Why Mail May Matter Longer Than We Think.

A recent story in Business Insider identified another reason why the information superhighway could face bottlenecks not dissimilar to those that drivers experience during rush hour in Los Angeles. The article quotes the ATT filing on its purchase of T-Mobile in which ATT explains the impact that the
iPhone and similar smart phones have on network demand. 

"The filing says:

A smartphone generates 24 times the mobile data traffic of a conventional wireless phone, and the explosively popular iPad and similar tablet devices can generate traffic comparable to or even greater than a smartphone. AT&T’s mobile data volumes surged by a staggering 8,000% from 2007 to 2010, and as a result, AT&T faces network capacity constraints more severe than those of any other wireless provider.

Those dates aren't a coincidence. 2007 is when the iPhone was introduced as an AT&T exclusive.


AT&T warns the problem is getting worse as more consumers use video and enterprise apps on their smartphones, and guesses that its network will carry more traffic in the first five to seven weeks of 2015 than it did in all of 2010."

ATT's statement suggests that no one including Apple and ATT's network engineers had a clue about the revolution that they had started.   The forecast for 2015 suggests that the network will carry more than seven times the traffic in 2015 than it did just last year.   Given how poorly forecasters estimated the initial growth in network demand, one wonders whether current investments in network capacity can create a network robust enough to meet needs of mobile users.

Network capacity will not be the only constraint slowing expansion of digital communications.   Currently, iPv4, the addressing system that provides a numerical identifier to every connection to the Internet is close to reaching its maximum capacity.  According to ZD Net, Asia has reached the limit of iPv4 web addresses, and it would not seem unreasonably to assume that that the Europe and the united North America could come next.

A replacement addressing system, IPv6 would raise the number of possible addresses to 4.2 billion to 340 undecillion or addresses.  However, most Internet users whether they use a mobile or computer based access points are using legacy systems that can cause challenges when using iPv6 web addresses.  As ZD Net reports: 

There may be some operating system out there with picture perfect IPv6 support, but I haven’t met it yet. Each has some quirks and some problems. As time goes by, more and more people insist on full-featured IPv6 support that will change. In the meantime though don’t be surprised if you run into problems every now and again with IPv6 and say Windows 7. I’m not picking on Windows 7; every operating system will have some troubles until everyone is on board with IPv6.

The same article notes that switching to another operating system like Linux or Apple's OSX will not solve the problem either.

Linux has long had IPv6 support. To set it up properly, though, you’ll need to get down and dirty with shell commands. Carla Schroder, a Linux and networking expert, has recently written a pair of quick IPv6 Linux guides: IPv6 Crash Course For Linux and Another IPv6 Crash Course For Linux: Real IPv6 Addresses, Routing, Name Services. With these you can get your basic Linux client and servers setup without tears. I expect the Linus distributors to provide GUI-based tools for essential IPv6 set-ups in the near future.



Apple already provides automated IPv6 support in Mac OS X. Under the hood, it uses the KAME open-source IPv6 stack, which also supports the BSD Unixes. To do more with the Mac OS X IPv6 support, check out the Ipv6INT page, Apple Mac OS X IPv6. As they note here, “The IPv6 documentation in Mac OS X is very sparse.” On the Mac server sides, there are some grave omissions. For example, as far as I’ve been able to tell there’s no support for Dynamic Host Configuration Protocol version 6 (DHCPv6).

But the problem goes beyond just operating systems as SOHO networking equipment from major manufacturers all have spotty abilities to use the new addresses.  ZD Net reports:

Today, Linksys does not offer any SOHO/consumer hardware that supports IPv6. Cisco tells me though that The Linksys E4200 we just launched and Linksys routers [the rest of the E series] that will be launched this year will support iPV6.” This will be delivered via a free firmware update. I still don’t know if older Linksys hardware will be retrofitted with real IPv6 support.


