Business Case for Global Hybrid Mail

Business Case for Global Hybrid Mail

Dr. Ben Livson

Version 10, 8 April, 1999

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Table of Contents

1. Executive Summary *

Global Messaging vis Postal Services Statistics *

2. Business Concept and Value Proposition to Customers *

2.1 Business concept *

2.2 Value Proposition to Customers *

3. What is the reaction by National Postal Services? *

SWOT Analysis of National Postal Services (PS) *

4. The Business – History and Present *

5. Technology Outline of the Product-Service – how does it work? *

5.1 Intelligent Addressing *

5.2 Distributed Nodes *

5.3 Description of Authentication *

5.4 Billing and Customer Care *

5.5 SMTP Handler Billing Functions *

6. Market Analysis – Breakdown of the major Users *

6.1 Customer segments *

6.2 Product service bundles, pricing and revenue, and costs *

6.3 Critical Success Factors CSFs *

6.4 Risks and Responses *

7. Management and Organisation *

8. Financial Plan - Pricing, Revenue and Cost *

9. Industry Literature *

10. Profile on Potential Business Partners *

10.1 When and how to involve Global Business Partners? *

10.2 What does it take to make it? *

10.3 United Parcel Service - UPS *

10.4 Federal Express Corp. *

10.5 DHL Worldwide Express *

11. Competitor Analysis *

11.1 Microsoft - Royal Mail *

11.2 Netscape-Sweden Post-Sun *

11.3 E-Snailâ *

11.4 AT&T Mail *

11.5 International Data Post Hybrid Mail ePOST *

11.5.1 IDP PC ePOST *

11.5.2 Further development will be needed *

11.6 Partial Net Postage Metering Solutions - E-Stamp and StampMaster *

11.7 Internet Print Protocol *

11.8 Hybrid Mail Advertising Revenues *

11.9 Tumbleweed POSTA and UPS OnLine® Dossier and UPS OnLine® Courier *

11.10 ELetter http://www.eletter.com *

12 Outsourced Corporate LAN Print Services*

13 Where to from here? *

14 Links to Hybrid Messaging Sites *

Executive Summary
Develop, implement and deploy globally services for integrating all messaging requirements and in particular surface mail with electronic messaging into hybrid mail. Build a business asset in five years growing to ten million customers with the value of the customer base being $120 per customer for a total of $US1.2b the intent being either to float the company or sell it to an international player.

The investment required to create this asset of $1.2b will be of the order $US10m for initial development and early deployment, thus yielding a 120-fold return on investment.

Global Messaging vis Postal Services Statistics

Email is becoming a major business communications rapidly substituting postal services as highlighted by recent email vis postal services global statistics:

Email exceeded in 1998 for the first time postal letter service volumes: 2-billion emails/day vis 1.5 billion letters/day.
There will be eight times more email than postal letters by 2001 according to Forrester Research.

"Business Week reports a Forrester prediction that annual message volume will balloon to 12 billion messages in 2001 … six times today's e-mail traffic. E-mail is the most common online activity. According to a recent survey by IntelliQuest, 75% of the respondents used e-mail; 41% reported using e-mail daily, while another 27% used it weekly. Computer Industry Almanac predicts that the number of people with e-mail access worldwide will grow 800% to 450 million over the next three years, up from 60 million in 1997. "

"Between 1998 and 2001, the number of e-mail users is projected to increase from 120 million to 827 million, or a compound annual growth rate of 90%" according to CNET.

"By 2001, enterprises will receive 25% of all customer contacts and inquiries through Internet e-mail" according to the Gartner Group.

International Data Corporation (IDC) reported in March, 1999, that approximately 200 million people will access the Web in 1999, growing to 500 million by 2003 (IDC Directions Conference).

IDC predicts the resultant ecommerce economy will grow even faster -- from just under $100 billion in 1999 to over $800 billion in 2003.

The following quote by Money Talks columnist; John Tompkins is a real eye opener:

"It took 38 years before 50 million Americans were listening to radio. Television picked up the pace reaching that many in only 14 years. The Internet had 50 million users in just four
years."

Business Concept and Value Proposition to Customers

2.1 Business concept

Service offering

Global Hybrid Mail is addressed anywhere.

