OFFICIAL TRANSCRIPT OF PROCEEDINGS 0 BEFORE THE POSTAL REGULATORY COIMMISSION SUMMIT MEETING - POSTAL ) CUSTOMER NEEDS IN A CHANGING ) REGULATORY ENVIRONMENT ) Pages : 1 through 274 Place: Potornac, Maryland Date: March 13, 2007 HERITAGE REPORTING CORPORATION mcial Repotters 1220 L Street, N.W., Suite 600 Washington, D.C. 20005 (202) 628-4888 1 POSTAL REGULATORY COMMISSION SUMMIT MEETING - POSTAL ) CUSTOMER NEEDS IN A CHANGING REGULATORY ENVIRONMENT 1 Conference Hall William F. Bolger Center 9600 Newbridge Drive Potomac, Maryland Tuesday, March 13, 2007 The parties met, pursuant to notice, at 9:OO a.m. BEFORE: HONORABLE WILLIAM M. TAKIS Moderator APPEARANCES : WILLIAM M. TAKIS, Moderator Partner, IBM Global Services DAN G. BLAIR, Chairman Postal Regulatory Commission JOHN E. POTTER, Postmaster General United States Postal Service Heritage Reporting Corporation (202) 628-4888 1 APPEARANCES: (CONT'D) PANEL 1 - MEETING CUSTOMER NEEDS IN THE MARKET DOMINANT CATEGORY. JODY BERENBLATT, Senior Vice President Postal Strategy, Bank of America STEVE LASERSON, Vice President Business Intelligence/Research & Development American Greetings Corporation LOUIS MILANI, Senior Director Business Affairs & Publishing Operations Consumers Union MARKUS WILHELM, Chief Executive Officer Bookspan PANEL 2 - MEETING CUSTOMER NEEDS IN THE COMPETITIVE PRODUCT CATEGORY RICK COLLINS, Managing Director South East & Mid-Atlantic Region, AFMS JULIE SWATEK, President Scrap Your Memories, Inc. TY TAYLOR, Manager Marketing Transportation and Postal Affairs JC Penney Company, Inc. JAMES E. WEST, Director Postal and Government Affairs, Williams-Sonoma, Inc . Heritage Reporting Corporation (202) 628-4888 2 APPEARANCES: (CONT'D) PANEL 3 - DESIGNING FLEXIBLE, CUSTOMER-RESPONSIVE, PRICING & PRODUCT REGULATION ROGER KODAT, Deputy Assistant Secretary Government Financing Policy, Department of the Treasury DAVID LEVY, Partner Sidley, Austin LLP J. GREGORY SIDAK, Visiting Professor of Law Georgetown University Law Center IAN VOLNER, Partner Venable LLP PANEL 4 - SERVICE STANDARDS AND MEASUREMENT FOR MARKET DOMINANT PRODUCTS DAN EMENS, First Vice President Marketing Operations, Chase Card Services BEN LAMM, Director Direct Mail Operations, Capital One BILL McCOMB, Director Operations Support, Netflix, InC. JAMES R. O'BRIEN, Director Distribution and Postal Affairs, Time Incorporated Heritage Reporting Corporation (202) 628-4888 3 01 -PBQcHE9LEES L (9:OO a.m.) 3 MR. TAKIS: Thank you for all coming here 4 today, and welcome to the U.S. Postal Service and the 5 Postal Regulatory Commission’s Summit Meeting on 6 Meeting Customer Needs in a Changing Regulatory 7 Environment. Thank you all for coming today. My name 8 is Bill Takis, and I am a partner with IBM’s Global 9 Business Services located here in Washington, D.C., 10 and I am very pleased to be your moderator for the day 11 today. 12 As you all know, we’re here to discuss the 0 13 challenges and the opportunities that are presented by 14 the Postal Accountability and Enhancement Act of 2006. 15 That’s a big mouthful but the Act as passed by 16 Congress, as you know, not only to strength the 17 mailing industry but also to ensure the long-term 18 financial feasibility and viability of the Postal 19 Service going forward. 20 Now many of the pricing provisions in the 21 Act provide both the Postal Service and the Postal 22 Regulatory Commission with an avenue at achieving 23 these goals, through increased flexibility in the 24 pricing mechanism, the pricing approaches that the 25 Postal Service and the Postal Regulatory Commission Heritage Reporting Corporation (202) 628-4888 4 1 will be taking in the future. 2 At the same time it also provides a 3 framework to the Postal Service and to the PRC to 4 promote efficiency in the overall industry, and 5 allowing the Postal Service to operate in a more 6 business-like environment, and most importantly to 7 respond to customer needs in many different areas and 8 a myriad of different approaches, and that's exactly 9 why we're here today is to get feedback from you all 10 for the Postal Service and the Postal Regulatory 11 Commission around these various alternatives and 12 various approaches that it can take. 13 So we're going to be doing today, as you 14 know, we have a series of panelists and different 15 speakers, but we're going to be trying to encourage as 16 much customer and industry participation as we can, 17 even in a group of 300 some odd people. So it's going 18 to be quite a challenge but I know we're up to it. 19 Now the Postal Service and the PRC have 20 designed this session today around four different 21 sessions, and we're going to be talking more about 22 them in a moment, but I'll give you a little overview 23 now. The first session is going to be focused on the 24 market dominant products and services, and then we'll 25 turn our attention to the competitive services and Heritage Reporting Corporation (202) 628-4888 5 1 products . 