 Today's event is not about the history of email, nor about Shiva himself. It's about the future of the post office, as Shiva and I both strongly agree. I'm scarcely alone in believing that this is a fundamental question, the future of the post office. It's a fundamental question, not only because today's postal service confronts daunting immediate problems, as our forum will surely demonstrate. It's a fundamental question because the history of the post office is so intimately, and some, including myself, would say gloriously, tied to the history of American democracy. However diminished and threatened, the post office remains an institution that claims the affection, the loyalty, and increasingly alas, the nostalgia of many of our citizens. The recent announcement, for example, of possible Saturday closings, generated a raft of pained articles in places like the New York Times and the New Yorker, not to mention an ocean of commentary that appeared in the blogosphere, just over the possibility that Saturday deliveries might be curtailed or stopped. One measure, then, of the cultural importance of the post office, we might say, is it's almost mythic status in our popular culture, in our songs, our poems, our novels, our visual art, our plays, our movies. I'm reminded of a movie, many of you, a great financial catastrophe, and one of the, on many people's lists of the 10 worst movies of all time, although not for me because I love the post office, a film, some of you may know, Kevin Costner's ridiculous post-apocalyptic film called The Postman. But I mention it because, if you think about it, based on a science fiction novel that had been published in the 80s, the film came out in the late 90s. It's a very interesting film from a postal standpoint because essentially what it posits is that the post office is the last vestige or remnant of an idea of democracy and personal autonomy. And in this post-apocalyptic world, the Postman's uniform comes to stand for freedom. It comes to stand for a civic community which has to be re-established after some kind of typical science fiction apocalypse. The Postman is one of the least interesting from an artistic standpoint, of an immense range of artistic and narrative expressions that grow out of and that have been animated by or inspired by the realities of the post office in American life. So as we consider the fate of the post office today, we must, I think, be conscious of the fact that all the major institutions of modern society, libraries, universities, our systems of art and entertainment are all being transformed by the digital future now impending. One overriding question then is not the specific details of this or that financial rescue package for a beleaguered employer, but the question of the civic democratic principles that establish the post office. Will those values survive in the digital age? I hope that that question will at least hover over our discourse for the entire afternoon. It's now my pleasure to introduce the moderator and co-organizer of this event to whom I'm very grateful for his intelligence and help in organizing this forum, Shiva Ayyadurai. He's a lecturer at MIT in both the Department of Biological Engineering and Comparative Media Studies as director of the email lab. He works with the US Postal Service of the Inspector General exploring ways to retain postal workers' jobs through the provisioning of email services. His book, The Email Revolution, is forthcoming this fall. Shiva. Thank you, David. Thanks for that warm introduction. So it's a pleasure to host this forum today and I appreciate David's comments on putting why we're hosting this forum today. This is not about me. It's really to talk about the future of the post office. And it's a very, very important question and I think it's a very personal question. I just want to share an aside. When my father came here in 1969, he came here with $75, it was a time of the recession and the job that he was promised didn't exist. So he went to the YMCA and he became very friendly with the local postman, a guy by the name of Max Novik, who ended up becoming very close to my father and ended up taking my father home tip in his home. And when we first came to the United States, we stayed in the home of the postman. So to me, the US Postal Service is a very touching part of my personal life. And relative to the issue with mail, how have I been involved in it and how did I get here and how did David and I end up doing this? Was my history with mail goes back to a long time. For me, when I look at mail, be it email or postal mail, I've always seen mail as something print or digital that gets processed in a very similar way. In 78 at the University of Medicine Dentistry, it was an opportunity for me to look at mail in the electronic form. In 93, I had the same opportunity with the White House to process mail in a similar way to help the White House. And in 97, as I was mentioning to David, it was an opportunity to go back to the US Postal Service and say, hey, look, the Postal Service should also look at mail in both its print and electronic format. And so last year, when I heard about the impending disruption with the Postal Service, I reached out and I said, look, the Postal Service should, again, look at both opportunities, print and electronic. And that led to a series of articles. And finally, I had the opportunity to meet David Williams. David reached out and he said, yes, there are people who are looking at this. There are other opportunities that the Postal Service needs to look at. And it ended up becoming initially a collegial relationship and we started to think about through the email app to host a series of workshops and look at this. And that ended up with David and I recognizing that this is a much larger issue and we needed to have a forum about this and that led to this. So that's how we got here. And I wanna encourage everyone to have a lot of fun at this. We have excellent speakers here. And the format of this evening's forum is gonna be sort of a hybrid part where the three speakers will have the opportunity to present 10 to 12 minutes. I will be the time jerk because we wanna make sure we have the opportunity to get everyone here to participate. Richard John is a professor at the Columbia School of Journalism. Richard will first present, he's a noted historian on the Postal Service. And Richard is gonna give us an educational run through the Postal Service. Then we're gonna go to Kent Smith, who's the manager in the Office of Strategic Business Planning in the US Postal Service. Kent is gonna bring us up to date what is the current situation and then what is a strategic plan for the Postal Service over the next five years. And then David is gonna give his presentation as the ombudsman in some ways of the American people as the Inspector General, what recommendations he's made, some of the new vision he's put forward. And that's gonna be in a presentation format. After that, the speakers will come up and I'm gonna facilitate a moderated session around four to five questions. Hopefully that'll go for 20 minutes and that'll take us to around 625. And that'll give us hopefully 20 to 40 minutes of all of you to participate in the discussion. And in that participation, there are two mics set up and everything, as you notice, is being taped. So please come up to the mic and ask a question. Please hold the commentary, ask your question, then each of the speakers and myself may respond to that. So that is a format for this evening. I'd like to first of all introduce Richard John from Columbia, he's a professor of journalism there. Richard? Well, thanks so much, David and Shiva for organizing this and Shiva for the very gracious introduction. For many years we've been told that Benjamin Franklin is the founder of the post office and that the values and ideals that Benjamin Franklin exemplified have forever after shaped its destiny. And I'm here tonight to tell you that that just ain't so. That Benjamin Franklin's contribution to the post office has been much overrated and that I think in some ways it distorts our understanding of its civic mandate, like to propose an alternative founder of the post office, the revolutionary philosopher, statesman and enlightenment philisoph Benjamin Rush. Benjamin Rush in January 1787 articulated something that Benjamin Franklin never did, civic mandate for the post office and a remarkable address to the people of the United States. For the purpose of diffusing knowledge as well as the living principle of government to every part of the United States, every state, city, county, village and township in the union that should be tied together by means of the post office. This is the true non-electric wire of government. Perhaps a reference to Franklin there. It's the only means of associated electricity. It's the only means of conveying heat and light to every individual in the federal Commonwealth. It should be the constant injunction to the postmasters to convey newspapers free of all charge for postage, a conviction that was shared by George Washington, not ultimately adopted. But newspapers are not only the vehicles of knowledge and intelligence, but the sentinels of liberties are country. So what I'm proposing here is that the civic mandate of the post office is broad, dynamic and open-ended. It was something that Benjamin Franklin simply could not have foreseen. He dies in 1790, just the moment when the constitution is being operationalized. And it's the operationalization of the federal constitution that leads to the institutionalization of the civic mandate of the post office that Russia articulated so brilliantly in 1787. There's no ringing preamble to the Post Office Act of 1792, which is the foundational legislation for this remarkable institution. Yet it has three key provisions. First, a rate structure that provides very low advantageous rates for the circulation of information on public affairs, newspapers, soon thereafter, magazines. Second, development strategy that gives control of the extension of the postal network to Congress in effect giving it to the people rather than the executive, hastening its remarkably rapid expansion, expansion of the network beginning in 1792. And third, and by no means incidentally, a surveillance standard that prohibits the opening of letters for the purpose of inspection, for the purpose of surveillance. So you have a rate structure, development strategy, surveillance standard set 1792 based on enlightenment principles embodied best by Benjamin Rush. For if the people were sovereign, as the constitution proclaimed, it seemed indisputable that the government had an obligation to provide them with regular broadcasts on public affairs from the seat of power. No longer is access to information about public affairs a privilege, rather it now became a right or more precisely a practical necessity for a government whose legitimacy rested in the sovereignty of the people. The mail declared one lawmaker in the course of the debate over the post office after 1792. The mail had been established for no other purpose than the conveyance of information into every part of the union. Those are two foundational statements of the civic mandate of the post office. The mandate of the federal government to circulate information was seldom questioned and only on rare occasions was it even debated. At least in part, this was because contemporaries presumed that the benefits of the circulation of information to be not only political but also economic. To stimulate the desire for exchange, explained the American political economist, Francis Weyland, in an influential textbook he published in 1837. To stimulate this desire for exchange, lawmakers had at their disposal on the limited number of tools. And among the most effective of these tools was legislation to foster the physical means for the dissemination of knowledge and intelligence through the establishment of an efficient and cheap post office system that should pervade every portion of the country and bring to every man's door all of the information circulating throughout the civilized world. It was a system because of these cross subsidies. These cross subsidies facilitated the low cost circulation of newspapers and magazines throughout the length and breadth of the country. The complete transmission of intelligence to the most distant point, reflected a jurist in 1873, was one of the conditions of civilization. For should lawmakers eliminate these cross subsidies, circulation of newspapers, magazines, should lawmakers eliminate these cross subsidies, goodness knows what the future would hold. And here I quote, one could hardly imagine what would be the condition of national affairs if the greater part of our population cut off from letters and newspapers knew little more of the affairs of Washington than the returning members of Congress chose to tell them. The post office department could never be dispensed with was the one agency of government that came impartially to every man's door. There's that phrase once again. The kinds of information that the post office department had a civic mandate to circulate expanded repeatedly. 