[Federal Register Volume 73, Number 233 (Wednesday, December 3, 2008)]
[Notices]
[Pages 73664-73679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28643]


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POSTAL REGULATORY COMMISSION

[Docket No. PI2008-1; Order No. 140]


Postal Service Plan for Service Performance Measurement

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: This document approves most elements of a proposed Postal 
Service plan for service performance measurement. Both the Postal 
Service's plan and the Commission's approval respond to requirements in 
a 2006 federal law that revised and updated the regulatory approach to 
postal operations.

DATES: Postal Service response: June 1, 2009.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and [email protected].

SUPPLEMENTARY INFORMATION:

Regulatory History

    72 FR 72395 (December 20, 2007)
    73 FR 36136 (June 25, 2008)
    73 FR 39996 (July 11, 2008)

I. Executive Summary

    The Commission today approves a Postal Service request to employ 
internal service measurements developed from its Intelligent Mail 
Barcode (IMb) data to track service performance of bulk letters and 
flats. This data would be combined with externally collected 
information to provide the first system measuring the speed and 
consistency of delivery for most types of mail.
    A major feature of the Postal Accountability and Enhancement Act of 
2006 is the requirement that the Postal Service begin to measure and 
publicly report on its service performance for all market dominant 
products. That law directs that external measurement systems be used 
for this task unless alternate systems are approved by the Postal 
Regulatory Commission.
    This order reviews a Postal Service request to employ both external 
and internal service measurement systems, and the public's comments on 
that proposal. The Commission authorizes most aspects of the plan.
    The Postal Service states that reliable external measurement of all 
products would be very expensive and hard to implement. In particular, 
to be reliable, test pieces must be indistinguishable from ``real 
mail'' while being sufficiently physically diverse and geographically 
dispersed to reflect service performance for different types of mail in 
all parts of the country. The Postal Service claims this would be very 
difficult to achieve in any affordable fashion.
    The comments agree that it is important to utilize reliable 
existing data sources where possible, and to avoid requiring costly new 
external measurement systems.

[[Page 73665]]

    The Postal Service proposes to expand its existing external system 
for measuring single-piece First-Class Mail, and use its existing 
Delivery Confirmation data to measure parcel service. For the majority 
of its volume, letter and flat-shaped mail sent in bulk by businesses, 
it proposes to measure performance with a hybrid system that would use 
data from its new IMb program, scheduled for implementation in May 
2009, in combination with already available externally derived service 
information.
    A measurement system that tracks representative, live mail from 
deposit to delivery would provide the most meaningful measure of 
service performance. The Postal Service believes that its planned 
``full service'' IMb program will meet that standard. It will allow the 
Postal Service to begin measurement when it receives mail, and track 
containers and individual pieces as they proceed through its processing 
and transportation networks. These data would be combined with 
externally measured data quantifying time from ready-for-delivery, to 
actual delivery, providing end-to-end service measurement.
    Assuming IMb scanning and reporting technology can be successfully 
implemented, and full service IMb is utilized by a representative 
cross-section of mailers, this service measurement program should 
produce high quality, minimal cost results. Therefore, the Commission 
approves its use, and urges the Postal Service to proceed quickly to 
deploy this system.
    The Postal Service is to provide quarterly public progress reports 
while full service IMb is being tested and implemented. The Commission 
will carefully monitor IMb implementation and usage to assure that 
accurate and representative performance data are obtained. If 
necessary, modifications to the service performance measurement plan 
will be developed. A separate public proceeding will be initiated 
shortly to establish specific requirements for the periodic reporting 
of service achievement by type of mail.
    In one area, the Commission has identified problems that require 
immediate adjustment. The Postal Service proposes to combine the 
measurements for its diverse special services into an index. The 
Commission finds that the proposed measures fail to reflect actual 
performance for several of the more important services, including 
Delivery Confirmation and Return Receipt. More realistic measures of 
actual performance need to be developed in these areas.

II. Background

    The Postal Accountability and Enhancement Act (PAEA), Public Law 
109-435, 120 Stat. 3218 (2006), requires the Postal Service, in 
consultation with the Postal Regulatory Commission, to establish by 
regulation a set of modern service standards for market dominant 
products. 39 U.S.C. 3691. Initial consultations between the Commission 
and the Postal Service concluded on November 16, 2007, with the 
Commission providing the Postal Service with comments addressing the 
Postal Service's service standards proposals.\1\ The Postal Service 
completed this task by publishing as a final rule Modern Service 
Standards for Market-Dominant Products, December 19, 2007 (Service 
Standards).\2\
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    \1\ Comments of the Postal Regulatory Commission on Modern 
Service Standards for Market Dominant Products, November 16, 2007. 
The consultations are described as ``initial'' because of the 
ongoing nature of consultations that are necessary to transition 
from a set of standards to an operational measurement system 
encompassing performance goals (see uncodified section 302(b)(1) of 
the PAEA) and reporting mechanisms (see 39 U.S.C. 3652).
    \2\ 72 FR 72216 (December 19, 2007) (codified at 39 CFR parts 
121 and 122).
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    Having established service standards, the Postal Service is 
developing systems to measure actual service performance. On November 
29, 2007, the Postal Service provided the Commission with a draft of 
its Service Performance Measurement plan (Initial Plan), and through a 
continuation of the consultation process, sought the views of the 
Commission. The Commission posted the Initial Plan on its Web site as 
an attachment to Order No. 48, which also established Docket No. 
PI2008-1 for this matter and provided interested persons an opportunity 
to comment on the Postal Service's service performance measurement 
proposals.\3\ The Commission received 18 sets of comments and 9 sets of 
reply comments from the mailing community.\4\
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    \3\ PRC Order No. 48, Notice of Request for Comments on Service 
Performance Measurement Systems for Market Dominant Products, 
December 4, 2008 (Order No. 48).
    \4\ The members of the mailing community that have filed 
comments, reply comments, and additional comments are identified 
after the signature of this order. As a matter of convenience, 
citations to these comments will identify the party's comments as 
comments, reply comments, or additional comments. For example, 
Pitney Bowes' comments are cited as Pitney Bowes Comments at xx; 
reply comments are cited as Pitney Bowes Reply Comments at xx; and 
additional comments are cited as Pitney Bowes Additional Comments at 
xx.
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    Since November, the Postal Service has been consulting with its 
customers, working with its external measurement vendors, and working 
through the implementation of the Intelligent Mail Barcode system. This 
has led to the continuous refinement of the Service Performance 
Measurement plan. In June 2008, the Postal Service provided the 
Commission with a second draft of its Service Performance Measurement 
plan (Revised Plan). The Commission posted the June 2008 draft Service 
Performance Measurement document on its Web site as an attachment to 
Order No. 83, and again provided interested persons an opportunity to 
comment.\5\ The Commission received 10 sets of additional comments 
addressing the Revised Plan.
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    \5\ PRC Order No. 83, Second Notice of Request for Comments on 
Service Performance Measurement Systems for Market Dominant 
Products, June 18, 2008 (Order No. 83).
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III. Statutory Requirements

    The Postal Service's Revised Plan provides proposals both for 
performance measurement systems and for reporting data generated by the 
performance measurement systems. Performance measurement systems and 
reporting of data are linked, but evaluation of each requires 
consideration of different statutory requirements and issues unique to 
each area. They appropriately may be considered separately. The focus 
of this Order is on the first topic, the approaches proposed for the 
various measurement systems.
    Because the Postal Service's Revised Plan also includes proposals 
for data reporting and comments were solicited in this area, this order 
also describes the Postal Service's proposals for data reporting and 
reviews the comments that were submitted, with limited Commission 
discussion. A comprehensive review of the data items required by the 
Commission for annual determination of compliance, including more 
detailed reporting on a quarterly basis, will await a rulemaking as 
previously suggested in Docket No. RM2008-4.\6\
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    \6\ See Docket No. RM2008-4, Notice of Proposed Rulemaking 
Prescribing Form and Content of Periodic Reports, August 22, 2008, 
at 11-12 for a discussion of the future rulemaking.
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A. Internal Versus External Measurement Systems

    An objective in designing service performance standards is for the 
Postal Service to provide ``a system of objective external performance 
measurements for each market-dominant product as a basis for 
measurement of Postal Service performance.'' 39 U.S.C. 3691(b)(1)(D). 
However, ``with the approval of the Postal Regulatory Commission an 
internal measurement system may be implemented instead of an external 
measurement system'' for individual

[[Page 73666]]

products. 39 U.S.C. 3691(b)(2). The Revised Plan presents the various 
measurement systems the Postal Service proposes to use to measure the 
standards presented in the Service Standards document. In the Revised 
Plan, the Postal Service proposes various internal, external, and 
hybrid (containing both internal and external elements) measurement 
systems to measure the performance of its mail products.\7\
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    \7\ For the purposes of the statutory requirements, the 
Commission will consider all hybrid systems to be internal systems 
because of the level of control that the Postal Service exerts over 
the internal elements of the proposed hybrid systems.
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    The Postal Service submitted the Revised Plan for the Commission's 
``review, feedback, and concurrence.'' \8\ In consultations with the 
Commission, the Postal Service indicated that it seeks approval of the 
direction that it is taking with its measurement systems, specifically 
whether the Commission finds any issues that may be ``show-stoppers'' 
to proceeding with the various external and hybrid measurement systems.
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    \8\ Letter from Thomas G. Day, Senior Vice President, United 
States Postal Service, to Dan G. Blair, Chairman, Postal Regulatory 
Commission, June 3, 2008.
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    This order provides the Postal Service with the requested feedback. 
Specific approvals will be subject to review as the quality of the data 
produced is evaluated.

B. Data Reporting

    The Postal Service's Revised Plan also describes how it proposes to 
report to the Commission the data generated by its measurement systems. 
The Postal Service states:

    In accordance with Sec.  3652 of the Postal Accountability and 
Enhancement Act, the Postal Service is required to report measures 
of the quality of service on an annual basis. The Postal Service's 
proposal for service measurement goes far beyond annual reporting 
and will instead provide quarterly reporting for all market-dominant 
products, almost entirely at a district level.

Revised Plan at 12 39 U.S.C. 3652 requires that the Postal Service 
include in an annual report to the Commission an analysis of the 
quality of service ``for each market-dominant product provided in such 
year'' by providing ``(B) measures of the quality of service afforded 
by the Postal Service in connection with such product, including--(i) 
the level of service (described in terms of speed of delivery and 
reliability) provided; and (ii) the degree of customer satisfaction 
with the service provided.''
    As noted above, the Commission intends on initiating a rulemaking 
to develop rules for both annual and periodic reports of service 
performance measurements through its authority to (1) prescribe by 
regulation the content and form (including the methodologies used) of 
the annual report to the Commission (39 U.S.C. 3652(a)(1) and (e)(1)), 
and (2) prescribe data reporting requirements as part of designing a 
modern system for regulating rates and classes for market dominant 
products (39 U.S.C. 3622(a)). The Postal Service proposals presented in 
its Revised Plan, along with all comments received, will be 
incorporated by reference and considered in that rulemaking docket.