Core Service. Every subscriber allocated an electronic address for life, supported by a single electronic in-box for all messaging, spanning:

Surface mail (a)
E-mail (b)
Voicemail (b)
Fax, pager and SMS (b)

Supporting services. Forwarding, receipts (guarantee of delivery), web-tracking, virtual mail for fax and e-mail (receiver need not have e-mail or fax number: access by dialling into their service provider, PS, or by surface mail)

Facilitating infrastructure:

Universal in-box. Off the shelf technology – covers all electronic forms (b) above. Detects and selects which electronic means to deliver the message. Eg. Amvatek/AT&T "Universal In-box" product.
However, universal in-box technology does require integration with surface mail (a) above.
On demand printing (of e-mails). Sent electronically to the nearest ‘printing factory’ centre, folded enveloped, barcoded and delivered. (Other options include colour printing, greeting cards, media conversion (CD-ROM, floppy etc. for video or sound attachments). Eg. Fujitsu/IBM. Converts the message to pdf file for printing.

NOTE:

Opportunity for outsourcing.
Complex machinery and logistics;
UK, Sweden and Canada have trialed
Other issues: intelligent distribution, scalability and probably minimum one centre per capital city.

Modular approach:

concentrate initially on e-mail to e-mail and e-mail to surface mail, closely followed by
fax, mobile, and
Other value-added services.

The global trend in messaging is to integrate all forms of communication into one, accessible from desktops yet supporting complete mobility of users. Significant progress has been made in integrating electronic messaging, web e-mail for mobility, facsimile to/from email, voice mail to/from email, receive and send email by phone, and integrating the Short Message Service for mobile phones with email. Most of this technology is off-the-shelf and can be purchased for wider integration.

The huge and largely untapped opportunity is in integrating surface mail with electronic messaging as hybrid mail. The market for postal services is well over a trillion dollars with the United States Postal Services USPS revenue in 1997 exceeding $US58b. Obtaining 10% of the global surface mail revenue is business opportunity worth well over $100b a year.

Value Proposition to Customers

The value proposition to customers is many-fold:

Anything that can be represented as a computer file can be sent and received by email. Email is superb in reducing cost of communications, very fast, easy to use being fully integrated with the desktop with new access mechanisms offering users complete mobility in terms of email forwarding, web-mail and access by phone. Email is a perfect store-forward mechanism that allows access when convenient, ability to search people, companies and resources by integration with ever more powerful directory services that are now global. No wonder Netscape Communications named 1997 as the year of messaging.
Ever increasing numbers of individuals and corporations see postal services as an impost. Printing, folding into envelops, labelling and pre-paying envelops has been the source of a lot of expensive technology that is not readily available to Small to Medium Enterprises SMEs, Small Home Offices SOHOs let alone individuals. Similarly, facsimile is regarded as an additional impost.
Hybrid mail represents major savings to SOHOs in particular. The U.S. had 24 million SOHOs in 1996 increasing by more than ten percent a year – faster than any other segment in the U.S. economy and having twice higher income per employee than the national U.S. average – source: the Microsoft series Guerilla Marketing with Technology by J.C. Levinson. The SOHOs in the U.S.A alone would represent a golden opportunity. Hybrid mail speeds delivery from tens of hours into hours. Some 80% of time is spent preparing the envelops, delivering the mail to the post box, which then has to wait for the pick up to the sorting centre. Hybrid mail is sent to the nearest postal sorting centre in minutes – not in hours.
The savings are simple to quantify in dollars; the 1997 annual report of the United States Postal Service has the statistics of 700 pieces of mail per person year - a similar study by Xerox Australia March 1998 shows an 650 pieces of outgoing mail per staff per year. On the average a minimum 5 minutes is required to print, fold, address an envelope and post per each surface mail totalling some 60 labour hours. The SOHO labour rate in the U.S. is $26/hr translating into a direct annual saving of $1,560 per person. The indirect savings in speeding the processes and enabling superior tracking of what of what has been sent and received including return receipts are significant and need to be quantified.
Surface mail and facsimile were in the past required to witness the signature for non-repudiation. Electronic mail with X.509 certificates supports encryption of content, digital signature, digital checksum of content not having been altered during transit and non-repudiable receipt.
Virtual Email is a concept previously reserved for the top executives with personal assistants sifting through email. Extend this service to the electrician or plumber running a SOHO but not having the time, or means to access a desktop. We can provide a virtual e-mail address and facsimile number with all the email and faxes converted to surface mail but still delivered very fast. We can even send a short message to the mobile for communications meeting specific criteria and the plumber can phone in for the most important messages or screen them later as surface mail. Our plumber with facsimile and email addresses will ‘look bigger’ but does not have to worry about having the technology. There are millions of business people do not want to use any technology except the plain old telephone. All the rest is an impost just because (some of) the customers are using it. Amteva Technologies Inc.’s Internet-Ready Intelligent Services is an example of VPIM (Voice Profile Internet Mail) that supports Fax, Automatic Speech Recognition, Text-to-Speech synthesis, and audio management with a Unified Personal Assistant for Unified Messaging, Universal Messaging, Reach-Me Services, Voice Dialling, and Directory Services. Amteva Technologies solution integrated with our hybrid mail would be unparalleled value for business.