2 Next we'll have a discussion around the 3 regulatory framework that the PRC and the Postal 4 Service will be designing, and finally we'll have a 5 session on service standards and measurements, which 6 as you know is a very malor part of the Act and the 7 legislation going forward. At the very end of the day 8 we're going to have a wrap-up session and we'll talk 9 about that in a moment. 10 But before we get into the individual panels 11 themselves, we're very pleased to have two very 12 special speakers with us today who are going to be 13 setting the stage for the entire day and providing a 14 very good context for our discussions later in the 15 morning and in the afternoon. 16 So let me introduce our first two speakers. 17 Mr. Dan Blair is our first guest, and he was recently 18 appointed by President George W. Bush as the very 19 first Chairman of the Postal Regulatory Commission. 20 Mr. Blair comes to this position with a long history 21 of service to the American people, including extensive 22 experience in the Postal and the Civil Service 23 sectors. Most recently Mr. Blair served as the Deputy 24 Director of the U.S. Office of Personnel Management 25 where he was responsible for many different reform Heritage Reporting Corporation (202) 628-4888 6 1 efforts, and he also testified before Congress on 2 issues concerning pensions and health benefit 3 liabilities affecting the Postal Service. 4 Prior to joining OPM, Mr. Blair had a long 5 and very distinguished career on Capitol Hill. He 6 worked for nearly 17 years on the staffs of both the 7 House and Senate committees, charged with Postal and 8 Civil Service oversight. We are very honored to have 9 Mr. Blair here today and for him to be sharing his 10 views on the Act. Ladies and gentlemen, please 11 welcome Mr. Dan Blair. 12 MR. BLAIR: Good morning everyone. Bill, 13 thank you for that kind introduction. I appreciate it 14 very much. I've had the pleasure to come out here on 15 several occasions, and every time I've been out here 16 I've always been struck by how much you can actually 17 get done when you get outside the beltway. So I think 18 that today's session should be a good one. 19 The Postal Service and the Postal Regulatory 20 Commission are jointly sponsoring this program today 21 to get your input. We all want an effective, 22 responsive Postal Service, and in order to meet your 23 needs, we have to understand them. Bill referenced 24 that today in that we want your input, and we need 25 your input. Heritage Reporting Corporation (202) 628-4888 7 I At the outset, I want to thank the Postal 2 Service for hosting this. Later this summer the 3 Postal Service will engage the Commission in full 4 consultation to develop and establish new service 5 standards for all classes of mail, and in preparation 6 for this the Service has invited the Commission to 7 observe the MTAC meetings of which our customer 8 service requirements are being explored. We 9 appreciate this outreach, and we look forward to the 10 consultation. 11 All of this will guide us in our thinking as 12 we proceed to engage the community in developing the 13 complaint process. This morning I'm here and I would 14 like to acknowledge in the audience today the other 15 Commissioners from the Postal Regulatory Commission as 16 well. We have Commissioners Acton, Goldway, and 17 Hammond in the audience, and I also want to recognize 18 my predecessor and good friend, George Omas, who is 19 out here today, and also thank again Postmaster 20 General Potter for his leadership in bringing us all 21 together this morning. 22 Eleven days ago Jack Potter and I had the 23 chance to speak at a program on Postal reform hosted 24 by the American University School of Public Affairs. 25 Jack identified what I believe are some key concepts Heritage Reporting Corporation (202) 628-4888 8 1 that we should remember as we implement Postal reform. 2 First, Congress approved the new legislation to enable 3 the Postal Service to continue to evolve to meet the 4 needs of the American public. By any reasonable 5 measure, the Postal Reform Act of 1970 was indeed a 6 success. That law took politics out of the Post 7 Office and directed it to operate like a business.