Netgear supports IPv6 in much of their equipment, but I haven’t been able to find an easy way to find out which switch, router, or what have you supports IPv6 or not from their Web site. For now, the only thing I can do is recommend that you take a long, hard look at each prospective device’s release notes.

With D-Link, you can at least do a search on IPv6 and get a product list. This network vendor currently supports a wireless router, the DIR-632, and half-a-dozen Gigabit switches.


Curiously, enough Apple’s AirPort Extreme and Time Capsule support IPv6. The bad news is that they do it with 6by4 or, the smarter move, you can set IPv6 support up manually.


Buffalo Technology, like Netgear, also supports IPv6 on some of their equipment, but makes it even harder to find out which equipment supports it. Here, you’ll actually need to dig into the user manuals to find out what’s what. That said, the company has a series of routers–WZR-HP-G300NH, WHR-HP-G300N and WHR-HP-GN-that use the alternative DD-WRT firmware and these do offer some IPv6 support.

So we have a situation that home/small business users find themselves facing a situation that easy access to the Internet may become more difficult and the computer and networking hardware that they use cannot keep up with the changing technology without expert assistance.  

What does all this technical talk have to do with mail?  It means that overcrowding of mobile and web-based communications may make mail a critical backstop during what will likely be a decade or more long transition to greater network capacity and computer and networking equipment that can easily handle new web addressing standards.   This does not mean that consumers and businesses will slow the push of  many forms of mail-based communications, and in particular transaction related documents (i.e. statements, checks, payments and bills) to electronic alternatives. But it does mean that mail will continue to provide a critical communications role for those that do not want to be lost among the thousands of communicators crowding the information superhighway until speed of that highway slows to a crawl when network capacity or addressing problems makes the Los Angeles rush hour analogy appear apt.

But the link between the digital and physical delivery world is not limited to traditional business roles.  Recent reports by the Inspector General of the Postal Service suggests that there may be a digital role within the postal ecosystem and even possibly a digital role for the Postal Service that allows digital and physical delivery to coexist .  It is for this reason that an upcoming conference, Postal Vision 2020 will be bringing together some of the greatest minds in digital and print communications to discuss the future of print and digital communications.   The symposium to be held June 15, 2011 and the Marriott Chrystal Gateway Hotel in Arlington, VA.  To learn more click on the Postal Vision 2020  link.

The Washington Post Does Not Understand the Postal Service

Once again the Washington Post's editorial board illustrated their ignorance on Postal issues. In an editorial focusing on labor issues, the editorial board illustrated an understanding about labor negotiations that is particularly peculiar given the newspaper industry's history in reducing labor costs as it faced the threat of e-competition.  The editorial board reinforced the impression that it does not know what it is talking about by confusing retirement with health benefits.

By stating that the contract with the APWU is inadequate, they assume that a better contract could have been negotiated or obtained through binding arbitration. The truth is changes in wages in benefits that the Washington Post believes are needed only are implemented when the company negotiating new labor agreements faces the threat of liquidation from creditors or shut down by owners outside of bankruptcy. The only way that would have occurred with the Postal Service would be if Congress demanded that the Postal Service liquidate its business to pay off its retiree health care and workers compensation obligations unless the Postal Service and its unions agree to reductions in wages and benefits.  The Post editorial board should know that because only through the threat of liquidation and bankruptcy have newspapers been able to cut the wages and benefits and changed the work rules in the contracts of its employees.


Given that the Postal Service is the core part of the mailing industry that generates over 8.4 billion million jobs and $1.1 trillion in sales. Most of these jobs exist because businesses, including the Washington Post Corporation advertise their products and services through the mail or deliver parcels to consumers through the USPS or a private sector competitor in conjunction with the Postal Service. Shutting the Postal Service down on September 30, 2011 to force further reductions in labor wages and benefits would wreak havoc on next fall's retail sales.   Currently 20% of all retail sales that can be delivered are now being delivered and that share will likely to be higher by next fall as on-line sales are growing at double digit rates while sales of these items regardless of sales method are growing at low single digit rates.