Our analysis for the value proposition to customers follows:

SOHO - at average 730* surface mail sends per user at 5minutes** preparation (for print, fold, envelope, postage and walk to letter box) = 60 hours @ $26/hr SOHO labour - $1,560 labour saving per year per SOHO = $2 value added per Hybrid Mail (excluding printing, postal charges etc.) Assume could charge up to $2 per message for this service.

*This United States Postal Services USPS figure has to be translated to PS figure for SOHOs. The Letter Business Plan provides an Australian average of 205 letter per head - check the Australian figure for SOHOs). A similar figure from Scandinavia averages 215 letters per head indicating significantly different consumer practices from the USA.

**The 5-minute preparation time is highly conservative. Figures of some 10 minutes are quoted by 'Paul Budde, Electronic Trading Markets 1998 section 1.4.2.2 as the average for printing a document, walking to the printer, then to the fax machine, to create a covert sheet, send the document, collect the receipt and return to the desk in an office environment -- in our case printing is followed by folding, enveloping, addressing, delivery to the mail-room or in the case of SOHO stamping if not prepaid and delivery to the post box.

A more likely scenario is 1 letter per day per Australian SOHO requiring 10 minutes handling and a total time saving of 60 hours a year as in the American case.

Other benefits include reliability, ability to track the delivery via the web and speed of delivery.

(c/f. $1 scenario because people not entirely rational about their time and doubts about reliability: will it really get there; what if they misprint my proposal?).

SME. Centralised mailroom function often combined with bulk mailings via mail houses. Still highly manual. Little automated and little batch processing. However, different to SOHOs are probably working closely with mailing houses, either in-house or outsourced, for direct marketing.

LMEs. Highly centralised mail operations and highly automated for invoicing and other bulk mailings. But still problems with the process (eg. finding the envelope store, pigeonholes, little faxing from PCs. Sending a postal item or faxing is – and may be slower per item than a SOHO.

Residential. Most numerous segment, but maybe slow to uptake. 2+ years.

SOHO. Highly sensitive to the value of their time; and perhaps SMEs. LMEs will be slower still for hierarchical and structural reasons. Residential will WOM and experience, seeing a friend with a SOHO using hybrid mail, for example.

Value proposition elements:

Speed, accuracy and reliability of delivery (NB: SOHO can’t check document after printed and before sent). Reliability bypasses the physical mailbox and straight to printing house; one means of almost totally ensuring that a document is printed as you sent it is Adobe Distiller which produces a pdf file from more than 200 desk application file types.
Value-added services (track on the web, receipt sent and receipt received)
Outsourcing CAPEX – printing, fax machines
Convenience and choice – sending and receiving (all communications in one – the universal in-box)
Labour savings

These services and fees are mapped against:

the sender (A-Party)
the receiver (B-Party)
fee structures of the following types:

transaction-based pay-as-you-use fee
activation fee
monthly (or periodic) fee
excess fee

Activation and monthly fees for subscribing. There is some uncertainty over whether these should be charged. Initially, they may seem attractive for to raise revenue and to facilitate maintaining a customer relationship. However, they are also likely to retard take-up of the service. Therefore, we should consider either:

exempting users from activation and monthly subscription fees; or
setting these fees as low as possible (e.g. $5 activation fee)

Excess fees relate to resources that a service provider wishes to conserve such as storage or network bandwidth and are regarded controversial by most users creating uncertainty for the customer about the total-cost.