IV. Review of the Postal Service Performance Measurement Systems 
Proposals

    Many service performance measurement issues are common to multiple 
mail products. These issues include the structure and reliability of a 
hybrid measurement system, exclusions from measurement, and IMb 
adoption rates, among others. The Commission addresses these issues 
first, discussing its concerns with the Postal Service's proposals, 
including where applicable, concerns presented by mailers.
    The Commission then reviews service performance measurement issues 
as applicable to the individual classes of mail. The review addresses 
specific Commission concerns and provides recommendations on the 
approaches that the Postal Service is proposing for service performance 
measurement systems and data reporting. It also considers mailer 
comments specific to individual mail products.

A. Multiproduct Issues

1. The Hybrid Measurement System
    The Postal Service proposes service performance measurement systems 
that incorporate both internal and external measurement elements to 
measure the performance of First-Class Mail presort letters and cards, 
Standard Mail non-saturation letters and flats, and Package Services 
presort flats. The systems for each type of mail share similar 
attributes. Collectively, these measurement systems are referred to as 
the ``hybrid measurement system.''
    The hybrid measurement system hinges on successful implementation 
and mailer adoption of the internal IMb system.\9\ Only mail using the 
full service option of IMb will be included in the measurement.\10\ The 
measurement system uses a sampling, not a census, of full service IMb-
compliant mail.
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    \9\ The Intelligent Mail Barcode is a new data rich, four-state 
barcode that the Postal Service is in the process of introducing. 
The IMb system includes the process and documentation requirements 
for inducting mail into the postal system, and the data system to 
monitor and report on mail containing IMbs.
    \10\ Full service and basic options are available for IMb. Basic 
IMb requires mailers to use an IMb that includes a Barcode ID, 
Service Type ID, Mailer ID, Serial Number (does not have to be 
unique and can include all zeroes), and a Delivery Point ZIP Code. 
In addition to the requirements for basic service IMb, full service 
IMb mailpieces must include serial numbers that are unique for 45 
days, unique Tray/Container barcodes, and electronic documentation.
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    A prerequisite for mail to be measured is the submission of 
electronic mailing documentation by the mailer. Generally, the mailer's 
submission of electronic mailing documentation and the documented 
arrival time at a postal facility starts the clock of the 
measurement.\11\
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    \11\ The actual start-the-clock takes into consideration the 
critical entry time (CET) for that type of mail.
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    The hybrid measurement system measures end-to-end service 
performance in two steps. In the first step, a mail processing factor 
is developed. The mail processing factor is the time from the start-
the-clock event described above to the last recorded mail processing 
scan using IMb system data. In the second step, a delivery factor is 
developed. The delivery factor represents the time from the last 
recorded mail processing scan to actual delivery of a mailpiece. In 
calculating the delivery factor, an external contractor uses the last 
recorded mail processing scan reported by the IMb system, and the 
actual delivery date recorded by external reporters with scanners 
capable of reading IMbs. The mail processing factor is combined with 
the delivery factor to provide an end-to-end measurement of service 
performance.\12\
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    \12\ The external reporters generate an actual stop-the-clock 
event, which also can be used to develop an actual end-to-end 
measurement. At this time, it is unclear how this end-to-end 
measurement will be incorporated into the reported service 
performance measurement.
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    A variety of mailers support the hybrid measurement system 
approach. AMEE Comments at 2; DFS Reply Comments at 1; MMA Comments at 
2; NPPC Comments at 4; Pitney Bowes Comments at 3; and PostCom/DMA 
Comments at 7.
    AMEE and MMA comment that the existing External First-Class (EXFC) 
infrastructure used by the hybrid system and external reporters will 
add credibility to the system. AMEE Comments at 2; and MMA Comments at 
2. However, Pitney Bowes and Valpak suggest eventually eliminating the 
external reporters to reduce costs once IMb becomes widespread enough 
to ensure statistical validity of the system. Pitney Bowes Comments at 
3; and

[[Page 73667]]

Valpak Comments at 8-9; see also IWCO Additional Comments at 1. 
PostCom/DMA and DFS also suggest eliminating the external reporters as 
a cost savings measure, but suggest using an independent study as an 
internal delivery proxy instead. PostCom Comments at 7; and DFS Reply 
Comments at 3.
    Commission analysis. The Commission supports the approach the 
Postal Service is taking to implement the hybrid system for service 
performance measurement, with the following caveats.
    The mail sampled by the hybrid system must be representative of the 
overall mail subject to performance measurement for the system to 
produce meaningful results. Representativeness is further discussed in 
section VI.A.2 which addresses mail excluded from measurement. A 
representative sample also may depend on mailers' adoption of the IMb 
system, which is further discussed in section VI.A.3.
    The Commission notes the common analytical and statistical practice 
of combining the results of more than one separate and independent 
analytical sample. The Postal Service proposes to achieve an end-to-end 
measurement of service performance by combining the mail processing 
factor (step one estimation) with the delivery factor (step two 
estimation). It appears that the volume of data used in the step one 
estimations will be much larger than the volume used in the step two 
analysis. Although independence appears to hold between the two 
separate analyses for the two separate factors, the Commission suggests 
that it will be important to monitor if that independence is true for 
all components within each analyses for all classes of mail so as to 
avoid possible unintended bias effects.
    The Commission also recommends monitoring and testing for 
potentially negative influences on measurement resulting from the type/
frequency of mismatched data pairs that may enter the analyses such as 
a reliable start-the-clock with no final external reporter scan, or no 
reliable start-the-clock with a reliable final external reporter scan. 
The methodology for incorporating (or scrubbing) mismatch data pairs 
into the measurement may bias the measurement result. Thus, the 
methodology must be fully understood and disclosed to assure that any 
bias is reasonably limited.\13\
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    \13\ For example, a mailpiece with a valid start-the-clock but 
without a valid stop-the-clock (due to the mailpiece never being 
delivered) that is scrubbed from the dataset will not be represented 
in the overall measurement of service performance, i.e., the 
measurement system will indicate a higher level of service 
performance than what is actually occurring. This is a complex issue 
because the decisions concerning atypical data typically affect 
measurement bias.
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    As suggested by AMEE and MMA, the Commission finds that the 
existing EXFC infrastructure and the external panel of reporters 
equipped with devices to scan all IMb First-Class, Periodical, and 
Standard letters/cards and flats delivered to their in-home addresses 
will add credibility to the hybrid system. The option of reducing or 
eliminating the use of external reporters to reduce costs may be 
considered at a later date.
2. Exclusions From Measurement
    Mail that is excluded from measurement may impact the ability of 
the sampled mail to represent the total of the mail subject to 
measurement. For the IMb-based measurement systems, only mail 
participating in full service IMb is measured. This excludes mail 
participating in only the basic IMb service. Similar questions exist 
for DelTrak and Red Tag, and the Delivery Confirmation-based systems, 
where a significant portion of the mail does not utilize these systems. 
Finally, mailers express concern with the exclusion from measurement of 
mail that does not meet preparation requirements.
    Valpak expresses concern that the exclusion from measurement of 
(Standard) bulk mail not using full service IMb raises the possibility 
of bias, and the possibility that the measurement is not representative 
of the wider universe. It suggests that the Postal Service provide an 
annual explanation of the universe from which performance data is 
derived and an explanation of what universe this data can be considered 
to represent. Where the represented universe is larger than the 
performance data universe, the Postal Service also should explain why 
the data universe is representative of the larger universe. Valpak 
Comments at 4-5; and Valpak Reply Comments at 7-8; see also Research 
International Additional Comments at 2.
    GCA provides an example of where representativeness issues may 
exist with single-piece mail. It requests clarification on the 
treatment of mis- or badly-addressed single-piece mail in the 
measurement system. GCA Comments at 1.
    MOAA comments that it is reasonable to exclude mail that does not 
meet mail preparation requirements, but further suggests procedures are 
necessary to inform mailers of any mail that is excluded from 
measurement.\14\ MOAA Comments at 1-2. APWU contends that excluding 
mail that does not meet mail preparation requirements may cause 
measurements that are not reflective of the mail being sent. APWU 
Comments at 2. PostCom/DMA adds that data excluded from service 
performance measurement should be provided to mailers to resolve 
service issues and improve mail quality. PostCom/DMA Comments at 16.
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    \14\ For bulk mail, the Postal Service proposes only to measure 
end-to-end performance of mail that is verified as satisfying mail 
preparation requirements associated with applicable price categories 
and that complies with the requirements of full service IMb. Revised 
Plan, Appendix, para. 4.
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    Commission analysis. The Commission recognizes that the full 
service IMb mail used in the end-to-end service measurement 
calculations may not be representative of the larger populations it 
seeks to represent in making service measurement claims. The full 
service IMb mail and the remainder of the mail of a given class may 
differ in terms of mail characteristics, geographical location, and 
most importantly, service performance. If these two sets of mail groups 
do indeed differ significantly in important characteristics, then the 
``estimated'' measures for the full service IMb mail may be very 
different than the service performance for the rest of the mail.
    To assess this potential bias problem, the Commission recommends 
limited performance measurement tests be conducted for mailpieces 
excluded from the primary measurement system and used for comparison 
purposes. For example, the Postal Service could apply unique 
identifying barcode information to a random sample of mailpieces that 
do not use full service IMb to obtain an estimate of service 
performance. This estimate could then be compared to the estimate 
obtained from the full service IMb pieces to monitor how representative 
full service IMb pieces are as adoption rates increase. A plan for 
implementing a system for ascertaining the representativeness of annual 
compliance report (ACR) service performance measurements based on IMb 
should be provided with the 2009 ACR.
    The Commission finds that the Postal Service is taking a reasoned 
approach to addressing the MOAA, et al. concerns of determining whether 
to include or exclude mail from measurement because of a variety of 
mail validation deficiencies. See Revised Plan, Appendix, para. 4. In 
some instances, the mailer will be provided an opportunity to correct 
the deficiencies and the mail then will be included in the performance 
measurement. In all