The contract that the Postal Service signed goes far to eliminate the fixed 40-hour schedules that drive up costs and increase the possibility that employees will be on the clock with no work needed.   This change is the equivalent to the elimination of the work rule changes that took the railroad industry nearly a decade to negotiate that eliminated the 110 mile rule, eliminated jobs for firemen in diesel locomotives that no longer required a fireman, and eliminated the caboose.  Discounting this change, ignores what is probably the biggest cost impediment preventing the Postal Service from cutting the costs of sorting mail and parcels.

The contract puts wage rates and benefit levels for new hires at competitive levels that reflect the poor financial health of the USPS. These new hires will not only start at a lower wage rate but it will take them longer to reach the top salary and that top salary will be lower than the top wages for current employees. The new contract also allows the Postal Service to have up to 20% of its clerks and mailhandlers filling non-permanent positions with health care benefits below that of the non-Postal Federal employee.   Once the contract is signed, a significant portion of clerks will be in this position and over time the Postal Service should reach the 20% level.

The health care premium issue (that the Post wrongly describes as a pension issue) is a bit more complicated than what the Post noted.   While full time APWU members will pay a smaller share of the total health care premium than other Federal workers, the levels negotiated are not out of line with benefits offered at FedEx or UPS.  Furthermore, once you add it the health insurance costs of the 20% of APWU members that will not have permanent positions,  the average cost for health benefits per hour paid at the Postal Service should be equal or less than the cost per hour for all other Federal employees.

The Postal Service could get even more savings from the APWU contract by using a tactic that the Washington Post has used repeatedly to cut its own costs, early retirement incentives.   If the Postal Service had the cash to offer early retirement incentives to its older APWU and other union employees, just as it has offered management employees that it could increase the rate of attrition so that it could lower the average wage rate of its employees by taking advantage of the provisions in the new contract that allow for non-permanent employees and a lower wage scale for new employees.

The lack of cash is where legislation proposed by Representative Stephen Lynch, Senator Tom Carper and  Senator Susan Collins fits.   By providing needed operating cash now, these bills give the Postal Service the cash necessary to offer the retirement incentives and make the capital investments necessary to shrink its processing network and modernize its retail network.   In criticizing Representative Lynch's bill, the Post Editorial Board appears to prefer liquidating the enterprise rather than giving it the cash necessary to fund the transition to the modernized retail infrastructure and streamlined network that will be required for the 150 billion pieces of mail and parcels that will be delivered in 2020.

This Post's position makes sense only if the liquidation value of the Postal Service equals its retiree and workers compensation liabilities.  This is unlikely to be the case so the Post's position would force the federal government to take losses after liquidation.  

Representative Lynch's bill as well as similar provisions in bills introduced by Senators Carper and Collins make sense if they are part of comprehensive financial rescue plan that includes real financial targets needed to ensure self-sufficiency and a capital and transition investment plan that includes significant retirement incentives and investments in a lower cost network, modern information systems, and a modern retail network.  Then the Postal Service like other corporatized postal entities should generate the profits from both its competitive and monopoly products necessary to operate as a self-sufficient entity and pay dividends on its profits.

Secure Electronic Payment?

eWeek reports that Conde Nast paid $8 million to an  e-mail pfishing scam. 

A scammer managed to spear phish media giant Conde Nast and walk off with $8 million after he posed as a legitimate business. With the specter of spear phishing looming in the post-Epsilon-and-Silverpop world, the Conde Nast incident is a timely reminder of how easy it is to fall for a scam.


The steps were fairly straightforward. This scammer created a bank account with a name similar to that of another business that Conde Nast worked with frequently. With account details in hand, the scammer sent an email to the publishing company and requested that all future payments be credited to that bank account. Conde Nast signed the “Electronic Payment Authorization” form and faxed it back, essentially giving its bank, JPMorgan Chase, permission to electronically transfer money into that fraudulent account, no questions asked.