Value-added services. Both A-Party and B-Party subscribers will pay transaction-based fees for all value-added services, whether for non-standard hybrid mail, enablement of different send and receive preferences and electronic messaging.

Web-based advertising revenue. Further revenue can be generated for Web advertisements and "click-throughs" from our electronic addressing Web-site (e.g. www.@domain). Revenues could be significant as subscriber traffic rises to use the site for subscribing, sending messages, tracking messages and changing subscriber preferences.

NOTE: These four additional sources of revenue have been excluded from the financial projections (refer Section 11) for reasons of conservatism and simplicity.

Table 1: Subscriber activation – and hybrid mail services
	Party charged		Type of fee or charge
	A-party (sender)	B-party (receiver)	Per transaction	Activation	Periodic	Excess
Subscriber activation	4	4		4(?)
Directory entry or additions	4	4		4	4

Hybrid Mail:	4		4
Postal class	4	4	4
Colour printing	4	4	4
Stationery or brochure	4		4
Greeting card	4		4
CD-ROM; media conversion	4	4	4
Transparencies	4		4
Document management	4	4			4	4
Notary services	4	4	4
Certified Mail	4	4	4
Outbound mailroom	4		4		4	4
Inbound mailroom	4	4	4		4	4

Table 2: E-mail and telephony-based messaging services
	Party charged		Type of fee or charge
	A-party (sender)	B-party (receiver)	Per transaction	Activation	Periodic	Excess
Email Services:					4
Preferences: add, move, delete		4	4		4
Autoforward		4			4
Web mail	4	4			4
IVR mail	4	4			4
POP mailbox	4	4			4
IMAP mailbox	4	4			4
IMAP storage	4	4			4	4
Alias & lifetime E-Mail address	4	4			4
Autoreply and acknowledge		4			4
List services	4				4
Certified signed mail	4		4
certificate	4	4		4	4

Gateways:
Fax	4	4	4
EDI
SMS (Short Message Service)	4	4	4
Voice Mail	4	4	4

3. What is the reaction by National Postal Services?

Sweden Post is an example of a highly pro-active postal service with plans to provide email accounts to every Swede integrated with the rest of postal services resulting in two-fold increase in the projected postal revenue.

Postal Service is an example of a more conservative although highly efficient and profitable postal service. The Chairperson’s address in the Postal Service annual report of 1996 dismisses electronic mail as a significant competitive threat. The same person is reported a year later in 1997 to have regarded ‘electronic mail as the single biggest threat to Postal Service’.

Postal services are still protected in most countries by a regulatory regime. For instance, in Australia all mail items with weight less than 250 grams have to be delivered by Postal Service. However, it is a mater 2-3 years at the most when the postal regulatory regimes will liberated similar to the free competition in the global information technology and telecommunications IT&T market. Now is the time to be in the market with the right business paradigm, partnerships and resources to tackle the global electronic messaging - postal services market.

Are there others – private enterprise providing hybrid mail? Yes, for example the E-Snailâ Internet Mail delivers email to any street address in the world for 99c for the first page and 20c for each subsequent page by using the USPS and via the USPS the other postal services. E-Snailâ, does not have the right business paradigm and the associated technology to succeed in a big way.

SWOT Analysis of National Postal Services (PS)