[[Page 73668]]

instances of this nature, communication between the Postal Service and 
the mailer is beneficial to reducing the occurrence of validation 
issues so that the mail system operates smoothly.
3. IMb Adoption
    The IMb system, used to capture internal service performance data, 
is the centerpiece of several of the measurement systems proposed by 
the Postal Service. In particular, successful operation of the IMb 
system is necessary for implementation of the hybrid measurement 
system. Thus, the rate at which mailers are likely to start using the 
IMb, specifically the full service option of IMb that is required by 
the measurement systems, along with whether the IMb mail presented by 
the adopting mailers is representative of intended total population 
subject to measurement, must be considered.
    AMEE has an expectation of rapid adoption of IMb, but comments that 
undefined Postal Service requirements, the mailer's own data 
requirements, the Postal Service IT infrastructure, and the issue of 
rate incentives could add uncertainty to its expectations. AMEE 
Comments at 4. NPPC comments that the effectiveness of the hybrid 
system will depend on IMb adoption rates; however, NPPC contends that 
it is unclear how fast IMb will mature, when the Postal Service will 
specify business requirements, and how mailers will convert to IMb. 
NPPC Comments at 4. Pitney Bowes asserts that the hybrid measurement 
system is critically dependent upon mailer participation in IMb, and 
suggests promoting adoption with meaningful price incentives and 
advance notice regarding the size of these incentives. In accord, 
PostCom/DMA Additional Comments at 5-6.
    PostCom/DMA and Pitney Bowes suggest implementation of a data 
collection process to monitor IMb adoption. Pitney Bowes explains the 
adoption monitoring system can be used to assess the validity of the 
hybrid system. Additionally, PostCom/DMA assert that the Postal Service 
must work aggressively with mailers to overcome implementation barriers 
to IMb, and that a monitoring system can be used to explore alternate 
requirements or measurement systems if IMb adoption rates are 
significantly less than anticipated. Pitney Bowes Comments at 4; and 
PostCom/DMA Comments at 18-19.
    Research International questions whether a system based on the 
natural adoption of IMbs for bulk mail will produce a measurement that 
is representative. It contends that adoption may be skewed by 
geography, size of mailer, types of mailing, or other factors. 
Alternatively, Research International suggests a system using seeded 
mailings, including transponders, to give a more complete end-to-end 
measurement. Research International Comments at 1. To the extent that 
the Postal Service may need to supplement IMb data, McGraw-Hill 
comments that the Postal Service should evaluate the costs and benefits 
of the Research International approach. McGraw-Hill Reply Comments at 
5.
    Commission analysis. The Commission recognizes that mailer adoption 
of full service IMb that provides a representative cross-section of the 
mail population being measured is critical to the success of the hybrid 
system. It is uncertain, at this time, when sufficient adoption of IMb 
will occur. In the Initial Plan, the Postal Service projected presort 
First-Class and letter-shaped Standard Mail adoption at 25-50 percent 
in FY 2009 with a projected increase to 50-75 percent in FY 2010. The 
Revised Plan does not give projection percentages for full service IMb 
adoption.
    The Postal Service has made several statements to the mailing 
community concerning the operational date of the IMb system and 
possibly developing differential rates specific to IMb mail. 
Uncertainty in the mailing community of IMb requirements, 
implementation dates, and applicable rates may lead to delay in the 
adoption of the system. Additional issues that may impede adoption are 
mailer concerns over final Postal Service requirements, mailer data 
requirements, and Postal Service IT infrastructure.
    The Commission also finds that tracking the representativeness of 
the actual full service IMb sample is important. For presort mail, the 
sample of full service IMb presort mailers must be representative of 
the entire population of presort mailers. The Commission expects the 
Postal Service to develop a protocol for testing to assess whether this 
sample is in fact representative.
    To the extent that uncertainty exists, the Commission agrees with 
the mailers' suggestions that it will be necessary to monitor IMb 
adoption rates so that possible solutions may be formulated to ensure 
reasonably representative and unbiased service performance estimates. 
The appropriate place to consider periodic reporting of IMb adoption 
rates and analysis of representativeness is the upcoming rulemaking on 
service performance data reporting requirements.
4. Start-the-Clock and Critical Entry Times
    Most mailers concerned with a credible service performance 
measurement system comment on some aspect of start-the-clock. MOAA 
Comments at 2; MPA Comments at 2-3; NPPC Comments at 2-3; PostCom/DMA 
Comments at 14; Time Warner Comments at 2-3; NPPC Additional Comments 
at 2-5; Valpak Comments at 5-8; and McGraw-Hill Reply Comments at 4-5. 
Generally, start-the-clock is the date and time that a mailpiece enters 
the mailstream for the purpose of service performance measurement.\15\ 
It is the starting point from which performance measurements are made. 
The issues are broad and encompass anything from documenting mail 
arrival times to mail acceptance. They include highly technical issues 
such as concerns with the need for better definitions of the electronic 
mailing information necessary to start-the-clock. AMEE Comments at 1-2; 
and MMA Comments at 2.
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    \15\ Where applicable, start-the-clock takes into consideration 
critical entry times (CET) and customer/supplier agreements (C/SA). 
For certain Special Services, start-the-clock is the date and time 
when the mail service is initiated.
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    In many cases, there is a CET associated with start-the-clock. The 
Postal Service defines the CET as ``the latest time that a reasonable 
amount of a class of mail can be received at designated induction 
points in the postal network for it to be processed and dispatched in 
time to meet service standards.'' Revised Plan at 3. For mail accepted 
before the posted CET for that day, the day of entry is designated as 
the ``start-the-clock.'' For mail accepted after the posted CET for 
that day, the mailpiece has a start-the-clock date of the following 
applicable acceptance day. The Postal Service has established national 
CETs for destination-entered Standard Mail, and has established 
locally-defined facility CETs for all other classes of mail. A C/SA may 
identify an alternate acceptance window.
    Several mailers ask the Postal Service to better define how CETs 
will be established and modified, and to develop a method for 
communicating CETs and changes to CETs to the mailing industry. AMEE 
Comments at 1-2; BAC Comments at 2; MMA Comments at 2; and Public 
Representative Reply Comments at 5. In addition, NPPC suggests 
specifying CETs in the service standards and providing a Web-based 
system for mailers to access CET information. NPPC Comments at 3-4. MPA 
supports

[[Page 73669]]

a centralized system for mailers to access CETs for all facilities, and 
also proposes the establishment of a centralized process for national 
mailers to negotiate C/SAs that cover all of their entry points. MPA 
Additional Comments at 4. Time Warner and DFS generally support locally 
established CETs that reflect local conditions. Time Warner Comments at 
3; and DFS Reply Comments at 3-4.
    The Postal Service indicates that it ``will be centrally 
documenting local product-specific CETs on a facility-by-facility basis 
for the purpose of responding to mailer information access concerns.'' 
Postal Service Reply Comments at 9.
    Commission analysis. The Postal Service is to be commended for 
addressing many mailer concerns in the time between submitting its 
Initial Plan and its Revised Plan. Successfully generating accurate 
start-the-clock times is essential to the development of a credible 
performance measurement system. The Commission perceives start-the-
clock as a detailed and difficult issue, and urges the Postal Service 
to continue working with the mailing community in developing a working, 
user-friendly, information system. The Commission supports the Postal 
Service's proposal to document CETs and encourages it to develop 
systems to make this information publicly available in the very near 
future.
    Bulk mailers that rely on CETs make several good suggestions for 
increasing the visibility and the transparency of CETs that the 
Commission fully supports. Additionally, the Postal Service is reminded 
that CETs also are important to low-volume and single-piece mailers 
when entering mail at a window or into a blue collection box. Easy 
access to CET information is essential to informing mailers of what 
service is to be expected.
    The Commission also is aware of the potential impact that gradual 
small changes to CETs could have on service performance. Readily 
transparent access to CET information will allow for monitoring of this 
particular situation.
5. Miscellaneous Issues
    Implementation benchmarks. APWU suggests the establishment of 
benchmarks to track the development and implementation of the 
performance measurement system and to ensure that the system accurately 
reflects actual performance. APWU Comments at 2, see also PostCom/DMA 
Comments at 21; and Valpak Reply Comments at 3.
    External audits. Noting the removal of the section describing 
external service performance measurement validation from the Postal 
Service's Revised Plan, PostCom/DMA stresses the need for independent 
external auditing and evaluation of the service performance measurement 
systems, processes, and data quality/accuracy. PostCom/DMA Additional 
Comments at 7.
    Data security. BAC, NPPC, PostCom/DMA, and Time Warner are 
concerned with the security of the data generated by the performance 
measurement system and contend that this issue has not been adequately 
addressed by the Postal Service. BAC Comments at 1; PostCom/DMA 
Comments at 20; PostCom/DMA Additional Comments at 6; Time Warner 
Comments at 1-2; and NPPC Additional Comments at 5-6.
    Commission analysis. The Commission recognizes the importance of 
each of these issues. Establishing benchmarks to track the various 
stages of system development are essential management tools that the 
Postal Service properly has been employing. The Commission concludes 
that public acceptance of IMb, and the use of IMb in service 
performance measurement reporting, will be significantly enhanced by 
greater transparency in this area. Therefore, the Postal Service is to 
provide reports at the beginning of each fiscal quarter on progress 
toward its benchmarks for implementing full service IMb for each mail 
shape. In the rulemaking on reporting that will shortly follow this 
order, the Commission will suggest for public comment specific periodic 
updates on the progress toward full implementation and the development 
of representative samples for measuring performance.
    External audits will protect the credibility of various internal 
and hybrid measurement systems. Although the Postal Service no longer 
describes such audits in its proposal, the Commission expects to 
require appropriate verification that reported service performance is 
representative. This may well involve audits of service achievement in 
various processing streams. At this juncture, however, it seems 
premature to focus resources on exploring methods for auditing systems 
that are not yet operational.
    Security also is an essential aspect of developing any information 
collection and reporting system. Mailers reasonably want assurances 
that data on their business activities will be properly safeguarded. 
The Postal Service may not have included extensive details on security 
in its request as this topic is somewhat tangential to whether IMb can 
provide robust performance data. As this system is implemented, the 
Postal Service will be expected to remain vigilant to preserve its long 
established record of attention to data security issues.