1790s, the mandate was confined primarily to information on public affairs. Here we have, I'm gonna show them rapid succession, three of the first most notable genre paintings all set in explicitly set in post offices. There's the mail arriving in 1814, and there's the mail, the news arriving of the war in Mexico in 1848. Notice the sign indicates post office, and there's the California news, 1850. These are our coffee houses, the place you got information on public affairs. By 1825, the mandate embraced information on market trends, and for a period of time, the government actually tried to outpace private carriers in the circulation of information concerning the price of cotton, the price of wheat. This principle led Samuel Morse to commit himself to trying to sell his patents on the electric telegraph to the government. It led to a project that was never consummated. There's the mail stage which moves the mail quickly, the early republic, and my unconsummated project which was the horse drawn monorail was supposed to go from Washington to New Orleans, a favorite of the Postal Administration of that time, and it led to the fast mail, 1875, and eventually to the commitment, conviction of a large number of Americans by no means only radicals, that the government should take over the electric telegraph, dispossess, Jay Gould, you see him in the background there, Uncle Sam taking over the telegraph and grafting it on to the post office department, with a remarkable statement of the civic mandate of the institution, the best kind of monopoly, let the people's government supply the people's information. By 1845, the mandate expanded to embrace information on personal matters by 1913 to parcels and also to the provisioning of the basic level of savings, Postal Savings Packs. How has the mandate of the post office understood today? And in recent years, lawmakers have asserted that the post office has a universal service obligation, phrase universal service obligation. For the historian, the most remarkable fact about this phrase universal service obligation is its novelty. Before 2002, the phrase does not turn up in an electronic keyword search of the annual reports of the postmaster general. In the related phrase, universal service is only slightly more venerable. Its first occurrence in an annual report of the postmaster general, I'm able to locate, occurred in 1990, and the first time the phrase universal service appeared more than once, this time it occurred twice, was in 1995. Now the invocation of the phrase universal service in a postal context before 1995 is hardly unknown. The phrase appears twice in the executive summary of Toward Postal Excellence, a major congressionally funded study of postal policy that Lyndon Johnson commissioned in 1967. It's a matter of speculation why the authors of Toward Postal Excellence included this phrase universal service in their executive summary. One explanation could be found in the occupational background of the committee that headed up the commission. The commission included several business leaders who would have been familiar with the phrase universal service in the context of telecommunications. In fact, the chair of the commission, Frederick Cappell, was himself the recently retired chair of AT&T, a corporation that had used the phrase universal service extensively in its public relations advertising since the early 20th century. As we see here from this bell system ad, parking back to the opening decade of the 20th century. In a recent essay, the justly respected historian of postal policy has proposed defining universal service in a postal context as a communication safety net. And it seems to me that this is too narrow. But the idea of a safety net is but one facet of the civic mandate of the post office as it has been understood much of our history. It presupposes this mandate that the post office will maintain a communications network for the entire population that promote goals that are included, that include, but are by no means confined to, the circulation of information on public affairs. To equate this mandate with a safety net would have seemed to earlier generations of lawmakers including the founders to be unduly narrow. The civic mandate embraced everyone and not merely those individuals who might find themselves marginalized by technological advance in the means of communication. So to conclude, the mandate of the post office has embraced at different times a variety of values of which the most enduring of an openness and inclusivity. Openness and inclusivity are like universal and service notoriously hard to define and almost impossible to measure with any precision. Yet if we take Russia's 1787 address and the printed reports of the congressional debates over the post office act of 1792 as our proof text, it's evident that the lawmakers who established the post office presumed that the federal government had a duty to provide the entire population with access to information, including information on public affairs. In the 1820s, lawmakers expanded this mandate to embrace information on market trends. In 1845, they expanded it to personal matters. This egalitarian dimension of postal policy received a particularly forceful expression in 1917 when postal administrator Daniel C. Roper underscored its civic significance. The struggle for human rights, Roper declared, and here I quote, presupposed free communication on equal conditions while, and here I quote again, progress in the facilities for such communication had made the post office a democratic institution. So what I've proposed here is this civic mandate for the post office goes back to the 1790s, not quite so far back to Franklin, and that there's a reservoir of goodwill that resides in the institution as a result of this civic mandate. And just as an epilogue, this reservoir of goodwill, I have my own movie to propose the miracle on 34th Street, 1947, in which the key plot twist, the end, where we have Santa Claus and the Little Girl. If you know this movie, The Little Girl leaves in Santa Claus, the world is unforgiving, yet in the penultimate scene, we discover the judge who's buried under mail addressed to Chris Kringle, Santa Claus, and he throws out the case against Chris Kringle because the post office department has declared that yes, there is a Santa Claus because that's for whom that mail was addressed. And it is these reservoirs of goodwill, I think that as we go forward, reservoirs that go back to the founding of this country and absolutely essential American democracies has come to be understood that we can draw on as we look forward to an uncertain future. Thank you. Thank you, Richard. So our next speaker is Kent Smith and Kent's the manager of the strategic planning group in the U.S. Postal Service. Kent. Thank you. Now for many of you are not familiar with the history and background of the Postal Service, but many of us who work there have worked our entire lives there. It's a culture that goes back several hundred years and many of us have been there for almost that long. Some of us, most of us in the Postal Service come up through the ranks. I was a mail handler way back when. And the love for the Postal Service, this idea that there's something more to it than just our day-to-day jobs is really a part of who we are and what we are. And this idea that we go everywhere and we deliver to the bottom of the Grand Canyon, dog sleds in Alaska and all this other kind of stuff, it's really a part of what we live and breathe. Now I was asked to talk about how we got to where we are now and how we plan to get out of it and perhaps talk just a little bit about the future, okay? You're all familiar with the news. We've been, it's been well publicized that we're facing a financial crisis. There's a couple of reasons behind that. But I wanna start with this idea that the Postal Service, even the most recent version of the Postal Service, yes, we're 235 plus years of history. Since 1970, we've undergone at least two major transformations that would just astound most business school and public policy students. We went from the Post Office Department to the Postal Service, a pure government organization with a cabinet head for a leader to a self-sufficient, break-even mandate organization. We also went from manual handling of almost everything to a very highly automated system. And we did that while the system was in motion. It was an incredible achievement that is kind of in the background of most people's consciousness. Most people don't realize what it took to get us successfully through the last 35 years. It was an incredible amount of organizational transformation. We actually have that in our DNA as we face the challenges of this particular future. Our challenge is, of course, that we've got to do both a business model change and an operational change in a shorter period of time than the 35 years we had under Postal Reorganization in a much less forgiving environment. Since we are so much in the background, we're taken for granted in many ways. But when you look at some of these numbers, you come to realize we are huge. And one of the things that gets lost in some of the discussions about the future of the Postal Service is that even if we all agree with the assumption that male volume and revenues will continue to decline over the next five to 10 years, in five to 10 years, we will still be a huge organization and we will be the center of an enormous amount of economic activity. In five to 10 years, we are still likely to be a Fortune 500 company if we were listed on the Fortune 500 list. We would be the largest fleet owner. We would have probably, even if we got rid of all the post offices that anyone would want to get rid of, we would still have more retail locations than anybody else. So when we talk about the future of the organization five, 10 years from now, we're talking about the future of a huge organization that will still be the center of an enormous amount of economic activity in the country. Now, we would be foolish not to understand and not to admit the future that we face and the future that we've gone through, the disruption caused by technology and the whole digital future and email and everything else, social media and all the other things you kind of consider. And in some ways, when we talk about the Postal Service, we talk about the Postal Service being an old ancient creaking organization holding onto the ways of the path while our customers are coming to us with iPads and all sorts of other things like that. It's not really the story. Now, we mostly talk about the public policy uncertainty. We talk about the pervasive technological changes. We don't talk as much about some of the demographic and social trends, the new normal of household finances and things like