STRENGTHS WEAKNESSES
Nationally trusted authority: supports confidence that the messages will be delivered reliably
Postal Service brand synonymous with mail delivery: supports message delivery in the digital world
Retail network: service activation (for those not choosing web activation and for 100pnt check to obtain certificate); credit card details
Financial strength: ability to partner with large organisations required to assemble this service
Business focused: profitable products
Not a messaging or messaging technology orientated organisation (more focused on physical mail logistics)
Little or no experience in subscription-based services (key processes are service activation, assurance and billing)
Decision making processes may not support a rapid decision, supported by requisite capital backing
Current processes and structure do not support good co-ordination of e-commerce across the organisation
Possesses an address-based database, not one on customers (transaction history or preferences)
OPPORTUNITIES THREATS
Appears PS only viable opportunity to get into the messaging market is via hybrid mail. The other strategic possibilities (PS becoming an ISP or telco) are major departures from its business – and in any event these industries are themselves maturing and current players are looking for value-added services across industry boundaries.
Increased profitability or utilisation of existing PS services such as EDIPOST (using joint service provider for print-on demand and mailing services).
Move now: technologies for large-scale integrated messaging are mature, thereby technology-risks are diminishing.
Synergies with other PS E-commerce initiatives via Bundling: Certificate Authority, hybrid messaging, e-commerce, advertising revenues from web-based mail. Indeed enablers such as Certificate Authority may not be valued unless bundled strategically with a core service like Hybrid Mail. Also, longer–term potential for revenues from web-based advertising, as e-mail becomes more browser integrated, and therefore advertising possibilities.
Also PS will have a subscription base (c/f. Current property address base) with customer profiles, to which PS can market 1:1 existing products, such as PS shop products to SOHO market, and future products.
Combined full-service messaging with telcos (and perhaps ISPs)
Fragmented or cautious implementation: not rolled out nationally or in a unified form
Too slow to react: current opportunity for a first mover is likely to be short-lived; another player moves first (eg. a local telco or an international service such as RelayOne). PS reduced to gaining revenue only from the physical mail delivery of hybrid mail (ie. others take major portion of the value chain)
E-mail will rapidly increase with projected Australian users likely to exceed 7 million by 2005 (1 million current) – substitution
PS’s current lack of long-horizon products to supplement erosion of markets in traditional mail services from competition; with deregulation of PS’s traditional mail services, PS has only a 2-year buffer to introduce new longer-horizon products
Web feeds
Rise of other communication options: multi-point communications (eg. video conferencing)
Web TV (or network computer may make messaging service easier to use)
Band-width expansion is delayed
Consumer’s uptake of hybrid mail is slower than expected

4. The Business – History and Present

The first known postal document, found in Egypt, dates from 255 BC. But even before that time postal services existed on nearly every continent in the form of messengers serving kings and emperors. It was not until the seventeenth century that the first international postal treaty was established, consisting of bilateral agreements governing the transit of mail within several European countries. The treaty of Berne establishing the "General Postal Union" was signed in 1874. Membership in the Union grew so quickly during the three years following the signing of the Treaty that the name "General Postal Union" was changed in 1878 to "Universal Postal Union".

Postal services form part of the daily life of people all over the world. The Universal Postal Union (UPU), with headquarters in Berne, Switzerland, is the specialised institution of the United Nations that regulates this truly universal service. The postal services of its 189 member countries form the largest physical distribution network in the world. Some 6.2 million postal employees working in over 700,000 post offices all over the world handle an annual total of 430 billion letters, printed matter and parcels in the domestic service and almost 10 billion letters, printed matter and parcels in the international service.

Source: http://ibis.ib.upu.org/AN/APropos.html Universal Postal Union web-site.

Electronic mail is to this decade what the fax machine was to the last: a communication tool that has suddenly become an indispensable part of millions of people's lives. More than a hundred million computer users worldwide are currently estimated to exchange more than two billion email messages each month, and these numbers are growing as explosively as the Internet itself.

Post 2005 Study by the Universal Postal Union: http://ibis.ib.upu.org/AN/Poste2005.html

In 1995, 403 thousand million letters were handled by just more than six million postal employees throughout the world. This represents more than 1100 million items posted every day all over the globe. Nearly 98 per cent of these items remain in the domestic service of the country of posting while just over two per cent cross boundaries in the international postal service.

At present 86 per cent of the domestic mail in industrial countries is generated by the business sector, compared with 14 per cent by households. The forecast for 2005 shows a marked increase in the business to household segment, while there is a significant decline in the household to household segment.

According to the information provided, physical mail accounted for nearly 20 per cent of the world communications market in 1995. Fax and telephone covered 75 per cent and electronic mail just over five per cent. According to the study, the share of telephone and fax will hardly change by 2005 but electronic mail should double.

The share of physical mail in the communications market will decline by 26 per cent by 2005, falling from 20 per cent to less than 15 per cent of the total market. This decline in market share does not necessarily contradict the upward forecasts for physical mail since the communications market as a whole is progressing faster than the postal market, a trend that was noted in the past and that seems to be set to continue in the future. The greatest substitution effect will be seen in the business to business segment in high-income countries where more than 50 per cent of businesses will be able to use electronic mail by the year 2005.