B. Class-Specific Issues

    The Postal Service proposes new measurement systems based on the 
IMb (the hybrid measurement systems), Delivery Confirmation scans 
(predominately the parcel-shaped mail measurement systems), DelTrak and 
Red Tag (the Periodicals mail measurement systems), and the 
International Mail Measurement System to measure the various types of 
mail. The Postal Service also will continue use of the External First-
Class (EXFC) system for measuring most single-piece First-Class Mail. 
The DelTrak and Red Tag systems are proposed as interim measurement 
solutions until IMb-based systems become viable. IMb-based systems also 
may replace the Delivery Confirmation-based systems in the future.
    The Commission finds that these measurement systems are likely to 
be representative of a significant portion of the mail sent as First-
Class Mail, Standard Mail, Periodicals, and Package Services, and have 
the potential of producing meaningful data. Notwithstanding the 
concerns previously noted, and noted in the additional comments below, 
the Commission approves of the Postal Service's general approach in 
these areas.
    The Commission, however, cannot approve the approaches that the 
Postal Service is proposing for the majority of the Special Services. 
More robust measurement systems capable of generating data that is 
representative of the services being offered must be developed.
    The remainder of this section discusses the Postal Service's 
individual proposals for implementing performance measurement systems 
by mail class. Issues identified by the mailing community are 
discussed, and specific recommendations by the Commission are 
presented.
1. First-Class Mail
    First-Class Mail includes Single-Piece Letters/Postcards; Presorted 
Letters/Postcards; Flats; Parcels; Outbound Single-Piece First-Class 
Mail International; and Inbound Single-Piece First-Class Mail 
International. Of all domestic First-Class Mail, 38.0 percent are 
single-piece letters and cards, 3.3 percent are single-piece flats, 0.4 
percent are single-piece parcels, 57.1 percent are presort letters and 
cards, 1.0 percent are presort flats, and 0.2 percent are presort 
parcels. Revised Plan at 13.
    Single-piece letters, cards, and flats. The Postal Service proposes 
to continue

[[Page 73670]]

measuring single-piece letters, cards, and flats using the EXFC 
measurement system. EXFC is an end-to-end time to delivery measurement 
system administered by an external contractor. Mail droppers employed 
by the external contractor report the date and time test mailpieces are 
deposited into the mail system to the external contractor. The time and 
date that the mail is dropped starts the clock of the measurement. Mail 
reporters employed by the external contractor record the date they 
receive test mailpieces and report this information to the external 
contractor. The date the mail reporter receives the mailpiece stops the 
clock of the measurement. The difference, in calendar days, between the 
start-the-clock event and the stop-the-clock event is reported as the 
service performance measurement.\16\
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    \16\ Non-delivery days are factored into the service performance 
calculation.
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    The Public Representative suggests expanding EXFC to include a 
statistically valid measurement system for single-piece First-Class 
Mail letters and flats delivered to post office boxes. Public 
Representative Comments at 33.
    The Commission asks the Postal Service to consider whether it is 
possible to incorporate pieces delivered to post office boxes and 
pieces requiring forwarding and return into its current EXFC design. 
The Postal Service should consider both the benefits of measuring 
pieces with these delivery characteristics and the added costs 
involved, and inform the Commission of its analysis by the conclusion 
of fiscal year 2009.
    GCA stresses the importance of non-standard aspect ratio mailpieces 
which currently are not being represented by EXFC. GCA Comments at 1-2.
    The Commission finds that EXFC does not include any non-machinable 
mail (such as square envelopes) in its seeded mailings, nor will 
nonmachinable mail be captured by the IMb-based systems. Consequently, 
this mail will not be represented in the performance measurement 
system. This issue eventually may require a special study to measure 
non-machinable mail performance.
    BAC and NPPC suggest disaggregating the service performance 
measurement of remittance mail and treating remittance mail as a 
distinct category of First-Class Mail. BAC Comments at 2; and NPPC 
Comments at 7.
    Presort letters and cards. The Postal Service proposes to use the 
hybrid measurement system to measure presort letters and cards.
    Presort flats. The Postal Service does not propose a measurement 
system for presort flats. It proposes use of the EXFC measurement for 
single-piece flats (machine addressed only) as a proxy for the presort 
flats measurement. It states that presort flats make up only 0.4 
percent of the total mailstream. The Postal Service notes the 
possibility of employing the IMb measurement system in the future if 
the volume of mailpieces with IMbs is sufficient to provide actual 
measurements.
    Several mailers oppose the proposal to use the EXFC measurement for 
single-piece flats (machine addressed only) as a proxy for the presort 
flats measurement. They acknowledge the low volume of presort flats, 
but contend that to qualify for automation rates they will be required 
to adopt IMb and other processes that are identical between letters and 
flats. AMEE Comments at 2; MMA Comments at 2; Pitney Bowes Comments at 
3-4; Pitney Bowes Additional Comments at 3; and PostCom/DMA Comments at 
4-5. These mailers suggest using the hybrid system to obtain 
performance measurements. BAC adds that there should be enough presort 
flats with IMbs in the system to measure performance without the need 
to use a proxy. BAC Comments at 4. PostCom/DMA ponders why a 
statistically valid system cannot be developed for presort flats when 
the Postal Service proposes a distinct measurement system for retail 
parcels that comprise less mail volume. PostCom/DMA Comments at 4. The 
Public Representative views the proposal ``a request to avoid measuring 
directly that price category of the First-Class Flats.'' Public 
Representative Comments at 34-35.
    The Commission acknowledges the mailer comments opposing use of the 
EXFC single-piece flat measurement as a proxy for presort flats. 
However, because the single-piece flat mail measured by EXFC is all 
machinable and does not include address correction, these pieces are 
likely to be representative of ``clean'' mail. Presort flats are also 
likely to be clean. Therefore, the Commission accepts the Postal 
Service's proposal to use the EXFC's First-Class single-piece flats 
measurement as a proxy for presort flats with the understanding that 
IMb will be used instead when it becomes possible to do so.
    Retail and presort parcels. The Postal Service proposes an internal 
measurement system for retail and presort parcels. Only parcels that 
have purchased Delivery Confirmation will be measured. For retail 
parcels, the Delivery Confirmation scan at the time of purchase at the 
retail counter starts the clock of the measurement. For presort 
parcels, the documented arrival time at the Postal Service acceptance 
facility along with the mailer provided electronic mailing 
documentation starts the clock of the measurement. The clock is stopped 
when the Postal Service scans the Delivery Confirmation label at 
delivery or attempted delivery. The difference, in calendar days, 
between the start-the-clock event and the stop-the-clock event is 
reported as the service performance measurement.
    The Commission notes that use of Delivery Confirmation scan data 
when evaluating service performance for First-Class retail and presort 
parcels has limitations that relate to the limited use of Delivery 
Confirmation service by First-Class presort parcel mailers. 
Additionally, First-Class single-piece parcels using Delivery 
Confirmation is estimated to be only 3.9 percent. The Postal Service 
will have to analyze this system and demonstrate that it produces a 
representative measurement. The Postal Service should include such an 
analysis with its annual compliance report for fiscal year 2009.
    Inbound and outbound single-piece international letters. Inbound 
and outbound single-piece international letter-shaped mail will be 
measured using the external International Mail Measurement System 
(IMMS). IMMS is an end-to-end system provided by an external contractor 
based on sample mailpieces entered into the system by droppers and 
received by reporters. Only domestic transit time will be measured. The 
system also relies on an internal ID tag and/or PLANET Code scan 
(PLANET Code will be phased out and replaced with IMb) to signal when 
the mailpiece either enters or leaves the control of the Postal 
Service.
    Single-piece international flats. Single-piece international flats 
will not be measured, and single-piece domestic flats external EXFC 
data will be used as a proxy for its service measurement.
    The Commission finds that single-piece domestic flats external EXFC 
data can be used as an acceptable proxy for single-piece international 
flats service measurement.
    Single-piece international parcels. Single-piece international 
parcels will not be measured, and single-piece domestic parcels 
internal Delivery Confirmation data will be used as a proxy for its 
service measurement.
    The Commission finds that single-piece domestic parcels internal 
Delivery Confirmation data can be used as an acceptable proxy for 
single-piece international parcels service measurement.

[[Page 73671]]

    Miscellaneous comments. The Public Representative contends that 
``the forwarding (and return or wasting) of undeliverable-as-addressed 
First-Class Mail remains a large and costly problem for the Postal 
Service.'' Public Representative Comments at 10. This category of 
First-Class Mail is not measured. Thus, the Public Representative, 
joined by Pitney Bowes, suggest establishment of service standards for 
undeliverable-as-addressed, forwarded, and returned mail. Public 
Representative Comments at 8-12; and Pitney Bowes Reply Comments at 4. 
The Postal Service should explore the cost of periodically conducting 
studies of service performance for forwarded and returned First-Class 
Mail and inform the Commission of their feasibility by the conclusion 
of fiscal year 2009.
2. Standard Mail
    Standard Mail includes High Density and Saturation Letters; High 
Density and Saturation Flats/Parcels; Carrier Route; Letters; Flats; 
and Not Flat-Machinables (NFMs)/Parcels. Of all Standard Mail, 61.1 
percent are presort letters and cards, 38.3 percent are presort flats, 
and 0.6 percent are presort parcels. Revised Plan at 26.
    Saturation letters and flats. The Postal Service proposes to use a 
variation of the hybrid measurement system to measure saturation 
letters and flats. Unique barcodes are not required on saturation mail, 
which presents additional challenges to stopping-the-clock for both 
mail processing and delivery measurement. The Postal Service states it 
will develop alternative methods for external recipients to identify 
saturation mail and to stop the clock of the measurement.
    The Commission recognizes that using the hybrid system for 
saturation letters and flats is problematic. Service performance cannot 
be accurately measured without a valid stop-the-clock event. The 
Commission understands that the Postal Service is working to develop 
stop-the-clock measurements and encourages it to do so expeditiously.
    Non-saturation letters and non-saturation flats. The Postal Service 
proposes to use the hybrid measurement system to measure both non-
saturation letters and non-saturation flats.
    Miscellaneous comments concerning flats. MOAA suggests that the 
Postal Service develop tracing at the destination delivery unit (DDU) 
for flats entered as carrier route mail. MOAA Comments at 3.
    Parcels. The Postal Service proposes an internal measurement system 
for parcels. Only parcels that have purchased Delivery Confirmation 
will be measured. The mailer's documented arrival time at the Postal 
Service acceptance facility is used to start the clock of the 
measurement. The Postal Service's scan of the Delivery Confirmation 
label at delivery, or attempted delivery, stops the clock of the 
measurement. The number of calendar days from when the clock is started 
to when it is stopped is reported as the measure of service 
performance.
3. Periodicals
    Periodicals include Within County Periodicals and Outside County 
Periodicals. Of all Periodicals, 1.5 percent are letters, and 98.5 
percent are flats. Revised Plan at 33.
    As an interim solution, the Postal Service proposes using the 
external Red Tag and DelTrak service measurement providers to measure 
the service performance of Periodicals. The long-term solution is to 
switch to an internal IMb-based system once there is a sufficient 
volume of Periodicals mail using IMbs.
    The Red Tag and DelTrak systems rely on mailer reported induction 
times to generate a start-the-clock event.\17\ A delivery date reported 
online by external reporters generates a stop-the-clock event. The 
measurement of service performance is the number of calendar days from 
the start-the-clock event to the stop-the-clock event.
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    \17\ It is unclear whether the mailer-reported induction time is 
reported to the Postal Service or directly to the external service 
measurement providers. If the information flow of the mailer-
reported induction time is not directly from the mailer to the 
external measurement providers, the measurement system incorporates 
features of both internal and external measurement systems.
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    MPA supports the use of DelTrak and Red Tag as an interim solution 
until IMb is implemented for Periodicals. MPA Comments at 2. Research 
International expresses concern over the representativeness of DelTrak 
and Red Tag. It notes that mailers must pay to participate in Red Tag, 
Red Tag mail is identifiable to the Postal Service, and the receiving 
reporters are volunteers. Research International Additional Comments at 
4-5.
    McGraw-Hill asserts that ``[a]ccurate service performance 
measurement is important for smaller mailers no less than for larger 
mailers.'' It questions the eventual adoption rate of IMb by small 
mailers and whether measurements from IMb Periodicals will be 
representative of the class as a whole. It suggests studying the 
temporary use of seed mail. McGraw-Hill Reply Comments at 4-5. The 
Postal Service is currently working to assure that Red Tag and DelTrak 
will provide it with a representative sample of Periodical 
publications. It should include an analysis of representativeness of 
the Periodicals measurements with its 2009 ACR.
    NNA suggests that there are many hurdles to overcome before IMbs 
begin to appear on newspapers and comments on the many unique problems 
of representing smaller publications in the measurement system. NNA 
Comments at 3-6. NNA concludes that it is content with leaving Within 
County unmeasured for the time being. Id. at 11.
    The Commission recognizes the opinion of Within County mailers that 
it is acceptable for the time being for their mail to escape 
measurement. Nonetheless, service problems for nationally distributed 
pieces paying Within County rates have been reported, and the statute 
does not provide an exemption from measurement for this significant 
segment of Periodicals mail. Thus, the Postal Service must strive to 
develop an appropriate measurement system for Within County mail and 
inform the Commission of its proposal by the conclusion of fiscal year 
2010.
    The Commission notes that an additional benefit of the Red Tag- and 
DelTrak-based systems will be to serve as a check on the IMb-based 
system that the Postal Service proposes for the future. Both systems 
should be run in parallel at the start to make appropriate comparisons.
4. Package Services
    Package Services includes Single-Piece Parcel Post; Inbound Surface 
Parcel Post (at UPU rates); Bound Printed Matter Flats; Bound Printed 
Matter Parcels; and Media Mail/Library Mail. Package Services contains 
both parcel-shaped and flat-shaped mail. Of the parcel-shaped mail, 
14.5 percent is considered retail and 85.5 percent is considered 
presort.
    Retail parcels. The Postal Service proposes an internal measurement 
system for retail parcels based on Delivery Confirmation scans. Thus, 
only parcels with purchased Delivery Confirmation will be measured. The 
Delivery Confirmation scan at the time of purchase starts the clock of 
the service performance measurement. The Postal Service scan of the 
Delivery Confirmation label at delivery, or attempted delivery, stops 
the clock of the service performance measurement. The difference, in 
calendar days, between the start-the-clock event and the stop-the-clock 
event is reported as the service performance measurement.