that. Let me use a very, very brief example that has nothing to do with electronic disruption but plays a major role in the volume history of the Postal Service, both going up and going down. Most of you are familiar with the idea of credit cards. Used to be that nobody had credit cards. Now, 20 years ago, almost nobody did. And then credit card industry developed this whole concept and there was an enormous amount of mail generated as we all got two, three, four, five and I don't know how many, what the average household peaked out at, which was about nine, something like that. And then we, they started, okay, no one was getting any more credit cards so they fought among each other, come to my credit card, come get my points, my lower rates, whatever. And still generating an enormous amount of mail at a response rate of one to 2%, but it was still the best deal in town for them. Now all that mail volume came up, reached its peak and started to decline before and irregardless of anything having to do with electronic mail, electronic, whatever, it was just part of what comes in the mail, what leaves the mail. Part of a cycle that's gone on for next to forever. Now, we face a fairly grim assessment of our current future and at its very basic, we know volume is going down and unfortunately the volume that's going down is our most profitable line of business, first class mail. At the same time, we're not permitted to raise our prices any more than the rate of inflation. In fact, even before that became a legislative mandate as a result of the Postal Accountability Enhancement Act, that pretty much was our policy, not to raise rates faster than the rate of inflation. And that's pretty much what we did since 1970, even though we were absorbing a subsidy that had been a quarter of our budget. And we no longer, of course, despite all the myths, we no longer accept public funds. We are completely self-sufficient, okay? At the same time, our fixed costs, this infrastructure, these thousands of post offices and all the other things that we do continue to grow even in the recession. We had new delivery points growing at the point of about a million plus deliveries a year and we have to deliver to all of them. At the same time, we've got a relatively high cost labor intensive organization. So now this is a tough nut for any organization of any amount of skill to handle. This was part of the issue, but this we were prepared for. And we made massive changes over the last decade. Some of the things that we've done parallel anything that was done with the auto industry or anything else. We took out more than 120,000 people, mostly through retirement. We closed facilities. We gradually decreased facilities from, we're showing here, 673 to 487. We did that before people got really excited about it, but we're just talking about now doing a little bit more and a little bit less time. It's scary, but it's something that we were able to do successfully. During that time, we dramatically increased service quality. The American Service Quality Index and Independent Assessment tells us that we are the most improved organization of all the organizations measured by their assessment since 1994. That's pretty good. At the same time, we've had a steady improvement in customer satisfaction as we measure it, and we've introduced all sorts of new mail-related products and services. We've done the other kinds of things that companies facing the kind of challenges that we do. We've reduced administrative overhead. We've closed administrative offices. We took out from the overhead administrative positions. We've frozen salary. All the things you read about happening in the private sector, we've done and have been doing. To the point for almost the last decade, we've been reducing our costs by about $2 billion a year. And so, we've been keeping our head above water quite well, thank you. And in fact, even though until 2007, we were mandated to break even. That was our requirement, not to generate a profit, but to break even. We were doing fairly well, as you could see here. Then came the recession, and that made, I think, just a little bit difficult. Then we had the unique application of what they call pre-funding retiree healthcare. And since we've got a lot of employees, that's a lot of people. Now, we're the only organization, public or private, that has this mandate. And it's a huge mandate, and you can see what it did, or what it's projected to do to our bottom line. Without this, we wouldn't be talking about quite the crisis that we are. So we've got a path to profitability. We've got a plan. It's fairly detailed. We've exposed it to all sorts of people, private sector folks who specialize in restructuring, corporate restructuring. And they say, yeah, you've got the basis covered. You're doing what a responsible business would do. And this is what we're planning. This is our fundamental basis for our restructuring plan. We're gonna preserve the mission, mission that a good professor talked about. We are still gonna maintain our role as a platform for the development of commerce, our transformation, and we don't want to go back to depending on taxpayers. It's just not the place where we wanna be. And we want to be fair to employees, customers, and to other stakeholders. So like any planner, we can't tell the future, but we can talk about scenarios. And I've got four, and I'm gonna talk just briefly about one, because it's the most counter-cultural and the most challenging to most of the people who talk about the postal service. And what it is, since I'm here at MIT, I'll talk about an ecosystem of systems. And it's not about the postal service, not just about the postal service. It's about the mailing industry broadly speaking and the technology that exists around it. If you posit the idea that the postal service can continue to improve in all sorts of interesting ways, but at the same time, the value chain, the people who are creating the mail, we are the channel, we carry the mail. Other people create the content and to succeed, they're going to have to create more relevant content. And all of this is going to be done, at least in part, with digital technologies being applied to postal processes, to the mail, and to the whole value chain. So when we push ourselves back just a little and think not so much about we're trying to save the mail, we're not. We're trying to help customers, both businesses, and consumers do jobs that are important to them. Clayton Christensen's idea from Cross River at Harvard, the idea that what jobs are they hiring the postal service to do? And when you look at our role here, the opportunities to do the kinds of things that are a little more novel than merely deliver mail. That's not what our carriers do. They help people do things that are important to them. If it was just snail mail delivering junk, we wouldn't have the kind of employee commitment that we have. They know that this stuff is important to the people they deliver to. So think about this kind of future. What if? Take a quick look at this, because my time is almost gone, but I want to show you the strategies that we have. They're sensible strategies, they're balanced, and they're interdependent. We have to succeed on all of them. They're the kind of stuff that a good business would do, not necessarily the kind of stuff that we've really focused on the past with our heritage as a government monopoly. So the real creativity will come from this, not the creativity of any of the silos. It will come at the boundaries between the postal service and the industry, between the industry and the customers, as we come up with new and creative ways to collaborate, to do things a little bit differently, to add value. And so that's my story and I'm sticking to it. Thank you. Thanks, Kent. So we're gonna have our final formal presentation by David Williams, who is the Inspector General of the Office of the Inspector General of the U.S. Postal Service. David. Thanks you very much. We stand at the crossroads of a dangerous crossroads of the nation's postal system today, and it's what I wanted to talk about. Two things need to be done. Well, the crossroads that we stand at are that we're losing billions of dollars and have been losing billions of dollars. And we've been told not to modernize the mission of the postal service to become a bug in amber. Two things need to be done to pull out of this. The first is we need to optimize the postal service. And the second is we need to begin providing adjacent digital services to extend the universal service obligation to the entire spectrum of messaging and parcel delivery. Let me talk about optimization first. We need fewer post offices in the right places to meet supply and demand. And at hours that match modern lifestyles, which we don't always do. We need to recognize that both partners and in relationships are working and unavailable during the day and need the services at night. For our big processing facilities, we need to focus on volume throughput and not exceed that. And lastly, for delivery, we need to standardize delivery. Some people get it at the door, the property line, cluster boxes. We need to move them out in a standard way so that we can run a business operation. That's probably going to be the property line and if not practical for cluster boxes. The next thing we need to do is greatly simplify the way we do business with customers. We have a 1700 page manual that we give customers, including our poor new customers. We have 7,600 prices for three products and some services. People actually hire middlemen to find out how much it will cost to put stamps on our products. That has to change. The last thing is there are government raids going on in progress that inflate prices greatly. Unfunded mandates, overpayments, and overfunding into our benefit programs that would provide for billions of dollars of relief. 13 billion, immediately billions each year to provide a lean, strong infrastructure for the traditional mail service. Another thing that takes sort of a deep breath to keep in mind is this isn't the first time we've had this kind of challenge. We could talk about a lot of times, but you may remember the paperless, that happened in your lifetime, the paperless society. Within a very short time, the usage of paper had increased by 400%. Low cost of printers, distributed printing, and people mysteriously like paper, and they really like it when they're having a dispute with someone. They don't want them to hold all of the cards. In its heyday of the paperless society, the postal service also grew dramatically. And that's the way it was with the telegraph, on the telephone, broadcast television, and radio, the fax machine, the computer, were each supposed to kill mail. And instead, they entangled and energized one another and grew dramatically. Some of these threats themselves have turned around the bend and the river of time, and they're gone. And the postal service has again energized and joined new technologies to become larger than ever. This entire time, there was growth, including when the computer threatened things. It grew to 213 billion pieces delivered annually by the postal service, an enormous amount, almost half of the world's. Then came the Big Bang occurrence, the internet. And the elimination of time and distance from messaging, the messaging side of things. The next thing that happened was that smart devices and social networking erupted in kind of a secondary explosion. And showers of innovation and creative destruction rained down on the world of our childhoods. Newspapers, magazines, broadcast television, music, motion pictures, bookstores, and the port postal service were all inside the blast radius of this very changed world. Even relatively new innovations didn't make it. CDs, DVDs, desktops, laptops are currently under pressure. Email began fragmenting into text and tweets and blogs in a very unsettled world of respective roles and interdependencies that's still