Luckily for the company, the U.S. Secret Service intervened and froze the money in the account


What is scary is that the accounts payroll clerk did not catch the error in the e-mail that clearly shows that the e-mail was fake.  The scammer, Andy Surface  "allegedly sent an email to Conde Nast accounts payable in early November with an “Electronic Payment Authorization” form. The form requested that Conde Nast direct payments for Quad Graphics, a printer who publishes Conde Nast magazines, to the Quad Graph account."


The scam was identified when Quad Graphics called Conde Nast to find out why it had not been paid for its printing services.  
 
Given how easy it was to set up a scam, one has to wonder how many businesses and individuals suffer losses from similar scams.

Missed Opportunity in the USPS Oversight Hearing

It is too bad that not one of the Congressman was prepared to ask Postmaster General Pat Donahoe these questions.

• How did you derive the $3.8 billion in savings from the APWU contract?
• How much of that savings will come in each year of the contract?
• Could you increase the savings from the APWU contract if you offered early retirement incentives to APWU members?
• How much would the incentives needed to get those incentives cost the Postal Service?

Consolidation and Excessing

One of the most confusing parts about the new APWU - Postal Service Contract is how the Postal Service deals with excess employees.    This is particularly important for employees affected by plant consolidations and declining single-piece first class mail.

Since the beginning of the fiscal year, the APWU website lists consolidations that involve 77 city pairs.      The 77 city pairs represent consolidations that are under study, approved but implementation has not been completed, and those now under review.   The 77 city pairs also include a couple where mail from the plant losing a processing option is being shifted to two or more other facilities.  

The median distance between the old facility and the new facility in this list is 70.1 miles.   Only 18% of all city pairs are less than 40 miles apart and 28% are less than fifty miles apart.   This means that when a consolidation occurs, jobs will shift to a facility that is further than the plant losing processing operations to one that is outside the 40 or 50 mile limits.  So what happens to those employees whose jobs are moved?

A similar problem exists as single-piece volume declines.   Demand for labor handling facing and cancelling and originating sortation operations decline is likely to decline at close to the 7-10% annual decline in single piece mail annual rate with declines in demand for labor sorting destination sortation being somewhat less.  The decline in demand for labor will create excess employees, so how will the Postal Service handle it.

The following discussion reflects the answer that Postmaster General Jack Potter gave when asked about excessing and the forty mile rule.  

Forty and Fifty Mile Rule

The goal of Postal Management will be to first find a job for all excess employees within forty mile radius and if that is not possible within a 50 mile radius.   To do so it will use the newly agreed to flexibility in work schedules that will increase the probability that a job will exist closer to home.  This flexibility could result in an employee choosing one of the follwing options:

• Traditional full time assignments.   In all likelihood there will be fewer standard 40 hour shift jobs than there will be employees that need to be accommodated within the 40 or 50 mile radius.
• Quasi-traditional full-time assigmments   Quasi-traditional full-time assignments will have between 40 and 44 hours guaranteed per week, between 6 and 10 hours on a given day and work  performed at one or more facilities on different days    So a full time clerk could work at more than one retail facility on different days as long as the different facilities are within the 40 or 50 mile radius agreed to in the contract.  Their  work schedule could include the following: 5 eight-hour shifts, 4 ten-hour shifts; 2 six-hour and 3-10 hour shifts, as well as any combination of shifts between 6 and 10 hours such that the total number of hours in a week is between 40 and 44 and no shift is less than 6 hours and no shift is more than 10 hours.  Also a clerk may work in a plant on heavy days and shift to a station or branch on days that there is less volume to process..
• Non-traditional full time assignments.  Employees can choose a non-traditional full time assignment.  They are similar to quasi-traditional but allow even more flexibility in scheduling as the total number of hours in the week can range between 30 and 48 hours and shifts can be as short as 4 hours and as long as 12 hours.   Employees who choose non-traditioanl assignments will have fewer hours during slower months in the summer and more hours in heavy mailing season between September and December. 
• Shift Craft  Clerks wanting to stay within the forty or fifty mile radius of the facility that is losing jobs will have the option to shift craft and work as a letter carrier.   (It was unclear from what Postmaster General Donahoe said whether the shift is only letter carriers but includes rural carriers as well.
• Transfer beyond 40 miles.  If no jobs exist within the 40 or 50 mile radius an employee may find that his only employment option with the Postal Service is a job that is in a city more than 50 miles away.   