5. Technology Outline of the Product-Service – how does it work?

The two critical and completely innovative concepts of our approach to implementing messaging-to-postal integration on a global scale are intelligent addressing and distributed nodes.

5.1 Intelligent Addressing

Each subscriber including the virtual subscribers is allocated a lifetime subscriber-id as a database-generated key. This key is stored in globally distributed and replicated directory services and can be forwarded to any email or postal address and to facsimile and phone numbers including IP addresses. Forwarding adds value and revenue.

The format of all addressing whether email, postal, facsimile etc. communication is always: base-address[-special-service-flags]@domain where [is optional] and domain is our Internet domain as service providers. This domain may be replaced by the customer’s domain if we host the customer’s MX record.

The base-address can be an email address, a postal address, a facsimile number or any other special service.

The first step in the SMTP routing process to is determine where the incoming email will be delivered as email in our domain. If so we accept it for delivery provided the incoming email domain matches the IP address as we reject spoofed addresses, secondly given that the incoming email domain is not black-listed by our anti-spamming filter and thirdly does not breach size limit and is virus free. This is the normal process for a quality messaging system.

Any email that requires the use of our gateway services must be authenticated for billing, non-repudiation and tracking purposes – the sender’s email address has to be listed in the directory services for valid subscribers. As an additional measure, the sender’s IP address has to be in the valid domain range. For example, a customer that uses Telco Big Pond for Internet access would be checked for IP addresses starting with 139.134.x.y. A customer may wish to relax this requirement for authentication or include multiple ranges.

Spoofing an e-mail address does not make sense because the surface mail generated will carry the from-address information of the spoofed.

Additional forms of authentication range from the weak username-password authentication over a web-interface to the use of a X.509 certificate proving strong authentication.

Base-address defaults to save typing will be the sender’s area and country code. For example, a fax to Ben Livson 99580489@domain would dial 61-2-99580489.

The format of a postal addresses would be receiver.[unit or suite no].streetno.streetname[.town].zipcode[.state][.country]@domain, for example

Ben.Livson.36.Minnamurra_Road.2063@domain where 2063 signifies Northbridge and NSW. In the above example, the sender is in Australia and thus .au or .Australia is not required.

How does the system understand that Ben.Livson.36.Minnamurra_Road.2063@domain is a postal address as opposed to a valid email address? Well here is the trick – if the domain is ours we do a directory look-up and ascertain that it is not an email address and not phone-fax-special service number so it must be either an error or a postal address. If it is a different domain, then it must be email.

The last step is to check for an error by analysing the postal address format. The address has to translate into a valid postal address. Postcodes are verified against [.town][.state][.country].

The [-special-service flags] are optional and one of an increasing list of value added services, for example .x might be defined as express mail meaning that the final delivery of the surface mail is by an express courier. Others value added services include:

Colour letterhead on demand.
Support for 'spot' colour on text to greatly improve readability.
Print on demand or personalised full colour brochures.
Overhead transparencies.
Greeting cards on demand

Return receipts for email are part of the RFC for SMTP and are implemented as back-to-back receipts for the postal item generated.

Each mail will be assigned a system-id for tracking purposes and for usage billing reporting.

The use of barcodes on the printing, finishing and mailing equipment can provide complete confidence in the integrity of the mailout. These features are used for printing high value documents such as cheques and other financial instruments; as such they can become a costly option.

Value added services offered to corporations include:

The outsourced mailroom (outbound) - all corporate correspondence leaves an organisation in this way.
The outsourced mailroom (inbound) - scan incoming documents and distribute to customer electronically - this is now becoming popular with larger organisations, but would also be highly relevant for virtual corporations and people working from home in remote areas.
Document audit services - An organisation might have a requirement that all outgoing communications are archived for future reference (ISO 9000 may require this) such archived documents would clearly carry great weight if a third party provided this service.
Digital library by Xerox facilitates the storage of documents for print on demand – particularly suited to low volume documents that change frequently - these might include full colour brochures, price lists, contracts, reference material, technical information etc. For example, a travelling salesperson could e-mail a covering letter for dispatch and select which items of standard collateral should be printed on demand and sent with the letter. The digital library enables documents to be viewed, changed or selected using a standard web browser.

S-MIME messages with digital signature for non-repudiation always have a return receipt for a postal item that will be charged for a premium and can be tracked by using a web-interface.