going on for a multitasking world on the move, just addicted with faster, better, and it is a better world. I certainly don't mind that. Okay, so social networking and smart devices found each other. And for generation-wide, the rest of the world grew very dim. When you could have conversations and hang out together, laptops and email became so five nanoseconds ago and everybody began feeling sorry for the poor old fogies of the Generation X kids. When the dust settles, it's very unclear what America wants and what they need for the road ahead. We don't know a lot of things that are currently going on. Is email killing mail or tweeting and texting and blogging, killing email? Or is email going to become the formal mode of rapid communications and tactile paper and envelopes the very high end of that continuum, going all the way down to tweeting and texting? For the moment, we can't tell what's going on. Very strange artifacts of the past and sort of edginess or coexisting. We see chatty conversations going on in correspondence and official reports that we would not have ever seen. We're getting tweets when we should get emails, emails when we should get letters, condolence tweets for the love of God. And businesses are responding to emails as they normally did to mail, which is a real slap on the face to the person that sent that email. They do not expect the answer in two weeks. Future generations are gonna laugh at this period where we're doing virtual work in a brick and mortar environment that we threw the cage door open and the animals won't leave the cage for some reason. So how in the world to follow the kind of carc's trajectory of this age of communication? The cycle time for everything's being reduced to something like chaos. And inversely, there's a lengthening tail of digital refugees and technophobes that are beginning to drop out from far back from the edge where others are existing. A very important issue in all of this, totally unsettled is who's gonna own and operate this emerging national infrastructure. Corporations are absolutely great. We can't do without them. Would you like them to be your government? Is the next question that we need to take on and on the road ahead. Corporations come and go. They go bankrupt, get taken over by other corporations that don't have any interest in the previous commitments and corporations get indicted and there goes your infrastructure. They have conflicts of interest. Issues like net neutrality and common carrier philosophies should be decided by the public, not by a corporation. Corporations haven't always been trustworthy with people's private data and profiling. And companies that own the infrastructure may not be entirely fair with their competitors who are dependent on that infrastructure. In fact, they may want them to burn in hell far from somebody that's going to be protective of them. So the traditional infrastructure has served to bind the nation, promote democracy, enable the information flow and commerce and assure inclusion. Americans care a lot about inclusion in a way that maybe the rest of the world is forging ahead and do not. When you take a walk outside one of the tech centers in China and other emerging countries, by the time you finish that walk, you're beginning to see people pulling plows being dragged by water buffaloes. Just a sea of humanity desperately poor in these listening towers. That's not a very American thing to do when America hasn't tolerated that in the past. The current infrastructure has served the country well for 200 years. But now, however, the internet introduced a game changer. Time and distance have disappeared. And that's not a bad working definition of the postal service. Networking, I'm sorry, social networking and the internet have eliminated time and they've created a void that hasn't quite been filled by them or anyone else. But it includes security vulnerabilities, legal puzzles, loss of confidentiality and confidentiality of the message content and a near total invasion of people's privacy. The postal service may need to move beyond this traditional role and serve a vital new role as beyond parcels and mail to begin to address some of the shortcomings of this new age. But we still have a very serious issue. Congress has asked us not to progress as we're wade through the digital age, globalism, changing workplace and the intrusion of a black swan that currents as complex, fast actions that are blowing away the risk models that they no longer work. So we need to decide, even if Congress allows it, what is that America wants and needs from its postal service during the digital age? The first thing we talked about, a smaller but dependable message and parcel delivery network. Packages don't beam themselves out. They still need to get from China to somebody's house. So what could we do? The first thing we could do is develop an email box in addition to your physical mailbox that links your physical address to your electronic address to allow secure encrypted environment to conduct business with the government and others that are financial transaction oriented. We could, and that will allow them to allow you to convert electronic messages to physical mail pieces and inversely, incoming mail could become digital and become integrated with your email. Wouldn't it be great if you could deal with a single password and pay all your bills with a single payment and they're automatically sent out? A lock box inside that mailbox would also allow you, with additional security, would allow you to curate, archive and transmit all the documents that are essential to you and that you're terrified will disappear. Medical records, safely stored but shipped in an emergency at your command and also to curate documents that you personally care a lot about. A global card could be issued like the size of a credit card with an identity chip and a SIM card option for your telephone to access postal services, e-government and to be used as a debit card for digital cash for obligations that the government owes you. You could send it to college students and allow them to redeem on both the post offices and ATMs and that would also allow secure storage. When you pull that card out, all the information leaves it with you and lastly, a universal platform through a webpage that allows you to access postal and e-government and other related commercial applications. One-stop navigation for all of government. You can do a great deal of business in this one-stop digitally when you need to close the business in person. Post office window services are available to verify your identification. Nobody wants to give a 70 million dollar loan to someone in response to an email. They're gonna want that person to present themselves. So the platform combined with post office window services are gonna provide a lot of solutions that are currently problems with the internet. They'll integrate across the digital divide. Security will be provided. Much more privacy and government field structures which are unbelievably costly could go virtual knowing that the post office window services are available to close the deal. The platform would feature net neutrality, common carrier philosophy, low entry barriers reasonably priced for everyone. So let me just wrap it up. The Postal Service mission is to support communications and commercial needs for Americans. The mission has expanded in the information age of binding the nation together. And it's not just about paper that I think we need to and must. We have a duty to extend the universal obligation to wherever Americans need to go and want to go. The Postal Service can help move the country into the digital age while maintaining the principles that everyone holds so important and dear to constitutional considerations and the very important concept of inclusion which is, I hope, the most American of the values. Thanks very much, everybody. So thank you, David. So the next part of the event is we're gonna have the three speakers come up and we're gonna move to a moderated set of questions. So about three or four questions and then depending on how many questions people have, we're gonna try to move this forward and enable people to also engage in the question and answer process. So I wanna begin by, when we set up these questions, we had a number of questions. So we gave each speaker the opportunity to sort of submit several and we honed it down to a finite set so we could get it in within 30 minutes. So the first question we wanna pose to the speakers here is, for many of us, the news of the disruption of the postal service was quite sudden and shocking if people think back to last year. And was there any indication that this disruption was coming? That's the first part of the question. And if so, when and what were those conditions and why didn't the postal service move faster? For example, in providing e-services and many of the foreign postal services have done, particularly given the explosive growth of email, if you go look at some of the data around 96, 97, when you see the growth of AOL and Hotmail, that's when you see email volume actually overtakes snail mail volume. So the question is those two parts. Kent, do you wanna start? Okay, I'll be happy to. Back in about that time, the postal service participated in several large multi-client, multi-year studies with the Institute of the Future out in Menlo Park, California. And we were working with several of the major suppliers in the industry, Pitney Bowes, Siemens, and others, as well as a number of foreign posts. And we investigated the studies for about four years. So we had a pretty comprehensive view across the postal world about what was happening and what was the future. We developed a set of scenarios with the consulting group at IBM and then brought all of postal senior managers over to Harvard for a three-day deep dive with some of the folks, such as Clayton Kritchards and others, to get them fully on board with the idea that this was coming. So we were fully aware of the implications and that's when we started that process that I outlined of radically transforming our operations within the constraints of the organization's ability at the time. And that's also when we started asking for legislative and regulatory relief, which is a somewhat more complicated process. David? At the time that this struck, I was still at Treasury, but it's pretty clear what happened. The skills at the Postal Service were primarily involving timely transport of messaging and parcels. Time and distance disappeared with the internet. And so we had the wrong, we were in the messaging business, but we were at the wrong skillset. Also at the Postal Service and in many government agencies, the desirable skills were primarily inertial. Mail came in 200 billion pieces and it had to get out. That was job number one. So the changes were primarily incremental that were conceived of. Another thing is we were the world leader. One thing about being the world leader of anything is you can slow-fall free farm longer than anybody else can. The weaker people have to adapt and change much more quickly than the world leaders. And you see that at the State Department and the Department of Justice that the last ones to embrace reforms and changes inside government because they are so strong. The other factor was this happened very fast. As a matter of fact, we're still not sure what happened and we're still not sure what's coming next. It's one of the great, exciting parts of what's going on around us. And lastly, it was very difficult to monetize this new thing. And very difficult to give up money and reach out for something that did not involve money. We know we have to, I mean, I believe we have to. It's essential that we, it's our duty to do that but it's difficult to do that and those were the difficulties. If I could just do one quick follow up to that. In the early 2000s, the Postal Service had a number of electronic experiments. We had E-Com, the successor to