The list of options suggests that the number of traditional full-time assignments and quasi-traditional full-time assignments may be less than the number of employees that the number of employees within a 40 mile radius prior to consolidation.  The Postal Service expects that some clerks will voluntarily take a non-traditional full-time assignment willingly, decide to move to the facility that is now processing the mail or transfer to a different craft to ensure that any employee that wants a job within the 40 mile radius will find one.   In addition, the Postal Service expects that some employees will decide to retire or find other employment as was the case in LIma Ohio when operatins were consolidated into the Toledo plant around 80 miles away.  

Conclusion

The new 40 mile rule combined with the new definitions of full time (i.e. quasi-traditional, and non-traditional) will give the Postal Service significantly greater flexibilty to deal with scheduling employees whose current work is no longer needed.   The total number of employees required to fill staffing needs will be fewer.  If a significant number of employees voluntarilly take a non-traditional full-time position, they could provide better retail services and speedier mail processing during the heaviest mailing periods without needing to hire seasonal employees.   Without having seen any of the Postal Service's scheduling models, the changes suggest that

For Postal Service Employees, the new quasi-traditional and non-traditional full time positions create more opportunities for them to find a job close to the plant that is losing its mail processing operations and therefore it is an improvement over the current contract during periods of consolidation and declining volumes.   Employees should realize that the agreement did not change the fact that some employees will still not find jobs within 40 miles and and their options will remain similar to what now exists under the current contract.  

Both the APWU and the Postal Service are going to have to work together to help employees supervisors, and Postal management handle the transition to a world where schedules are no longer the same every day and employees are working at more than one facility during a week.   This is a big change that will take some getting used to and cooperation will be needed to ensure that misunderstandings are minimized. 

Update 3/4/11 5:07 pm

The APWU in its most recent set of questions and answers about the contract confirms my understanding that the Postal Service will be setting up non-traditional full-time assignments that will be attractive to employees currently working in a traditional full-time assignment.  (This is what is described above as a quasi-traditional full time position.)

Question: Can traditional full- time assignments (eight-hour days, five days per week) be converted to non-traditional assignments?



Answer: Management can repost occupied traditional full-time assignments as non-traditional assignments as service needs require; however, in doing so, management will have to make certain that the new assignments are attractive enough so that somebody bids them. No current full-time employee can be involuntarily assigned to an assignment of less than 40 hours or more than 44 hours in a service week.

The same set of questions and answers suggests that many employees will prefer a non-traditional full time position if it allows them to continue to work close to home.
Question: I was excessed in 2009 and moved 200 miles from home. Can I get back home with the new 30-hour job? I have been looking on eReasign for two years.



Answer: Any new or vacant full-time assignments (traditional or non-traditional) created in your home office will have to be posted for bid. Provided you exercised your retreat rights and continue to maintain them, you will be eligible to return to any posted vacancy based on your seniority.

Hiccups in Consolidation

Recently, the USPS-OIG issued a report on the consolidation of Lima Ohio processing into the Dayton Ohio plant.  The USPS-OIG conducted the investigation at the request of Congressman Jim Jordan (R-OH).   The audit showed that the transition did no go smoothly

The result of the audit resulted in critical comments from Congressman Jordan but he did not call for processing to return to Lima Ohio.   In fact, his comments, and a careful reading of the USPS-OIG report clearly indicates that the problems in delayed mail that has occurred between December 2010 and March 20111 are solvable through better management of labor and capital assets and hiring additional staff in Toledo, Ohio.  