[[Page 73672]]

    Presort parcels. The Postal Service proposes an internal 
measurement system for presort parcels based on Delivery Confirmation 
scans. Thus, only parcels with purchased Delivery Confirmation will be 
measured. The documented arrival time at the Postal Service acceptance 
facility starts the clock of the service performance measurement. The 
Postal Service scan of the Delivery Confirmation label at delivery, or 
attempted delivery, stops the clock of the service performance 
measurement. The difference, in calendar days, between the start-the-
clock event and the stop-the-clock event is reported as the service 
performance measurement.
    Publishers Clearing House comments that industry and the Postal 
Service need to work together to overcome adoption barriers to placing 
Delivery Confirmation barcodes on small parcels (of all classes). 
Publishers Clearing House Comments at 1-2.
    PostCom/DMA, joined by PSA, and Publishers Clearing House oppose 
using Delivery Confirmation data from retail Package Services as a 
proxy to measure presort Package Services. PostCom/DMA Comments at 5-6; 
PSA Comments at 6-7; and Publishers Clearing House Comments at 2. They 
infer that the Postal Service proposes to use Delivery Confirmation 
data from retail Package Services as a proxy to measure presort Package 
Services from its Initial Plan.\18\ PostCom/DMA asserts that the Postal 
Service's intentions for measuring parcel-shaped presort Package 
Services are unclear. It contends that retail Package Services and 
presort Package Services have different entry and operational 
characteristics, and that there is adequate Delivery Confirmation data 
to separately measure retail and presort Package Services. PostCom/DMA 
Comments at 5-6.
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    \18\ ``The existing Delivery Confirmation performance reports 
for mail originating at postal retail units can be used in the 
short-term to measure the service performance of all Package 
Services until service measurement can be extended to Presort 
parcels.'' Initial Plan at 11.
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    The Commission notes that the references implying use of a proxy do 
not appear in the Revised Plan. The Revised Plan appears to indicate 
that retail and presort will be measured separately with Delivery 
Confirmation-based systems.\19\ The Postal Service appears to propose 
separate measurement systems based on Delivery Confirmation scans for 
retail and presort parcel-shaped Package Services mail. The Commission 
approves of the separate measurement approach.
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    \19\ See Revised Plan at 37-38, para. 7.2 (retail) and para. 7.3 
(presort).
---------------------------------------------------------------------------

    Presort flats. The Postal Service proposes to use the hybrid 
measurement system to measure presort flats.
    The Commission looks forward to the development of this aspect of 
the performance measurement system. Until the hybrid measurement system 
for flats becomes a reality, the Postal Service should include a 
discussion of its progress toward implementing this system with every 
annual compliance report.
5. Special Services
    Special Services are services offered by the Postal Service related 
to the delivery of mailpieces, including acceptance, collection, 
sorting, transportation, or other functions. Services within the 
Ancillary Services and the International Ancillary Services products 
can be purchased only in conjunction with the purchase of mail service. 
Other Special Services products can be purchased on a stand-alone 
basis. Special Services includes Ancillary Services; \20\ International 
Ancillary Services; \21\ Address List Services; Caller Service; Change-
of-Address Credit Card Authentication; Confirm; International Reply 
Coupon Service; International Business Reply Mail Service; Money 
Orders; and Post Office Box Service.
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    \20\ Ancillary Services include Address Correction Service; 
Applications and Mailing Permits; Business Reply Mail; Bulk Parcel 
Return Service; Certified Mail; Certificate of Mailing; Collect on 
Delivery; Delivery Confirmation; Insurance; Merchandise Return 
Service; Parcel Airlift (PAL); Registered Mail; Return Receipt; 
Return Receipt for Merchandise; Restricted Delivery; Shipper-Paid 
Forwarding; Signature Confirmation; Special Handling; Stamped 
Envelopes; Stamped Cards; Premium Stamped Stationery; and Premium 
Stamped Cards.
    \21\ International Ancillary Services include International 
Certificate of Mailing; International Registered Mail; International 
Return Receipt; International Restricted Delivery; International 
Insurance; and Customs Clearance and Delivery Fee.
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    Delivery Confirmation, Signature Confirmation, Certified Mail, 
Registered Mail, electronic Return Receipt, and Collect on Delivery. 
The Postal Service proposes service measurements for Delivery 
Confirmation, Signature Confirmation, Certified Mail, Registered Mail, 
electronic Return Receipt, and Collect on Delivery that use internally 
generated data from delivery event barcode scans to measure the time 
between when delivery information is collected to when the information 
is made available to the customer. The service performance score is the 
percentage of information available within 24 hours.
    The Public Representative notes that the Postal Service is 
measuring only the time between when delivery information was collected 
and when that information was made available to the mailer. However, 
mailpieces that do not receive a delivery scan event to stop-the-clock 
will not be measured, i.e., a failed performance will not be counted. 
The Public Representative suggests that the Postal Service also report 
the ratio of the number of pieces scanned at delivery to the number of 
such pieces scanned at acceptance. Public Representative Comments at 
48-52.
    Confirm and automated Address Correction. The Postal Service 
proposes service measurements for Confirm and automated Address 
Correction that use passive scans of individual IMb mailpieces on 
automated mail processing equipment. For Confirm, the start-the-clock 
event is the time stamp of the mailpiece scan, and the stop-the-clock 
is the date and time when data is made available to the subscribers. 
For automated Address Correction, the start-the-clock event is the date 
and time that data is transmitted to the Address Correction system, and 
the stop-the-clock is the date and time when data are forwarded to the 
participants. The service performance score is the percentage of on-
time information availability.
    The Public Representative finds deficiencies similar to what is 
discussed above with Confirm and Address Correction measurements. Id. 
at 52. PostCom/DMA makes similar comments in the areas of Confirm and 
Delivery Confirmation Service. PostCom/DMA Comments at 8-9.
    Post Office Box Service. The Postal Service proposes a measurement 
for Post Office Box Service that uses internally generated scanning 
technology to measure the percentage of post office box sections that 
meet their up-time service standards.
    The Public Representative notes that this system does not prevent 
the Postal Service from changing post office box up-times, and further 
contends that the system lacks controls to prevent premature scanning 
of the barcode to meet the up-time service standard. The Public 
Representative proposes expanding EXFC coverage and using EXFC 
reporters to measure post office box up-times. Public Representative 
Comments at 52-54; see also Popkin Reply Comments at 1-2.
    Insurance Claims Processing, Postal Money Order Inquiry Processing, 
and Address List Services. For Insurance Claims Processing, Postal 
Money Order Inquiry Processing, and Address List

[[Page 73673]]