Mailgram, the successor to the Telegram. We had an e-bill pay service. We had a number of other services that were hybrid or electronic. There were a couple of things going on at the time. One, we were a break-even organization so then we didn't have a whole lot of extra capital to spend on these kind of things. Two, a lot of people were trying a lot of things during the time with the dot-com bust as you recall and there was a lot of skepticism and also some fear about the Postal Service's entry into that particular market. At the same time, we were just beginning our process of real improvement in quality and a lot of people said the Postal Service should stick to its knitting and improve the quality of its core mail services before getting into some of this other stuff. Richard, do you have any comments on some of the transformation from these different, at least the e-services piece from the transformation from why the Postal Service, you know, some of the impediments on going from one format to another at least exploring that from a historical perspective? Well, the biggest crisis that the Post Office confronted in its history was in the 1840s and we've forgotten about that one when as much as one-third, two-thirds of mail revenue disappeared almost overnight and when it looked like the situation was truly dire, lawmakers jumped to attention and strengthened the monopoly provisions of the institution and without having followed the events and having liked the detail of my colleagues, my guess is that lawmakers might do the same today and I think part of the problem is that we've forgotten that the Post Office has confronted a number of really rough patches for much of its history. It has run an annual deficit yet that has not been a public issue and it was interesting to comment going to an electronic future. Old media tends not to disappear when new media emerges and there may still be, particularly with the idea of linking electronic with print and parcels, there may be a lot of opportunities there we haven't guessed at, but did I suspect the institution was in for rough water? I don't see how any institution operates under the kind of constraints that the Post Office does regarding the regulatory commission and Congress could do a better job than it's done. So it's not a surprise. Anyone else wanna add anything? I think one of the other questions that relates to this is as many people know there's a huge opportunity many large private companies since 93 have been looking at which is a small business market. If you even go look at online companies, it's the biggest nut to crack. I mean, when I was running several of my companies, Echo Mail, IBM, large companies were very, very interested in how do you go get those 10 million small businesses to sell something to them? It's called the SMB market or some people call it the BSNB, very small business market. And some people look at that as what's called the last mile, you wanna have feet on the street and it's very, very expensive from a sales perspective to get feet on the street. So the question around that is the US Postal Service in many ways has this last mile. They have a lot of people on the street. Everyone sees people at their door, their businesses, et cetera. So the question is given that this advantage that the US Postal Service has which many private companies actually seek is the Postal Service exploiting this last mile advantage? And if so, what are the ways that it has exploited and what are the ways it plans to exploit it? It's a great question and I'll take a shot at it. One of the things that did come out of this 2005 deep dive that we took all our officers to was the idea of the last mile. And in this particular case, one of the most immediate outgrows was forming partnerships or ventures with our competitors, UPS and FedEx for example, both in the international market and here in the domestic market where an awful lot of the packages originally given to UPS or FedEx but destined for the home market or the very small business market is given to the Postal Service for last mile delivery. It also has sustainability implications as well since there's one truck going down the neighborhood rather than many. So this is one example of leveraging the last mile. The idea that our letter carriers are a unique national resource that we've only just begun to figure out how to really partner with in our operations in reaching small businesses. We've had tremendous help from the National Association of Letter Carriers and from others in reaching out to small businesses and home-based businesses through that particular resource. Richard, would you like to end? You know, the last mile issue is one that throughout our history has been extremely important for small businesses sustaining innovation. And it's one reason I think that it's very difficult for the future of the Post Office to become a political question because the sorts of folks that are today dependent on the Post Office for their business operations and they read the stories in the press, they tend to know their Postmaster very well, they tend to be intimately connected with its peculiarities. This is a formidable potential political force that's hard to peg politically. So I think that it is a resource and it's heartening that the Post Office is taking advantage of it. Let me use a specific example, if you will. At one point, an outfit called Netflix was a very small business and they were challenging the established business model of DVDs Reynolds, movie Reynolds, and they had the unique idea of using the mail to do so. And they were enormously successful in the process of changing their business model right now, but still, they did nothing more than what J.C. Pennies and Montgomery Wards and Sears and other people have done throughout our history. Postal service is a platform, much like Apple. If you look at it that way, for entrepreneurs to figure out new ways to use the mail for new applications to do new things. And we have been passive recipients of their innovation over time. One of the biggest differences that David points out is that the world has changed and we have to be more collaborative with the industry in opening ourselves up and working, identifying with new businesses, the entrepreneurs, the innovators to generate this kind of thing. I think we're well into the digital age. We have a lot of questions hanging over it, but we know it. We're on the edge, I believe, of a global logistics revolution and a lot of enormous things are occurring simultaneously. One of which is sort of the death of the middle man. We saw these other casualties, a casualty of that one is going to be that they'll all be gone and they too will leave a void that we haven't filled. Manufacturers, some of the small manufacturers all over the world are sending products directly to people's home now. Rather than through Sears or through some other company, they're going directly to people's residences. That's a huge change and it creates a demand for an emerging global logistics grid, which will have absolutely no meaning without an effective last mile. To take that from those hubs and spokes down to people's residences are the only thing that's going to allow this revolution to occur. The Postal Service today owns that last mile. It lives or dies based on the contribution of each delivery point. So what's needed in order to allow that vital link to survive is for the contribution in each delivery point at each mailbox to contribute enough to keep it alive, to allow us to deliver to all the homes. So the Postal Service needs to increase that. They need to become involved in delivery on steroids. They're already involved in a lot of competition with UPS and FedEx and the DHL and the other parcel delivery people to provide that last mile service. That's not a popular role and I think people are glad to combine with us. There are also a lot of other things delivered to homes that the Postal Service should be keenly aware of. I think we're also getting to the point where we can't afford to have multi-tum trucks rolling through every neighborhood in the United States hour after hour after hour for the sake of a greening of America, a single delivery operation through those neighborhoods would be safer and much cleaner. And I think also there are other opportunities and we alluded to some of them. Some of them are attaching sensors to the trucks to allow the FCC to understand is there a dead spot there as far as broadband and if there is let's do something about it, let's address that. This is the only group that goes everywhere every day and it's the only group that can collect important information that's needed to make America and a great place and citizens safe and content. Yeah, I mean, just seems like there's a tremendous amount of use of those feet on the street that we take for granted. So I think it's an important area to look at. I think a follow-up to some of the areas Richard brought up earlier was, there's been the mandate of the post office has really expanded in several significant ways in the past. And the question is what circumstances really gave rise to this expansion and what lessons might it be for the postal administrators? Richard, do you wanna start with that? Yeah, the parcel delivery is a really interesting case study because middlemen may well be disappearing but much of our history, they were quite powerful and they worked very closely with the non-postal carriers to prevent the post office, for example, from getting into parcel delivery. We were one of the last industrialized countries to get into parcel delivery, we did in 1913. And that raises the larger question of who the post office bumps up against when the post office moves into new areas. And certainly in the 1840s, post office bumped up against private mail delivery carriers including companies that we now know of as Wells Fargo. It was very little opposition to the post office pushing them out of the business. Middlemen 1880s, 90s, more successful. Government was unable to take over the telegraph and they've been initiatives, you know better than I do, going back decades and get the government into electronic mail. But there are powerful interest groups that do not want the post office to expand not because they think the post office will fail because they think the post office will succeed. And it seems to me that that needs to be a part of any political calculus if we're thinking about going ahead into these new opportunities. Postal savings was an initiative that was very successful, not largely forgotten, largely immigrant population groups who were not invested in a non-government savings bank vested with our post office for decades. And the need for that was felt diminished. But there was fierce opposition to that initiative early on. So I just, the caution is I see the opportunities and I want to recognize also that there are a historical precedent for a lot of pushback and that pushback gets manifested through Congress which places all kinds of constraints on post office which I think is an issue that from a historical perspective perhaps demands a little more attention and perhaps more polite post representatives have been willing to express. Kent, I think you want to jump on something there. Oh, I'd love to. Yeah. It's okay. Do you want to comment up? Well, yes, as of now. When I put that one chart up there and it showed the three systems, if you will, the creative industry, the folks of service and of course the ultimate consumers, the households. We're already seeing the change in the households of course in their attitudes and behaviors and we're responding to that. At the same time, the established industry, what the community that we call the mailing industry will have to face the need to change just as much as the folks of service will. And I don't use that one graphic ill-advisedly, the one that showed the printers, still trying to maintain their tradition with the old style printing