The problems that occurred in Toledo reminded me of a similar USPS-OIG report in 2009 reporting on delayed mail in the Philadelphia Customer Service District following the movement of the main processing facility in the district to a new facility.   Philadelphia then was on the top of mailers complaints about service as time sensitive periodicals, advertising and transaction mail was facing delays that did not exist when the old facility was working.    However,  March 2011 audit of the the Philadelphia plant conducted by the USPS-OIG between November 2010 and February 2010, showed that most of the problems that existed shortly after the new plant opened have been resolved and productivity at the new plant was significantly higher than what existed previously.   Management felt that the problems that remained with color coding of mail and delayed small parcels could be resolved within two months of the report's publication.

Both Philadelphia and Toledo provide illustrations that moving operations involves good planning, strong communications with employees, and flexibility during the first few months of transition to ensure that service problems are solved quickly.  The Postal Service reviews of consolidations in Manasota, Lakeland, and South Florida, and Daytona Beach FL, and Watertown, and Binghamton, NY show that consolidations can produce EXFC scores equal to or above that what existed when two facilities operated within a quarter or two of consolidation.    Once the initial problems identified in Toledo are solved, Congressman Jordan and his constituants can expect results similar to what has happened in Florida and New York.   When that occurs,  Lima Ohio will have the mail serivce that the residents and businesses they expect.

One of the problems in Northwestern Ohio requires an additional comment.  This consolidation illustrates the challenge of staffing the receiving facility when consolidations involve facilities that are more than 40 miles apart.   Toledo and Lima Ohio are 78.8 miles apart according to Google Maps.   So it is not surprising that only 31 of the 41 craft employees made the transfer.   The others retired, were on leave that the Toledo facility did not know about or found jobs elsewhere in the Postal Service.   To solve the problem, the Postal Service and the local union signed an agreement that allowed for an increase in the number of casual employees and 8 employees were brought in who formerly worked in Detroit. (60.5 miles away) 

The new contract with the APWU gives Postal Service management significantly more flexibility to dealing with short term staffing problems like what occured in Toledo.   The new Postal Support Employees classification provide the Postal Service with an ability to hire staff quickly when forecasting errors that underestimate expected volumes or changes in the number of expected transfers of existing employees reduces the numnber of existing Postal Service employees that the facility now handling mail processing has available to work.

The addition of individuals from Detroit in Toledo, also suggests that plants going through consolidations that are more than 50 miles from the originating plant need to have access to a broader list of potential employees than just those from the facility losing mail processing to ensure full staffing.   If the Postal Service does not have a system in place already one needs to be developed as plants going through consolidation could be helped by having information on employees that are available.   In addition, the Postal Service might want to follow a practice used in other industries going through major operational changes and create a list of experienced postal clerks and mailhandlers who would be willing to accept a one or two month assignment in a new facility during a transition period in order to ensure that sufficient fully-trained staff is available.   This may require some additional travel expenses but creates opportunities for senior clerks and mailhandlers to gain experience in the transition process that could prove valuable to local managers needed extra hands to fill in where needed.

Consumer Spending Trends

The Economist posted a chart developed by Julia Coronado of BNP Paribas that illustrates why the economy stubbornly refuses to exhibit a recovery-like bounce.  Ms. Corado says in her notes, "While consumers are spending there has been no sign of pent up demand. Real consumer spending on goods fell off its pre-2008 trend line during the recession and has since resumed its former pace with no indications that a surge in spending to make up for lost time is imminent."

For the mailing industry, the trend in consumer spending presents both good and bad news.   The good news is that mail that grows with consumer demand (advertising) should grow at a rate approaching the growth rate prior to the recession, subject to the challenges of increased electronic competition.   The bad news is that volumes would not soon bounce back to the pre-recession trends even if electronic competition did not exist.

I urge readers to link to the Economist, Economics blog to take a look at the chart and read Ms. Corado's comments on how trends in consumer spending and employment will impact inflation and how they should impact economic policy.