In fact, any mail item for an extra charge can be tracked. The sender authenticates, types in the email system-id to receive the status of the mail item and where it is if not already delivered. Senders may for an extra charge stop a postal item en-route.

5.2 Distributed Nodes

The service will be designed to grow by the 5^th year to more than 200 countries and 2,000 locations with locations each serving a maximum population of one million. Assume a maximum 10% take up for the service and an average two daily mails per subscriber. Scale for the peak hour handling of 20% of all traffic. Thus, a node is required to handle 40,000 email-to-postal conversions per peak hour. Assume an average two A4-size pages per postal item. This translates into 1,400 pages per minute printed. Assume maximum 50% capacity covering losses to print handling, sorting, addressing, and auto folding into envelopes. All said, a node must be designed to handle up to 3,000 printed pages per minute.

This is a formidable requirement. For example, top of the line Xerox production printers handle less than 200 pages per minute. Top of the line systems for bulk mailing handle 10,000 mails per hour.

A node must be operated 7x24 requiring a minimum of 4 staff in more than 2,000 locations. Thus, a total staff of 10,000 staff will be required by the 5^th year. Obviously, most if not all of this can be outsourced. Similarly, delivery of the surface mail will be outsourced.

The nodes must be designed for one person to be able to operate a node at any given time. The large production printer feeds exceed 10,000 pages enabling them an hour of continuous operation.

Nodes have to be operated as mini data centres with security, uninterrupted power supply, two messaging-directory servers load sharing for fault-tolerance and intelligent queue-handling for printers to load share to maximise through put. The queue handling software has to be intelligent to work the postal priorities and favour small jobs over the big ones to minimise median time to process a postal item.

A critical requirement is for the nodes to be alarmed and monitored remotely. A failure of a node will be managed by re-routing to the closest available node.

The nodes must be highly automated requiring minimal operator skills with a single operator being able to operate the node at any given time.

The deployment of nodes will be multi-level starting with a pilot, progressing to a small national network followed by a network of international hubs – by the 2^nd or 3^rd year we anticipate the network of some 40-50 hubs to be operational. From there on starts the deployment under each hub forming its own star topology.

Companies such as Bell & Howell have worked with the United States Post Services for some 60 years and a lot of the hub technology can be purchased off-the-shelf but obviously the proof of concept, systems integration and fool-proof packaging of nodes for rapid deployment require our best efforts. We would benefit from business partners such as UPS, Federal Express and DHL with a wealth of experience how to deploy and operate global distribution networks. Obviously, the skills required here are complementary to the skills we can bring in developing the business paradigm up to and including a fully working proof concept ready for deployment. The founders of these concepts should target at exciting the day-to-day involvement with the business once the hub network has been implemented.
Intelligent nodes have to support the printing of almost all known types of desktop attachments – at least the 100+ more commonly known types including text, HTML, PostScript, PDF, MS Office, WordPerfect, and CorelDRAW! ä.
Any attachments such as sound and video that cannot be converted to print including any unknown attachment will be compressed and converted to media, floppy disks for small files and CD ROMs or even DVDs for larger ones. Print and conversion engines from Abode Systems Incorporated such as Abode PageMaker and Distiller will be investigated.

5.3 Description of Authentication

A key function of the SMTP handler is to authenticate electronic addressing to restrict any hybrid mails to paying users. Authenticate if any of the following conditions is true:

1. Email is from the ISP alliance partner domains.

2. Email is from any of the other trusted domains.

3. Email is signed with a certificate of the hybrid mail series.

4. The email address has been registered with the user accepting the financial risk for weak authentication. The email address can be partially authenticated via DNS to establish that the IP packets are from the right domain. For example, email from Ben.Livson@bal.com.au could be rejected if the IP packets do not come from the DNS-MX designation 202.139.xxx.yyy for the domain bal.com.au. Also, any hybrid mail would carry Ben Livson's name and postal address as the sender of the envelope. Thus, any attempt to spoof as Ben.Livson@bal.com.au would not make any sense except unless mindlessly malicious.

5. Http session with strong certificate based authentication.

6. Http session with a weak username-password authentication with the user accepting the financial risk for weak authentication.

7. The to-address is a registered address for B-party services with the user accepting to pay for any hybrid mail services for the given electronic address.