Services the Postal Service proposes to internally measure the 
percentage of time that the services meet their maximum processing 
duration standards. The system for Insurance Claims Processing 
generates a start-the-clock event when all information is received by 
the Customer Inquiry Claims Response System, and generates a stop-the-
clock event upon the transmission to the customer of the adjudicator's 
decision to pay, deny, or close the claim. The system for Postal Money 
Order Inquiry Processing generates a start-the-clock event upon the 
purchase of the service, and generates a stop-the-clock event upon the 
transmission of a response to the customer. The system for Address List 
Services generates a start-the-clock event upon the receipt of the 
address list or address cards from the mailer at the delivery unit of 
the postal district Address Management System office, and generates a 
stop-the-clock event upon the transmission to the customer of corrected 
address information.
    Caller Service. The Postal Service contends that measuring Caller 
Service is not practical because there is no one up-time as many 
customers arrange for multiple pickups each day. It proposes to address 
this issue through individual agreements.
    Mailers concerned with remittance mail request establishing a 
service standard for Caller Service. MMA Comments at 3; NPPC Comments 
at 7; PostCom/DMA Comments at 9; Publishers Clearing House Comments at 
2; and NPPC Additional Comments at 9-11. BAC further contends that 
using the single post office box up-time measurement does not represent 
the needs of remittance mailers. BAC Comments at 3.
    Change-of-Address. The Postal Service does not propose a specific 
measurement system for Change-of-Address service.
    Noting the challenges of keeping up with the current addresses of 
customers, BAC urges the Postal Service to establish standards for 
Change of Address Service. BAC Comments at 3. The Public Representative 
echoes this suggestion describing change of address requests and 
forwarded mail as the Achilles' heel of First-Class Mail service 
performance. Public Representative Comments at 8-12.
    Commission analysis of Special Services. Special Services include 
approximately 35 postal services with diverse attributes and a wide 
range of revenue production levels.\22\ This diversity contributes to 
the challenges of designing meaningful performance measurement systems 
for each service. Some services such as Certificate of Mailing or 
Stamped Cards essentially are transactions that may not merit much 
performance measurement attention.\23\ Other services such as Insurance 
and Delivery Confirmation are more complex and may warrant development 
of measurement systems specifically tailored to the services being 
provided.
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    \22\ As noted above, most of the approximately 35 individual 
services are components of either Ancillary Services or 
International Ancillary Services.
    \23\ Similarly, some services such as Caller Service may not be 
susceptible to any meaningful measurement because of the nature of 
the service itself.
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    The different levels of revenue production for the various services 
also may provide some indication of the effort warranted for developing 
measurement systems. However, just because a service does not produce a 
large revenue stream does not mean that the service is not important to 
the customer that undertakes the additional effort to purchase the 
service.
    Three services--Certified Mail, Post Office Boxes, and Return 
Receipts--account for nearly 70 percent of overall Special Services 
revenue. It may be desirable to place special emphasis on these to 
assure that they maintain a high level of service performance based on 
revenue production alone.
    For several of the services that include a barcode scan, the Postal 
Service proposes to measure the time from the barcode scan event to the 
time this information is made available to the customer. The percentage 
of time that this duration falls within the applicable service standard 
is reported as the measure of service performance. Although this 
measurement may provide some information on one component of the 
service, that measurement is not representative of the service that a 
customer has purchased or expects.
    As an example, the Postal Service states in the Domestic Mail 
Manual that ``Delivery Confirmation service provides the mailer with 
information about the date and time an article was delivered and, if 
delivery was attempted but not successful, the date and time of the 
delivery attempt.'' Thus, a typical mailer purchasing Delivery 
Confirmation reasonably could expect to be provided with information 
concerning the date and time of delivery or attempted delivery. If 
Delivery Confirmation performs as advertised (or slower than 
advertised), the proposed measurement system will capture whether or 
not delivery information was provided to the customer in a reasonable 
period of time. However, if Delivery Confirmation fails to report any 
information at all to the customer, the measurement system will not 
report this as a failure. Failures such as not scanning a mailpiece at 
delivery or attempted delivery, or a failure of the scanning equipment 
itself, are failures that will not be reported through the proposed 
performance measurement system. In this case, the measurement is not 
representative of the service being offered. At a minimum, the Postal 
Service must incorporate into its proposed measurement systems for 
Delivery Confirmation and other similar electronic systems a factor for 
the volume of services purchased versus the volume of services 
successfully completed.\24\
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    \24\ Arguments have been made that this cannot be accomplished 
because the Postal Service does not know exactly when to expect a 
final scan or will not have an actual stop-the-clock. However, 
reasonable assumptions can be made that overcome these arguments. 
The Postal Service will now be developing and reporting measures of 
time-to-delivery for all products.
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    The measurement system for Return Receipt service presents 
additional concerns. The Postal Service proposes to use the same 
measurement system as described for Delivery Confirmation. However, the 
vast majority of Return Receipt service is provided through delivery of 
the green return receipt card. It is not apparent how a delivery scan-
based measurement system can be representative of the delivery of green 
return receipt cards. As mentioned above, Return Receipt is one of the 
highest revenue producing Special Services. It warrants a more robust, 
independent performance measurement system.
    The problems discussed above are symptomatic of many of the 
measurement systems proposed for Special Services. The Commission finds 
that the proposed measurement system does not take into account the 
diverse attributes of these individual services, and does not provide 
informative insight into their level of performance. The Commission 
recommends that the Postal Service determine the attributes of each 
service including the customer's reasonable expectations of what is 
being purchased, and then design measurement systems considering these 
parameters. A cost benefit analysis factoring in the sophistication of 
the proposed measurement systems, the particular reliance a customer or 
group of customers may have on a service, and the revenue generated by 
a particular service also may be appropriate. Before providing the 
Postal Service with an

[[Page 73674]]

endorsement of its approach to these internal measurement systems, the 
Commission awaits further development of the systems to provide a 
representative measure of the service being provided. The Postal 
Service either should proceed with external measurement of service 
performance for Certified, Return Receipt, and Delivery Confirmation or 
develop an alternative internal measurement system by June 2009.
    Post Office Box Service provides an exception to the above 
comments. The proposed measurement system for post office boxes, which 
measures the up-time, or the time that a day's mail becomes available 
to customers, should provide a reasonable measure of performance. The 
Commission recommends that the measurement system provide for internal 
audits to verify that up-times are properly recorded by Postal Service 
personnel, and that up-times are conspicuously available to mailers to 
both inform customers of when mail is available and to deter any 
tendency to shift up-times to later in the day in order to meet service 
standards.
    The Commission also approves the proposals for internally measuring 
the percentage of time that Insurance claims processing, Postal Money 
Order inquiry processing, and Address List Services meet their maximum 
processing duration standards. For these systems, it appears 
appropriate to measure the noted processing times instead of attempting 
to develop a performance measurement of the product itself. These 
systems can be enhanced in the future if necessary.

V. Review of the Postal Service Data Reporting Proposals

    This section of the order provides a discussion of the Postal 
Service's proposals for reporting data generated by its performance 
measurement systems. The discussion includes consideration of the 
comments submitted by the mailing community with limited 
recommendations from the Commission. As mentioned previously, the 
Commission intends to comprehensively consider annual and periodic data 
reporting issues related to service performance measurement in a 
separate rulemaking. The discussion that follows is a first step in 
framing the issues that will be considered in that rulemaking.
    It is important to note that this section does not discuss the 
additional data reporting requirements that need to be developed to 
assure that the measurement system provides representative and 
statistically valid data. This also is an appropriate topic for future 
rulemaking.

A. Postal Service Reporting Proposals

    The Postal Service proposes providing two types of reports to the 
Commission. The first is an annual report for the purpose of reviewing 
compliance with service performance standards. Other reports will be 
provided on a quarterly basis and provide more detail than the annual 
report.
1. Annual Report Proposals
    First-Class Mail. The Postal Service proposes reporting three 
national aggregate annual percentage on-time service performance scores 
for single-piece First-Class Mail: Overnight, 2-day, and 3-day/4-day/5-
day mail.\25\ It proposes reporting three national aggregate annual 
percentage on-time service performance scores for presort First-Class 
Mail: Overnight, 2-day, and 3-day mail. It proposes reporting a single 
national aggregate annual percentage on-time service performance score 
for single-piece International First-Class Mail.
---------------------------------------------------------------------------

    \25\ The business rules defining 1- through 5-day domestic 
First-Class Mail service standards appear at 72 FR 72225 (December 
19, 2007). The Postal Service proposes to aggregate the reporting of 
4-day and 5-day service standard mail (predominately mail with an 
origin and/or a destination outside of the 48 contiguous states) 
with the reporting of 3-day service standard mail (predominantly 
origin-destination mail within the 48 contiguous states). An 
estimated 99.7 percent of First-Class Mail pieces will have a 
service standard of either 1, 2, or 3 days, and 0.3 percent will 
have a service standard of either 4 or 5 days. Id. For brevity, 3-
day/4-day/5-day mail will be referred to as 3-day mail hereafter.
---------------------------------------------------------------------------

    Standard Mail. The Postal Service proposes reporting a single 
national aggregate annual percentage on-time service performance score 
for Standard Mail. The score aggregates all of the 2- through 22-day 
service performance standard groups for letter-, flat-, and parcel-
shaped mail.
    Periodicals. The Postal Service proposes reporting a single 
national aggregate annual percentage on-time service performance score 
for Periodicals. The score aggregates each of the 1- through 8-day 
service performance standard groups for letter- and flat-shaped mail.
    Package Services. The Postal Service proposes reporting a single 
national aggregate annual percentage on-time service performance score 
for Package Services. The score aggregates each of the 2- through 20-
day service performance standard groups for Package Services mail.
    Special Services. The Postal Service proposes reporting a single 
national ``index'' representative of all Special Services. The index 
weights and aggregates the various Special Services.
2. Quarterly Report Proposals
    First-Class Mail. The Postal Service proposes providing data which 
reports First-Class Mail on-time service performance and service 
variances. Separate reports will be provided for domestic single-piece, 
domestic presort, and international single-piece mail.
    The on-time service performance reports provide the same 
information as provided annually, but at a disaggregated level. The 
domestic reports will be disaggregated by postal district and by 
overnight, 2-day, and 3-day mail. The international reports will be 
disaggregated by postal administrative area level and by inbound and 
outbound mail.
    The variance reports provide data on the percentages of mail 
delivered within 1 day, 2 days, or 3 days of the applicable service 
performance standard at the same level of disaggregation as the on-time 
service performance reports.
    Standard Mail. The Postal Service proposes providing data which 
reports Standard Mail on-time service performance and service 
variances.
    The on-time service performance report provides the same 
information as provided annually, but at a disaggregated level. The 
report will be disaggregated by postal district and by destination 
entry versus end-to-end mail.\26\
---------------------------------------------------------------------------

    \26\ Destination entry includes destination bulk mail center, 
destination area distribution center, destination sectional center 
facility, and destination delivery unit.
---------------------------------------------------------------------------

    The variance report provides data on the percentages of mail 
delivered within 1 day, 2 days, or 3 days of the aggregated service 
performance standard. This report also will display data by postal 
district and by destination entry versus end-to-end mail.
    Periodicals. The Postal Service proposes providing data which 
reports Periodicals on-time service performance and service variances.
    The on-time service performance report provides the same 
information as provided in the Annual Compliance Report filing, but at 
a disaggregated level. The report will be disaggregated by postal 
administrative area level.
    The variance report provides data on the percentages of mail 
delivered within 1 day, 2 days, or 3 days of the aggregated service 
performance standard. This report also will display data by postal 
administrative area level.
    Package Services. The Postal Service proposes providing data which 
reports

[[Page 73675]]

Package Services on-time service performance and service variances.
    The on-time service performance report provides the same 
information as provided in the Annual Compliance Report filing, but at 
a disaggregated level. The report will be disaggregated by postal 
district.
    The variance report provides data on the percentages of mail 
delivered within 1 day, 2 days, or 3 days of the aggregated service 
performance standard. This report also will display data by postal 
district.
    Special Services. The Postal Service proposes providing a 
performance score which aggregates Delivery Confirmation, Signature 
Confirmation, Certified Mail, Registered Mail, electronic Return 
Receipt, and Collection on Delivery reported by postal district. A 
quarterly score is reported for post office boxes disaggregated by 
postal district. The performance scores for Confirm, automated Address 
Correction, Insurance Claims Processing, Address List Services, and 
Money Order Inquiry Processing each will be reported separately at the 
national level.

