• on Feb 4th, 2013 in Strategy & Public Policy | 2 comments

    The number of Postal Service patents has grown significantly in the past few decades, as have the patents for rival carriers FedEx and UPS. When compared to other industries, such as information technology and wireless communications, the Postal Service has not significantly leveraged its intellectual property or fully recognized the potential financial and strategic value of these assets. If the Postal Service considered the commercial significance of each of its patents and licensed its intellectual property, it might find a valuable source of significant revenue. A 2011 Office of Inspector General report found that the Postal Service has 329 global families of patents, which means each “family” of a patent may have a multiple number of U.S. and international patent documents. The study looked closely at three specific patents to assess the commercial significance of each patent, or the revenue that the Postal Service may be able to generate through licensing of the patent. Those three patents alone hold a commercial value of more than $18 million per year. The report concluded that the Postal Service did not manage its portfolio of patents to maximize commercial significance. However, some stakeholders have argued that the Postal Service is different from private industry, even if it is encouraged to act like a business. It is a public institution held in the public trust. In that sense, it belongs to the American people. Shouldn’t a public institution that belongs to the American people open up the technology and patents it has developed for the benefit of the national infrastructure? There is a risk that in licensing patents or holding proprietary technology, the Postal Service may stymie innovation in the public and private sectors. Some people have looked to the Defense Advanced Research Projects Agency (DARPA) as a model. Its idea to link computers into a national system eventually led to the development of the Internet. The key for the Postal Service is to build a strategy and let it guide decisions on how best to leverage intellectual property. The first step might be to have an active program that looks to generate as many intellectual property instruments as possible. Once the Postal Service owns and protects that property, it can determine whether the best approach is to license it, sue for infringement, or share it. Tell us what you think. Take our poll question and then go to the comment section to share what you think would be the best strategy for the Postal Service on intellectual property and patents.

  • on Oct 16th, 2012 in Strategy & Public Policy | 13 comments
    There has been a surplus in the U.S. Postal Service’s Federal Employees’ Retirement System (FERS) pension program since 1992. Most recently, the FERS surplus was projected to be $11.4 billion, accounting for most of the Postal Service’s total $13.1 billion pension surplus. The Office of Inspector General (OIG) asked Hay Group, an actuarial firm, to examine the causes of the FERS surplus, and a new OIG white paper presents the results of Hay Group’s work. Hay Group found that the main reason for the surplus was differences between the Postal Service and the rest of the federal government. In particular, postal salary growth was lower than the assumptions made in the liability estimates. The surplus grew as actual postal experience replaced the initial assumptions used for the entire FERS population. Hay Group recommends using Postal Service-specific assumptions to provide a more accurate estimate of the liability. When Postal Service-specific assumptions are used to measure the Postal Service’s liability, the surplus increases from $11.4 billion to $24 billion. Given the Postal Service’s current financial health, the existence of the FERS surplus raises some questions. What should be done about the postal FERS surplus? Right now, there is no mechanism to return a FERS surplus once it occurs. Also, what about the contribution rate? The Postal Service currently pays the same FERS contribution rate as other federal agencies, 11.9 percent of payroll for most employees. This contribution rate has increased twice in the past 3 years despite the existence of a surplus for the Postal Service. Should the Postal Service’s contributions be adjusted to reflect its specific characteristics? What do you think? Share your thoughts in the comments below.
  • on Jul 9th, 2012 in Strategy & Public Policy | 1 comment
    Detail from Iron Mountain, Michigan
    Post Office Mural

    Some Americans may be aware that Benjamin Franklin was the first postmaster general of the United States, appointed by the Continental Congress during the American Revolution. But, unfortunately, our history lessons have otherwise overlooked the Post Office’s contribution to the development of the nation. A new paper entitled Postal Service Contributions to National Infrastructure describes some of the ways the Postal Service was used to support national infrastructure growth. For example, did you know?

    • In the early years of the nation, highly subsidized newspaper rates led to the growth of a national media culture.
    • Funding to transport mail supported a stagecoach industry that carried passengers across the nation. This model was later repeated in the early airline industry when mail contracts supported passenger air transportation.
    • The start of rural free delivery at the turn of the 20th century forced farmers and communities to improve the condition of rural roads as a condition of service.

    In these ways, the Post Office Department helped conquer the great distances of the country, fill infrastructure gaps, buoy burgeoning technologies and industries, and bind the nation together. Postal policy decisions also generated important debates about the appropriate roles of the government and the private sector. In the 1840s, a new age of low postal rates and two-way communications was initiated in part because of private sector competition to the monopoly, and the United States was a latecomer to Parcel Post compared to other nations because of concern by the railroads and small rural stores over the incursion into their areas of business. By the 1960s, the Post Office was struggling with inefficiency and a large deficit. The President’s Commission on Postal Organization (known as the Kappel Commission) argued that the Post Office should run more like a business. Since then, the Postal Service’s secondary role in contributing to the expansion of the national infrastructure has lessened. Today, the decentralized and fragmented nature of the digital age may be creating new infrastructure gaps and under-served citizens. Is there again a place for the Postal Service in serving the nation’s infrastructure needs? Or is the Postal Service’s role of supporting new infrastructures behind it? What do you think?

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