press when their customers are coming to them with the iPad. That was actually taken from a study done by the printing industry of America where they were outlining the dramatic need for change in their industry. So the idea that the postal service has to do the change but somehow the mailing industry doesn't means that neither of us are likely to succeed. And what we're seeing is very frequently the established, the long established participants in the industry. And they've been around for 100 years or so. Not willing to change quite as much as many of the entrepreneurs who come in and say, we'd love to work directly with you to do these changes. And so when we see the Netflix, the Amazon, the Ebays, these are new entrants into the market. They didn't exist. They're not part of the established industry but as a result, new services and products are created that benefit both the larger mailing industry as well as the postal service and most especially the consumers. David, do you have anything to add to that? And actually as you're answering that, David, maybe you could also address this other issue and others can add to that. The postal service has never, the deficit issue has never been a major issue. And now it's being brought up as a major issue. So I wanted to also follow up on that. And in fact, the postal service loses money it's in deficit and why is it now become a major issue? Okay, the big changes in the postal service were the movement from post office delivery to door delivery, the extension to rural delivery to the rural parts of America which helped close the gap between the way people lived outside the cities and inside the cities. Automation, machinery that sorts mail down to the order, the route sequence, the order of the houses come. The beginning providing money orders for the unbanked and now digital cash for the unbanked, I hope. Beginning to provide e-government services, passport services through the post offices. Those were the changes and all of those came as a result of the presentation of a need and the postal service being agile and opportunistic enough and high sense of duty to the public to reach out and embrace those new needs with new change. I think those are the essential characteristics that the postal service needs. We owe it to you to have zero tolerance for bloat. Lean, agile, open to change. The reason that a lot of the financial stress began was the Congress was concerned that an aspect of any government agency is that in the absence of efficient market forces, which it will never have because they have appropriations, there is a tendency for government to bloat. And so the CPI control was placed on top of the postal service as a surrogate for efficient market forces to make sure that we constantly move toward leanness. That was a great idea. Unfortunately it was instituted at the very moment of the digital revolution and so a kind of perfect storm struck the postal service of the economic downturn, the digital age and this new imposition of CPI. But I believe in it. I believe that some control is needed and some surrogate for efficient market forces is a good thing. So I can't be against it. I suppose I'm part of the 10% that still has some affection toward Congress. But I believe that in this action it was intended to do a good thing and it was intended to look out for the well-being of the citizens. Can't, I think you wanna add something to that. One of the reasons why the issue of our deficits is so visible right now is one, it's part of the larger national conversation about deficits and most people conflate the postal deficit with the government deficit as if they were some sort of direct correlation and there's not. But in our particular case and the Inspector General was particularly good at pointing out about the nature of our contribution to some of our pension for overfunding of pension, overfunding, some of the other requirements that were put on it, but ultimately over the last year or two became a question of cash flow. We've always been able to manage the cash flow even though we had a, we were running a deficit but we've got a limit on the amount that we could borrow and that limit was set way back in 1970 given the size of the organization. So now we're bumping up against the top of that deficit of that borrowing limitation and of course we can't go to the private market for capital and even if we could it's a bad time for that kind of activity. So that's kind of a rock in our heart place is one of the reasons why the idea of the postal deficit there's a, as you said, a variety of perfect storm kind of thing for why the deficit itself is an issue. Richard, do you have any other things to add? Just that it's never been a political issue in our history that the post office is running a deficit and it has run a deficit most years between the 1830s and the 1960s. So the idea that the institution would break even is a relatively new one and that it has come with a number of obligations on the institution, some of which have been discussed, that do increase cost. So it gives the postal administrators very limited flexibility. Thank you. So I think many of these questions and I think it gives hopefully the audience an understanding of sort of the infrastructure issues of budgetary issues, some of these logistics issues. I want to sort of take this last question before we open it up the audience to a different issue on the civic function. I think all the speakers here have alluded to this. Today when there are a set of laws in jurisprudence and maybe you can address that, that protect our mail. When I send mail to David or anyone here there's a set of laws that protect mail tampering. When it comes to email, for example, when we sign up for these free email services be it Gmail, Yahoo, Hotmail, there's a big double quote around that free. We give away something which is our privacy. These companies open our email, they can read it, they can process it, it's openly in those privacy statements. And the question is as citizens, I mean it's a question everyone I think should think about, but as a civic function that the postal system was set up for when we look back at that 97 period when email did take over standard mail, why isn't the postal service offering us a protected email service that ensures and drives us towards this process of the body of law that exists for mail can hopefully be appended in some ways to protect our email because this is something I think is becoming disconcerting to more and more people. The fact that a Gmail or a Facebook essentially controls all of our communication and there is no civic responsibility they have to some of what you just said David as corporations come and go. So I'd like to get your thoughts on this from the USPS perspective and also from the historical perspective before we go to open it up. I think the postal service and the nation need to keep in mind that its role is not an end, it's intended to be a means, it's intended to enable and make things better not to compete and take over. So that's one thing I would wanna put on the table. I think that that would be wrongful for us to take over and try to compete. Having said that, I do think something has to be done. If the country is gonna keep up with the other nations that are moving around us and toward us and past us to address some of the weaknesses of the digital age and to provide a national infrastructure supporting that to address security. We need a secure platform to do financial transactions. The contents of those messages have got to be confidential and identities have got to be kept private. I think that's what the national infrastructure owes the people of the United States and that's our proper role. Not to become one more Gmail, but to make the digital age better and address its shortcomings. Richard? Well there, it's an interesting question historically, speaking as a historian. The inviolability of the mail was written into federal law in 1792 and the best that were able to determine the legislative record, the founders, several of them, Jefferson, Jay Adams, had all served as diplomats in Europe and they were well aware of the pervasiveness of breaches of surveillance that was taken for granted that diplomats mail would be routinely read. And therefore they were committed to establishing a surveillance standard that was really very rigorous. So that in fact it was impossible to open letters or it was illegal to open letters it was impossible to do it legally for many, many decades. And this did not prevent certain states from barring entire classes of material from going through the mail. The greatest peacetime violation of civil liberties involved the post office suppression of abolitionist literature. And then in the post civil war decades, it's an interesting question of the relationship between the government and private corporations in providing security for telegraphic dispatches. Western Union is the leading telegraphic network provider, was very vexed at the government for violating these secrecy of telegraphic dispatches because of what they called these dragnet subpoenas at times of political excitement. And I think that there is going to be concern today about the possibility that the government could use communication facilities if it develops an internet capability in order to spy on the citizenry. And this was the great concern in the 1870s. A body of law developed to protect telegraphic dispatches. So I think the larger issue is we need a body of law to protect the security of digital information. That body of law does not exist today. And there's no reason we should assume that corporations on their own are gonna provide that body of law. And we're kidding ourselves if we think they will. Whether the post office will be the be all and end all is an interesting question. But I think the need is real. And by drawing attention to it, we can draw on our own civic heritage where these concerns have been with us right from the beginning. The very powerful good point. I don't think we have any basis to trust corporate America or the government. We need the rule of law. And the rule of law, something of course that we take very seriously in the realm of male security. The Ponyman Institute, which measure this kind of thing is rated the Postal Service as the most trusted government. Organization and government when it comes to privacy and personal identity. And within the corporate world, I think the rate is among the top five. And we've backed that up through the ages with the help of our friends in the Postal Inspection Service to the point of, if you remember, the famous scenes in Butch Cassidy and the Sundance Kid after they had robbed the mail, the train, and were trying to escape the posse. They wondered who were those guys? Those were the Postal Inspectors. Yeah, at the end of the 19th century when someone was robbing a store, they'd often make it clear that they didn't enter the part of the store that included the post office so they wouldn't incur the wrath of the post office inspectors. As a follow up, I mean, when Arab Spring took place in Egypt, there was a moment where a vodafone essentially struck a deal with the government and they turned off text messaging. People remember that scene. If there's an Arab Spring here, the United States, and the Googles, et cetera, running a similar situation can occur. So from a civic function standpoint, is it not the responsibility of the Postal Service? I know that no one should own it, but doesn't the Postal Service have the, probably the clearest path to protect our interests as citizens? Just a side comment on that because it is very relevant. We have this plan, of course, to close, consolidate many of our operating plans. We've been in negotiations with many jurisdictions, especially on the West Coast, where they're very heavily into vote by mail. And as a result, we are delaying the implementation of some of our consolidations because we are not disrupting the primary