B. Concerns of the Mailing Community

1. Granularity of Reporting
    Reporting by product. Pitney Bowes, joined by DFS, requests that 
the performance measurement plan reflect service performance data 
reported by product as required by 39 U.S.C. 3691(b)(1)(D). They 
contend that reporting by groups of products may make it difficult, or 
impossible, for a mailer of a particular product to assess performance. 
DFS Reply Comments at 3; Pitney Bowes Comments at 6-7; and Pitney Bowes 
Additional Comments at 7.
    General support is expressed by others for performance reporting by 
product. PostCom/DMA contends that ``[m]easurement at the class level 
obscures actual performance at product levels because of volume 
differences by shape.'' PostCom/DMA Additional Comments at 2-3. McGraw-
Hill supports disaggregate reporting by product. McGraw-Hill Reply 
Comments at 3. Valpak contends that saturation letters and carrier 
route flats are separate products and should be measured separately. 
Valpak Comments at 3-4; and Valpak Additional Comments at 5-7.
    The Commission finds that compliance with the requirements of 39 
U.S.C. 3691(b)(1)(D) is an appropriate issue to be considered in the 
previously mentioned rulemaking on service performance data reporting 
requirements.
    Reporting by shape. Several mailers request shape-based reporting. 
BAC Comments at 3; NPPC Comments at 6; PostCom/DMA Comments at 12-13; 
Time Warner Comments at 3; Publishers Clearing House Comments at 1; 
Valpak Comments at 10; DFS Reply Comments at 2; and NPPC Additional 
Comments at 7.
    MOAA extends this request to include separately reporting Standard 
Mail letters and flats, tracing flats entered as carrier route on the 
basis of entry as bundles or pallets, reporting by level of entry, and 
by rate tiers. MOAA Comments at 2-3.
    PSA argues that Standard Mail parcels and First-Class Mail parcels 
are distinct products, and that the associated performance measurements 
should be reported separately from other mail shapes. PSA Comments at 
3-5; and PSA Additional Comments at 3-4. PostCom/DMA also opposes 
aggregating the measurement of parcels with other shaped mail for each 
of the respective classes. PostCom/DMA Comments at 5-6.
    The Postal Service contends that the PAEA does not require the 
establishment of standards based on price category or mailpiece shape 
to satisfy the Commission's regulatory responsibilities. Postal Service 
Reply Comments at 5-6.
    Shape-based reporting in general might be informative to evaluate 
the Postal Service's mail processing systems, since most mail 
processing systems are designed around shape and not class or product. 
Thus, the Commission finds that reporting by shape is an appropriate 
issue to be considered in the previously mentioned rulemaking on 
service performance data reporting requirements.
    Reporting by service standard day. To allow for adequate evaluation 
of service performance to the non-contiguous United States, PostCom/DMA 
suggests separate reporting of 3-day and 4/5-day First-Class Mail which 
is largely comprised of the 3-digit pairs that include the non-
contiguous United States. PostCom/DMA Additional Comments at 4-5.
    The Commission finds that the level of aggregation of service 
standard days is an appropriate issue to be considered in the 
previously mentioned rulemaking on service performance data reporting 
requirements. This issue is applicable to all classes of mail that have 
specific days to delivery standards.
    Data rich reporting. Most mailers submitting comments are 
interested in obtaining service performance measurement data at a 
higher level of detail than proposed by the Postal Service. Generally, 
they request reporting most statistics by 30-digit ZIP Code pairs. AMEE 
Comments at 2; NPPC Comments at 5; BAC Comments at 3-4; PostCom/DMA 
Comments at 10-11; PostCom/DMA Additional Comments at 2-3; NPPC 
Additional Comments at 6-8; Publishers Clearing House Comments at 2; 
DFS Reply Comments at 2-3; IWCO Additional Comments at 2; and Public 
Representative Comments at 46, 48.
    In addition, some mailers request timely, or real time, Web-based 
access to this data. McGraw-Hill Reply Comments at 2-3; Pitney Bowes 
Comments at 5-6; and Time Warner Comments at 4. Other mailers propose 
monthly interim reports as opposed to the proposed quarterly interim 
reports. MMA Comments at 3; and PSA Comments at 5-6.
    McGraw-Hill, MOAA, and Publishers Clearing House argue that mailers 
should be able to obtain reports on their own mail down to 3-digit 
pairs, together with the aggregate periodic reports. McGraw-Hill Reply 
Comments at 4, n.4; MOAA Comments at 2; and Publishers Clearing House 
Comments at 2.
    The Postal Service responds that although the PAEA does not require 
the generation of customer-specific reports, it intends on working with 
the mailing industry in this area. It suggests that the degree of 
customer access to disaggregate service performance data (in excess of 
that required for the regulatory process), may have the character of an 
ancillary service. Postal Service Reply Comments at 6.
    The Commission observes that business needs of some mailers may 
vastly exceed the needs of the regulator to perform its functions. 
Although the Commission may well specify reporting in a greater level 
of detail over time, it is not anticipated that the level of reporting 
will reach the provision of near real time data envisioned by some 
mailers. The Postal Service should be allowed time to explore the 
business needs of its customers and propose information products to 
meet those needs outside the context of the regulatory requirements.
    Reporting volume information. AMEE and MMA suggest including 
reporting volumes to determine relative weightings of the data. AMEE 
Comments at 2; and MMA Comments at 2.
    The Commission will require the reporting of volume data with the 
quarterly reports. The need to be able to aggregate the quarterly data 
up to annual levels was discussed during the consultation between the 
Commission and the Postal Service. This includes provision of 
respective volumes to

[[Page 73676]]

establish the necessary weighting of data. The Postal Service has 
verbally agreed to providing volume information and a means to 
aggregate the data from the quarterly reports up to the annual level.
    Separate reporting of inbound and outbound International Mail. 
Separate reporting of service performance for inbound and outbound 
International Mail was discussed during the consultation between the 
Commission and the Postal Service. Currently, the IMMS report is not 
disaggregated in this fashion although the data to do so appears to be 
available. The Postal Service indicated that it is possible to provide 
separate reporting. This will be further examined in the previously 
mentioned rulemaking on service performance data reporting 
requirements.
2. Tail-of-the-Mail
    A theme expressed in many comments is the need to expand tail-of-
the-mail reporting to obtain a more accurate picture of service 
performance. The variance reports proposed by the Postal Service 
generally provide data on the percentages of mail delivered within 1 
day, 2 days, or 3 days of the applicable service performance standard.
    NPPC stresses the importance to the remittance industry of a system 
that distinguishes the distribution of late delivery by days of 
lateness. NPPC Additional Comments at 9. Commenters generally express 
opposition to truncating the variance reports at 3 days. Several 
mailers propose expanding the variance reports to include the 
additional days until delivery reaches a 99 percent level. BAC Comments 
at 4; MPA Additional Comments at 4-5; McGraw-Hill Reply Comments at 3-
4; NPPC Comments at 5-6; NPPC Additional Comments at 8; PostCom/DMA 
Comments at 14; PostCom/DMA Additional Comments at 4; and Public 
Representative Comments at 45, 47-48.
    Other approaches to expanding tail-of-the-mail reporting include 
adding a column to the variance reports to show mail that is not 
delivered within 3 days of the applicable standard (PSA Comments at 3), 
and calculating and presenting the average number of days by which all 
mailpieces are delivered in excess of the standard (Valpak Comments at 
11-14; and Valpak Additional Comments at 3-4). Valpak also suggests 
reporting tail-of-the-mail in the annual report in addition to what is 
presented in the variance reports. Valpak Additional Comments at 4-5.
    The other side of tail-of-the-mail is early delivery of mail. 
Standard mailers in particular are sensitive to the consistency of 
delivery for planning advertising to reach homes on specific dates. 
These mailers propose expanding the variance reports to include 
reporting on early deliveries of mail. AMEE Comments at 2; BAC Comments 
at 4; MMA Comments at 2; IWCO Additional Comments at 2; MOAA Comments 
at 3; NPPC Additional Comments at 9; and Valpak Additional Comments at 
2-3.
    The Commission recognizes the benefits to mailers of more detailed 
reporting of delivery variance and consistency. The proposed 
measurement systems should be able to capture this type of data and 
provide the Postal Service with significant actionable data to 
troubleshoot its systems. However, the Commission is not convinced that 
data on early delivery is required for the Commission's purposes. 
Mailers will still be able to work with the Postal Service when 
specific problems are identified. This area is subject to re-evaluation 
once the measurement systems begin generating actual data and specific 
problems are identified.
3. Miscellaneous Issues
    Consideration of customer satisfaction. The Public Representative 
contends that the plan does not adequately measure or report customer 
satisfaction, nor does it provide a mechanism to assess whether 
customers, especially those with physical impairments, believe their 
needs are being met. Public Representative Comments at 12-19.
    The Postal Service asserts that it intends to redesign its Customer 
Satisfaction Measurement survey to meet the requirements of the PAEA 
and to generate customer satisfaction data on a product-by-product 
basis. Postal Service Reply Comments at 10-11. It notes that the 
survey's respondents are randomly solicited without regard to physical 
impairment, and can be expected to include the view of customers with 
such impairments. Id. at 12.
    The Commission notes that the Postal Service is required to provide 
an analysis of customer satisfaction in its annual report to the 
Commission. See 39 CFR 3652(a)(2)(B)(ii). The Postal Service's Revised 
Plan addresses measurement systems and data reporting. Discussion of 
customer satisfaction appears beyond the scope of the Postal Service's 
proposals and was appropriately omitted until the Customer Satisfaction 
Measurement Survey has been redesigned.
    Quality of service performance index. The Public Representative 
proposes a Quality of Service Performance Index ``to review objectively 
the results of the service performance measurements of the Postal 
Service.'' The index can represent all postal products or groups of 
products. The index would reduce the variety of performance statistics 
to a single, or a few, numbers, and permit objective comparisons of 
service over time. Public Representative Comments at 19-32.
    McGraw-Hill supports the idea of an index to track performance over 
time. McGraw-Hill Reply Comments at 1-3. NPPC calls this idea 
intriguing and worthy of consideration. NPPC Reply Comments at 5. 
PostCom/DMA does not oppose development of an index for each product or 
each group of products, but opposes one overall index because such an 
index would mask performance issues by specific products. PostCom/DMA 
Reply Comments at 4-6. The Postal Service argues that the index is 
beyond the statutorily defined scope of the Commission's regulatory 
oversight. Postal Service Reply Comments at 11.
    The Commission finds the proposal to provide indexes for the entire 
service performance measurement system or for product groups therein 
noteworthy, but premature. The immediate goal is to develop and 
implement a performance measurement system and begin reporting data. 
Specific indexes may be considered in the future to evaluate the data 
once the measurement systems become operational.
    Class-specific miscellaneous issues. MPA supports the revision to 
the Postal Service's original proposal to report Periodicals service 
measurement by performance area instead of only reporting a national 
aggregate. MPA Additional Comments at 2. However, it continues to 
suggest reporting Periodicals by postal district once IMb is in place. 
MPA Comments at 3; and MPA Additional Comments at 2.
    BAC and NPPC suggest disaggregating the service performance 
measurement of remittance mail and treating remittance mail as a 
distinct category of First-Class Mail. BAC Comments at 2; and NPPC 
Comments at 7.
    The Commission distinguishes separate reporting of remittance mail 
from treating remittance mail as a distinct category of First-Class 
Mail. The Postal Service has indicated to the Commission in 
consultations that it is considering ways to separately measure the 
performance of remittance mail, which indicates a future potential for 
separate reporting of remittance mail. However, treating remittance 
mail as a distinct category of First-Class Mail raises classification 
issues that are beyond the scope of this discussion.

