See my response to USPSIPB-Tl-5.
PITNEY BOWES WITNESS MARTIN RESPONSE TO INTERROGATORY
UNITED STATES POSTAL SERVICE (REFERRED)
OF
USPSIPB-T2-16.
On page 25 lines 8-10 of your testimony you state that “the
increased convenience associated with metering technology could draw in new
customers, or lead existing customers to increase their usage of Postal Service
[products].”
Have you conducted any market research or other studies to
(4
determine whether this would, in fact, happen? If so, please provide copies of all
supporting documentation.
Response:
(a)
See my response to USPSIPB-Tl-2.
See also PB-LR-4.
--
ATTESTATION
I, Judith Martin, declare under penalty of perjury that the foregoing
answers
to interrogatories
were prepared
control and that such answers
information
Dated:
and belief.
6--I5700
by me or under my supervision
and
are true and correct, to the best of my knowledge,
CERTIFICATION
I hereby certify that I have this day served the foregoing
all participants
documents
of record in this proceeding
in accordance
having requested
document
upon
service of discovery
with Section 12 of the rules of practice.