elections, where they depend on vote by mail. Similarly, we're suspending our consolidation operations not only come October, November, not only because it's peak season, but it's also the presidential elections. And we don't want to disrupt the political mail at all. Okay, thanks Ken. So what we'd like to do is, unless anyone else has comments, I'd like to open this up to the audience. There are two microphones on each side. And since this is being taped, if you'd like to ask a question, if you could come up to the mic, ask your question as succinctly as possible. Hi, I'm a little bit confused about what it really means to have the postal service in the email service. In a physical mail, you put a piece of mail in a mailbox or hand it to a U.S. government employee and you have sort of end-to-end delivery responsibility. In email, let's say I'm using Gmail, my email packets first start on Comcast and go through three or four other private companies until they arrive at the Gmail server. Now, all of these are private companies. All of them can, to one extent or another, interfere with privacy security or start filtering on net neutrality means. What part of that business are you envisioning the postal service in? I mean, are you going to be the last mile to my house in terms of network connectivity? Or are you just gonna run another mail server that will be subject to corporate constraints around the edges? Great, excellent question. Very, very good question. Actually, the United States is bringing up the rear end of the parade on this one. A number of nations, postal services, world posts, now provide digital services in an email box. And it works in a variety of ways, but one of the functions it primarily delivers is the ability to conduct government business inside a secure environment. It's encrypted, and it is. It's owned by the world posts. It's not the kind of investment that you need for mail. It's a much smaller investment. But its intention is not to replace Gmail or the last four customers of AOL or whoever is still in the business, but is to provide a channel for secure transactions, confidentiality of the contents under penalty of law, and privacy of identity. So it's meant to run in parallel, but secure. I'm confused about this. The whole network is owned by the post but the question speaks to you send a message electronically. It's gonna go through a number of different servers. So in other words, the government owns the entire backbone? My understanding is that there are two models and there is a model in which it does run through the internet and there are vulnerabilities along the internet that are meant to be addressed by encryption and other techniques. But it is, but the rule of law does extend to those links. Is that was the larger point, speaking historically, that for much of our history, the post office relied on non-government carriers. The airline industry, for example, got a major boost from mail contracts. There were not government planes. They were non-government planes. The stagecoach industry got a huge boost in the government. But there was a rule of law and Mark Twain once called it that sacred governmental thing, the sort of the mail sack that made a difference and that seemed to me to be the more realistic model than the post office actually building its own backbone. I would say among the larger countries, that's the case. And in the physical side, you are correct. The UPS and FedEx move some of our mail as just as we provide the last mile, airlines, trains, trucks, but the rule of law extends to them. When they violate the law, they come under federal investigation. Right, and I would say that principle that federal government will investigate has been quite important historically in ensuring that the mail will be secure. So David, are you saying that the rule of law, even if it uses private network, still will prevail within that? That's what we want. Yeah. Well, that is what we have with regard to... Current. With regard to the current. So that would be instructive and suggestive of the model that we're imagining. And it's electronic. Yes. I think the overriding model is that the Postal Service will operate through partnership and most of this, you know, whatever the technology, whatever the model, there are various different foreign postal models that exist out there. But you know, when you stop and think that virtually everything, every mass mailing, every bill or statement, every document is now generated digitally on some computer somewhere. That even if this is transmitted to the Postal Service through our acceptance process for major mailers, it's done more and more electronically. You know, just at a very minimum to reduce paperwork and increase efficiency. And then there's the delivery kind of services where for example, if you get something in a post office box and you rented a post office box that we would notify you digitally that those arrive. So, you know, it's hard to, I mean, it's very easy to limit the potential applications of the digital hybrid world to the Postal Model, any different number, any number of different ways that it could evolve. But it is a very good question because the mandate of the government to provide a secure channel is very well established. And it would seem to me that that's significantly different from the existing mandate for any of the existing. As a follow up to that, you know, from some of my colleagues at MIT have talked about this, there's some new local area network technology, you know, YMAX type routers, for example, that the Postal Service technically could put up in local, in their actual real estate, that you could build a local network independent of the backbone. So in some ways the backbone providers or maybe connected as necessary, so local communities can essentially use a Postal Service as their provider for not, to your point, you know, from the time the mail leaves and arrives, let's say even in a local neighborhood, it's going through this trusted brand of the Postal Service. Is this something the Postal Service has looked at? It's providing that service, you know, that civic function, extending that civic function to the local area. And certainly something that we have been looking at. Yeah. And I've heard it discussed too, and also by some of our customers, asking if aerials on our 31,000 post offices and facilities couldn't almost provide a Wi-Fi umbrella for the nation. Exactly, it seems like the infrastructure's there to provide a public network independent of the large telcos and independent of, you know, the mail providers. William, you had a question, right? I'm sorry to follow. I mean, the whole notion of the digital divide, I mean, is sort of the larger, you know, aspect of network neutrality. I mean, there's, you know, it's one thing for packets to be transmitted neutrally. It's another thing for costs to, you know, keep people off the network. And I mean, the post office mission to, you know, make communication available. I mean, seems, I mean, there seems to be a fit here. Yeah, thank you. William? Just a quick two-part contextual question. In the history of the post office that you sketched, I heard hints of an American exceptionalism argument in a way. And maybe that's about the privacy issue, I don't know. But certainly in that it's rooted in the Enlightenment and in that much of Europe also develops a postal system kind of in parallel with ours. What I'm curious about there is the fact that in much of Europe there's a PTT, a post telephone and telegraph are aligned in the US that never really happened. So that tells me it's already starting in the 1830s, 1840s for the division of the telegraph and telephone 1870s. So I'm curious about why we departed. Second part comes to the future and where are you looking for your best cases? Are there postal systems out there, Finland or Denmark or somewhere that, you know, might just be a fluke of the geographical setting of a country? But I'm curious about where you're looking for your best practices, thanks. The exceptionalism question. The United States in the 19th century was distinctive. Alexis de Tocqueville famously expressed astonishment at the number of post offices in the United States compared to the number of post offices in France and the Michigan, the frontiersmen was reading the same news as the New Yorker and that is not something that was going to happen at that time in France. That's because the control over the institution and expansion of the network was vested in Congress which was close to the citizenry and the fiscal mandate for the post office which remained extremely important in Britain and France along with the national security dimension was much less important. By 1800 the fiscal mandate had essentially been abandoned. The only reason for the institution to break even was to prevent the kind of problems that they should spoke about that if you have no constraint at all, oh my gosh, they're gonna just spend money up the wazoo. So it was distinctive. We had many more post offices. We have many more newspapers. Tocqueville got that wrong. He thought we had so many newspapers because we had federal system of government decentralization but in fact we now know we had so many newspapers because we had massive subsidies for newspapers. Why, so that's the first part of it. Yes, the United States is distinctive. Fiscally, we're not raising money and there isn't the security obsession which there was say in France. Now what happens in the middle of the century? Well Samuel Moore certainly wanted the government to take over the telegraph. He was given a patent rights by the government and then he wanted to sell the patent rights right back to Congress which is nice work if you can get it. And Congress demurred and so we developed this principle that I call market segmentation that we knew media are not permitted to take over old media. So to go back to Franklin, newspapers didn't take over the post office, the post office didn't take over the telegraph, the telegraph didn't take over the telephone, the telephone didn't take over radio. All of those divides are politically mediated. They're not due to technology, they're not due to economics, they're due to politics and what I call the market segmentation and the presumption that we should keep these divisions. The Radio Act of 1927 is a very good example which keeps AT&T out of radio. And that may well be a principle we wanna think about in the future when we think about Google and Facebook and these other behelmets of our own day. So those are two ways in which the United States experience is different. We don't get the pay-tay-tay because of that. And I think the fact we don't have a pay-tay-tay helps explain the remarkable creativity of our telephone system in the 20th century. I think that's worth, I think that's worth. Yeah. David to Williams question, have you and Kent looked at other best business practices? Yeah, actually there's been an extensive look. We really don't have to go that far to find the best practices because most of the world posts are using U.S. technology firms as their partners and advisors and enablers. But if you were to look internationally, certainly Deutsche Post is a very interesting one to watch. They're doing fascinating sort of groundbreaking work in the Scandinavian countries, New Zealand's always on the edge and fun to watch. Israeli Post has gone a slightly different way and it's a very good path that they've selected. There's a sort of strictly government business. You have your other email accounts for other matters and other mailboxes, but that one is walled off for your work, it's a confidential work with the government. Kent, do you have it? Yeah, we cooperate with the UPU, the Universal Postal Union in Switzerland and they track what everybody is doing and it's surprising how innovative some of the very smaller post offices and less developed countries are doing because they're leapfrogging, they can't afford the kind