[[Page 73677]]

VI. Opportunity for Further Review

    The PAEA provides the Postal Service and the Commission with the 
flexibility to develop a useful and beneficial performance measurement 
system over time. The Commission approves of the approach that the 
Postal Service is taking to establish most of its measurement systems 
recognizing that these systems are in the early stage of development.
    The Commission is greatly appreciative of the Postal Service's 
efforts thus far in making the measurement of service standards a 
reality. The task is complex and will require continuing effort.
    Inevitably, problems will arise as the systems are implemented that 
will require changes to these systems. Informal procedures are 
available for the Postal Service to keep the Commission apprised of 
developments and to seek consultation where necessary as the 
measurement systems progress. Regular meetings between the Postal 
Service and the Commission to provide updates on progress and problems 
are beneficial, including workgroup meetings at the staff level. 
Continuing attention is necessary to keep the implementation of the 
measurement systems on track. The Commission supports the ideas 
expressed in the comments for the Postal Service to share its internal 
milestones with the public, and to regularly report on progress. See 
APWU Comments at 21; PostCom/DMA Comments at 21; and Valpak Reply 
Comment at 3. The Postal Service will provide such reports to the 
Commission at the beginning of each fiscal quarter.
    Many formal avenues also are available by statute for reviewing and 
improving the performance measurement system. These methods may be 
employed as the needs of the Commission, the Postal Service, and the 
mailing community change over time, or when specific issues arise that 
require closer examination. The Commission will shortly initiate a 
rulemaking to prescribe the content and form of public reports (and any 
nonpublic annex and supporting materials) for performance data in the 
Postal Service's annual report to the Commission. 39 U.S.C. 3652(e)(1). 
It also may prescribe the methodologies used in preparing the annual 
report. 39 U.S.C. 3652(a)(1).
    Progress towards a smoothly functioning, broadly representative, 
measurement system based on full service IMb must be monitored, and the 
Postal Service should include with its ACR, discussions of the extent 
to which various measures are representative. In this order, the 
Commission identifies several potential problem areas the Postal 
Service should focus on. Should it appear that progress toward reliable 
measurement has ceased, or that ``the quality of service data has 
become significantly inaccurate or can be significantly improved[,]'' 
proceedings may be initiated to remedy identified problems. 39 U.S.C. 
3652(e)(2).
    The effort to improve service through establishing standards and 
measuring performance will be continuing. The modern service standards 
are subject to review through the complaint process. 39 U.S.C. 3691(d). 
Additionally, the Commission may, if necessary, initiate reporting 
requirements through its obligation to establish a modern system for 
regulating rates and classes for market dominant products. 39 U.S.C. 
3622(a).

VII. Ordering Paragraphs

    It is Ordered:
    1. The Commission approves of the approaches that the Postal 
Service is taking in developing internal measurement systems for 
various classes of mail as specified in the body of this order.
    2. The Commission finds the proposed measurement systems for 
several Special Services are inadequate as specified in the body of 
this order. Remedial action is to be proposed by June 1, 2009.
    3. The Postal Service is to provide progress reports and analyses 
of reliability for its measurement systems as specified in the body of 
this order.
    4. The Motion of the Public Representative for Late Acceptance of 
Comments on United States Postal Service June 2008 Service Performance 
Measurement Plan for Market-Dominant Products, filed July 10, 2008, is 
granted.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

VIII. Concurring Opinion of Commissioner Goldway

    I agree with my colleagues that the initial approach to service 
performance measurement proposed by the Postal Service offers the 
potential of a reliable, low cost system. The Postal Service seeks to 
use scans of Intelligent Mail Barcodes (IMb) to gauge service 
performance by measuring the processing and transportation of bulk 
letters and flats.
    The Commission identifies a number of areas where the ability of 
this system to accurately depict actual service performance will depend 
on whether a representative mix of mail uses ``full service'' IMb. For 
this reason, the Commission also directs the Postal Service to provide 
quarterly progress reports on IMb implementation and to include with 
its Annual Compliance Reports analyses of the representativeness of 
certain service performance measurement results.
    I write separately to clarify that, while the language of the order 
offers options and suggestions on how to proceed to the Service, these 
analyses and reports must be undertaken promptly and be complete in 
their scope.
    The Commission and the Postal Service have been consulting on these 
issues for almost two years. The Commission views accurate and 
comprehensive service performance measurement as a requirement of the 
Postal Accountability and Enhancement Act. Unjustified, further delay 
in obtaining reliable, representative service performance measurements 
will not be acceptable.

  Attachment A--Comments to Service Performance Measurement Systems for
                        Market Dominant Products
------------------------------------------------------------------------
          Participant                   Title             Filing date
------------------------------------------------------------------------
American Postal Workers Union,  Initial Comments of    January 18, 2008.
 AFL-CIO (APWU).                 American Postal
                                 Workers Union, AFL-
                                 CIO, on Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
Association for Mail            Comments of the        January 18, 2008.
 Electronic Enhancement (AMEE).  Association for Mail
                                 Electronic
                                 Enhancement.
Association for Postal          Initial Comments of    January 18, 2008.
 Commerce and Direct Marketing   the Association for
 Association (PostCom/DMA).      Postal Commerce
                                 Joined by the Direct
                                 Marketing
                                 Association.

[[Page 73678]]

 
                                Reply Comments of the  February 1, 2008.
                                 Association for
                                 Postal Commerce
                                 Joined by the Direct
                                 Marketing
                                 Association
                                 (Corrected Version).
                                Comments of the        July 9, 2008.
                                 Association for
                                 Postal Commerce
                                 Joined by the Direct
                                 Marketing
                                 Association: Order
                                 No. 83.
Bank of America Corporation     Comments of the Bank   January 18, 2008.
 (BAC).                          of America
                                 Corporation.
Cond[egrave] Nast Publications  Comments of            July 8, 2008.
                                 Cond[egrave] Nast
                                 Publications.
Discover Financial Services     Reply Comments of DFS  February 1, 2008.
 LLC (DFS).                      Services LLC in
                                 Response to Notice
                                 for Request for
                                 Comments.
Greeting Card Association       Comments of the        January 18, 2008.
 (GCA).                          Greeting Card
                                 Association.
IWCO Direct...................  Comments of IWCO       July 9, 2008.
                                 Direct.
Magazine Publishers of          Comments of Magazine   January 18, 2008.
 America, Inc. (MPA).            Publishers of
                                 America, Inc.
                                Comments of Magazine   July 9, 2008.
                                 Publishers of
                                 America, Inc.
Mail Order Association of       Comments of the Mail   January 17, 2008.
 America (MOAA).                 Order Association of
                                 America on the
                                 Postal Service's
                                 ``Service
                                 Performance
                                 Measurement'' for
                                 Market Dominant
                                 Products.
Major Mailers Association       Comments of Major      January 18, 2008.
 (MMA).                          Mailers Association.
McGraw-Hill Companies, Inc.     Reply Comments of The  February 1, 2008.
 (McGraw-Hill).                  McGraw-Hill
                                 Companies, Inc.
National Newspaper Association  Comments of National   January 18, 2008.
 (NNA).                          Newspaper
                                 Association on
                                 Service Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
National Postal Policy Council  Comments of National   January 18, 2008.
 (NPPC).                         Postal Policy
                                 Council.
                                Reply Comments of      February 1, 2008.
                                 National Postal
                                 Policy Council.
                                Comments of National   July 9, 2008.
                                 Postal Policy
                                 Council.
Parcel Shippers Association     Comments of the        January 18, 2008.
 (PSA).                          Parcel Shippers
                                 Association on
                                 Service Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
                                Further Comments of    July 9, 2008.
                                 the Parcel Shippers
                                 Association on
                                 Service Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
Pitney Bowes Inc. (Pitney       Initial Comments of    January 18, 2008.
 Bowes).                         Pitney Bowes Inc. in
                                 Response to Notice
                                 of Request for
                                 Comments on Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
                                Reply Comments of      February 1, 2008.
                                 Pitney Bowes Inc. in
                                 Response to Notice
                                 of Request for
                                 Comments on Service
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
                                Comments of Pitney     July 9, 2008.
                                 Bowes Inc. in
                                 Response to the
                                 Second Notice of
                                 Request for Comments
                                 on Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
David B. Popkin (Popkin)......  Initial Comments of    January 18, 2008.
                                 David B. Popkin.
                                Reply Comments of      February 1, 2008.
                                 David B. Popkin.
Public Representative.........  Public Representative  January 18, 2008.
                                 Initial Comments in
                                 Response to Notice
                                 of Request for
                                 Comments on Service
                                 Performance
                                 Measurement Systems
                                 for Market-Dominant
                                 Products.
                                Public Representative  February 1, 2008.
                                 Reply Comments in
                                 Response to Notice
                                 of Request for
                                 Comments on Service
                                 Performance
                                 Measurement Systems
                                 for Market-Dominant
                                 Products.
                                Public Representative  July 10, 2008.
                                 Comments on United
                                 States Postal
                                 Service June 2008
                                 Service Performance
                                 Measurement Plan to
                                 Market-Dominant
                                 Products.
Publishers Clearing House.....  Comments on Docket     January 18, 2008.
                                 No. PI2008-1 Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
Research International........  Comments of Research   January 14, 2008.
                                 International.
                                Research               July 8, 2008.
                                 International Second
                                 Notice of Request
                                 for Comments on
                                 Service Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.

[[Page 73679]]

 
Time Warner Inc. (Time Warner)  Comments of Time       January 18, 2008.
                                 Warner Inc. in
                                 Response to
                                 Commission Order No.
                                 48.
United States Postal Service    Reply Comments of the  February 1, 2008.
 (Postal Service).               United States Postal
                                 Service.
Valpak Direct Marketing         Valpak Direct          January 18, 2008.
 Systems, Inc. and Valpak        Marketing Systems,
 Dealers' Association, Inc.      Inc. and Valpak
 (Valpak).                       Dealers'
                                 Association, Inc.
                                 Comments on Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
                                Valpak Direct          February 1, 2008.
                                 Marketing Systems,
                                 Inc. and Valpak
                                 Dealers'
                                 Association, Inc.
                                 Reply Comments on
                                 Service Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products.
                                Valpak Direct          July 9, 2008.
                                 Marketing Systems,
                                 Inc. and Valpak
                                 Dealers'
                                 Association, Inc.
                                 Comments on Service
                                 Performance
                                 Measurement Systems
                                 for Market Dominant
                                 Products in Response
                                 to Order No. 83.
------------------------------------------------------------------------


    By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E8-28643 Filed 12-2-08; 8:45 am]
BILLING CODE 7710-FW-P