of infrastructure that we've developed here. We also work with many of the world's most developed posts through an organization called the International Postal Corporation in Belgium and keep track of each other and what we're doing. So between that, between, I mean, we're tracking everything that everybody has done as the postal world has become both more collaborative and competitive, as you remember DHL, Deutsche Post, tried to invade the United States just in the package market and of course between UPS and FedEx and Post Service and they're about skipped and rolled back to Germany, but you know, so it's a very interesting world and we're all tracking each other. So who's rated number one in the world as a postal? Nobody really has the same system as this model. It depends on, there was a recent study from the Oxford Strategic Group out of England that rated the G20 postal operations and they rated the US Postal Services as number one, but you have to look at their criteria. They looked at sustainability, they looked at productivity, they looked at quality and several other things and that rolled us up to number one. Their criteria did not include financial viability, which if they had included would have put us somewhat below Deutsche Post and it's with Spos and a couple of others. The little countries are really, you have to be careful because they're not always scalable. Things that they're working in Singapore and New Zealand just can't work in a huge place like this, but they are oftentimes at the edge of innovation, they've leapt over everybody else's mistakes and now they're at the very leading edge. I was in South Africa fairly recently and certainly saw that that's what they did. They just didn't have enough money to do a horrible job and so they didn't do one. And that's- Let's take, we have a question over here, gentlemen, impatiently waiting, yeah. It's not surprising with, for this place to have a lot of questions and discussion on new things in communication and so on, but it isn't that easy for somebody without much money to pay $200 to $400 for a computer and $20 to $50 a month to turn it on and get his email. So I think you're in business for a long time. Secondly, you haven't heard many complaints against the post office here. It's always been variations on a theme and so on. I think people are pretty happy with the post office in general. There's no need for apologies. But you've got the current problem of finances. And in this country, we tend to be good to everybody if we can. And so what's happened in Washington, we have a debt where the interest every day is $1 billion and not changing. You take something like a toll taker on the mass turnpike over here, $70 to $90,000 a year. So what's, can you get to the question? Yes. Yeah. A slide up here said 80% of the cost of the post office was in labor. So two specific questions. I have heard that you pay $100,000 or more for certain convenience stores to maintain a post office. Is that true or not true? Second question, what are retirement benefits for people retiring from the post office? Okay. Two questions. First, going back to the ancient history that you talked about. When there was not a post office, we often made arrangements, what we call community post offices or whatever to have somewhere in the back room. And there was a little bars and a little corner and a few post office boxes. And there was an arrangement for them to provide the retail services. We have been doing that for virtually our entire history where we work to extend our reach where there is community demand. And most recently, when we've talked about perhaps closing some rural post offices of offering those same kind of services as kind of a franchise, if you will, in rural locations, we call them now village post offices. But the idea that we would remove postal employees in this particular case and have it done under contract. Now, the size of the contract, of course, would depend on the level of business activity expected. That's always been pretty much the pattern. What is that level that you pay? It depends on the size and the area of the post office. I couldn't really tell you that, I mean. Those are, that's a level of detail down below my range. For the second question, as far as retirement, it's fairly standard federal government retirement. We're mandated by law to be comparable to the private sector and our ranges for many of our employees, they're unionized and subject to negotiation. But the retirement package is fairly similar to the rest of government. So what is that number, roughly? I could not give you a number for the average employee. We've got four, 500,000 employees. I couldn't tell you what the range, all the way from postmaster general down to a letter carrier, so large, that the average would be not a meaningful number if I knew it. I think, we talked about this perfect storm, the imposition of CPI and the economic downturn and the digital onslaught. It came very swiftly, and so revenue dropped, it's still huge, but it dropped suddenly. It always takes, there's always a gap, no matter how draconian you elect to be. There's always a gap between the sudden loss and chasing those falling revenues down with falling costs, and that's what's going on now. The costs are being cut, but the ramp, this is all about how steep that ramp is going to be with regard to how, what the, whether we're gonna be able to use attrition or whether we're gonna require layoffs or something. This is a little, I'm gonna go through this sort of fast because I'm not sure what the interest level would be, but with regard to the benefits, federal employees and state employees always have horrible salaries and good benefits, and that's the case today. It's generally computed at about a percent, you get a percentage of your high three salary years, and it's based on, so the percentage is built on the number of years you've worked there. So you'll get about half of your salary after about a 20-year career with a postal service. I want to get in a couple more questions because we're almost over, so no, thank you. Hi, there's a historical part to this question and then a contemporary part, so for the historical part, I think what I knew of the history of the post office and what I think of it originally, it's this very radical way of reaching the whole nation which has to do with, as you mentioned, this then radical spread of newspapers and magazines that resulted, and necessarily as new media have come in over time, the post office in some ways has needed to change its idea of what it was doing, and so once the telegraph enters onto the scene or broadcast media enter onto the scene, the mail is no longer the only way in which information is being spread, and there's a long history of that. So I guess you could argue that there's a bit of a narrowing of the communication component of the mail that's happened over time, and so I guess the first part of my question is, from a historical perspective, I mean, we've heard a little bit about the telegraph, but what about other moments like broadcast media? Is it true that you could characterize it as a sort of narrowing, or what are the patterns in the way that the mail has been redefined as a result of the entrance of this new media? And then I guess I'll just quickly say part two of the question is, it almost seems like there are two different directions that I'm hearing for the contemporary options for the mail, and one is this narrowing of, you know, collaboration with other businesses, taking advantage of that last mile aspect of things, but that's really different from thinking about the infrastructural side, which I don't know that the last mile component has much advantage for that, and I almost feel like I'm hearing two different visions of, we could be going very narrow, or we could be finding a way to go broad. So in the interest of time, if each person could take a minute to address that, and we're gonna have to close. Post office is important today. It was much more important in our past. It was a wellspring of democracy. It was fundamental to the financing of political campaigns, newspapers, magazines, absolutely indispensable. Telegraph came along, and it was not a popular medium until 1910. The president of Western Union will tell anyone who will listen, if you wanna send information over long distances, send a letter. Don't use Western Union. The revenue annual of Western Union was never more than one third of the post office. Telegraph was not that important. The post office got a huge boost with corporations, because now they're advertising, and that expands magazine and newspaper revenue, and the big changes don't really occur until relatively recently. I think the spike was still going up, certainly in the 1970s and 1980s, so this is a new phenomenon. But just to put it in a civic plea, it does seem to me that it would be perfectly in keeping with the historical mandate of the post office to provide special facilities for print medium, or other, on a neutral basis, other civic-minded publications, maybe even electronic publications, and that is very much in keeping with the mandate as it was understood by Benjamin Rush in 1787. David? There's a communications revolution going on. Communications is wildly expanding and increasing, so in some ways all ships are rising. The largest year the Postal Service ever had was just before the economic downturn. Nothing stopped it. It had always entangled and mutually energized, and that's been the story of the Postal Service until these very recent events, but the recent events are unprecedented. So I think that's what causes the appearance, how you're imagining a zero sum world, but it's not, the communications revolution is wildly increasing in an exponential fashion, and that's what accounts for that apparent disparaging. And the Postal Service is a giant beast. There's, it depends on where you look at it, you know, it's got a huge front end, it's got a huge middle, and a huge last mile, and the needs of society determine how that's all interconnected. What to me is we've just begun to see the real, it used to be male versus the internet, or male versus its alternatives. We're just beginning to see the beginnings of the marriage, where the internet is connected to the male, where male is connected, you know, through what we call the intelligent male bar codes, or universal product codes, or, you know, any number of digital technologies that link the male to the internet and make it more interactive, make it more entertaining, make it more relevant and fun. And that will determine the future. Thanks, Ken. Is it a very quick question? Very, it's a very quick question. Okay, so we can only take maybe... That's fine. Okay, 20 seconds, because I wanna close on time. I'm a marketer, I send direct mail, I have 28,000 pieces in the mail today. Thank you. What would one do to help? Mail more, please. No, what really matters, and what we're telling the industry, what you'd hear at National Postal Forum, or the Postal Customer Council, is learn how to mail smarter. That means using less mail where it's relevant, so that it isn't junk. I mean, it's the same kind of thing that you hit in the email world. Learn how to be relevant, relevant, using the data that you have about your customers, finding out who to mail to at the appropriate times, so it's not junk mail delivered by snail, it's real mail that helps people make decisions, helps them do things that are important to them. That would increase your response rates, your ROI, it would make the customer, it would increase the mail moment for the customers, and for the businesses that you're doing business with, and make them happy as well. Certainly make our us happy. Great, well, it's exactly 7 p.m., so the goal was to end on time, and I think we've achieved that. I wanna thank, again, all the speakers, I wanna thank Richard John, Ken Smith, and Dave Williams, I'd like to give them a round of applause. Thank you.