NB. The vast majority of electronic addressing is for A-party billing with the last case being the only instance of B-party billing that may not be available when the service is launched but added later on.

5.4 Billing and Customer Care

Billing will be similar in the volume and complexity to the billing of a telecommunications carrier providing itemised billing. Obviously, we have the advantage of not being saddled with billing that has evolved over a very long time, thus enabling us a fresh start.

All processes including service activation, billing and customer care should be web and messaging enabled to minimise cost and to maximise customer satisfaction.

Examples of streamlined billing and customer care are:

Customers activate themselves using secure web-forms.
Interface to all services will be by web, email or IVR (phone).
Bills are emailed. Detail is accessible by web.
Trouble tickets are raised and tracked by web and email.
System generated trouble ticket numbers are emailed back to the user. A user may by email or by web track the status of a trouble, will receive by email instructions and by web or email cancel or close a trouble ticket.
All postal items have a system-id and can be tracked by web and by email.

The goal is whenever possible for the users to operate the system with only a tiny fraction requiring operator assistance.

SMTP Handler Billing Functions

The SMTP-Hybrid Mail Handler that processes emails to hybrid mail has to convert the SMTP-MIME mail including attachment to a format suitable for hybrid mail processing. In producing the itemised billing record, the handler issues a message-id, calculates as part of the print file conversion the number of pages to be printed. This in turn impacts on whether the mail goes out as a C6, B5 or A4 letter - the insertion technology supports up to six pages for C6 standard size envelope, B5 to 20 pages and requires A4 letter size for more than 20 pages. These details depend on both the insertion technology and national postal service classes.

The itemised billing record for hybrid mail consists of:

ü Message-id

ü Date-time

ü From-address

ü To-address

ü No of pages printed

ü Mail class (as per standard postal services definition)

ü Customer-id-for-billing (alliance, trusted domain or third party)

ü Status - a record of both successful and unsuccessful hybrid mails is kept. The status codes for unsuccessful hybrid mail attempts include failed authentication, invalid postal address and unknown attachment type that cannot be converted.

ü Value added service attributes

ü Cost

The bill items are aggregated on a periodic basis for bulk billing the alliance partner and trusted domains. Third party credit cards may either be debited for each transaction or aggregated on a periodic basis but up to a limit. For example, RelayOne debits separately for each transaction.

Customers receive an itemised monthly (periodic) bill by email. Customers may receive on-line

6. Market Analysis – Breakdown of the major Users

Market Analysis

Expected patterns of substitution and growth for hybrid mail by current surface mail segmentation

Segment Substitution Primary driver Increased usage Primary driver
Business to Home

Correspondence
Promotion
Invoicing: LMEs, SMEs
70%
High
Efficiency 15%-20%
Low-medium
1:1 marketing; Targeted promotion and ads
Ease of communication
Household to Business 10%
Very low
Primarily return mail by business requesting a response or signature; most businesses have e-mail
Ease of use 0%
Nil
NA
Household to household 10% to 25%+?
Initially low growing to medium
Ease of use 10% - 25%+?
Low to medium
(eg. connected users sending hybrid mail to unconnected parents/friends)
NOTE: Influence of multi-point communications (eg. videophone?)
Ease of use
Business to business 3%?
Very low
Most business/government agencies have e-mail
Very low to Low

People either lack the medium (eg. not Internet connected), not convenient at that time of day (eg. not next to the fax machine) or don’t wish to have it (eg. the CEO).

The basic need for messaging will be with us for the foreseeable future. There will also be the need for physical delivery of mail

Messaging segments:

Postal services
E-mail
Fax
Mobile
Pager and other

All telephony: average 3 calls per day based on 20 billion calls.

Postal Service letters 3.8 billion, based on 205 pa per person - 0.6 letter per day per person.

All e-mail may reach 1 billion emails pa based on 2+/day sent based on current 1.2 million users. Therefore if we accept 50% substitution and no natural growth – then approx. 4% fall in market share (1.2m email users out of a 15m writing age population is 8%). At $2 per item and accept that 10% are also sent hybrid mail….

Assume that static usage of 2 e-mails per day free of cost, 1 new hybrid mail and 0.3/day fewer normal mail = + $2 - 0.3*$0.45 = +$1.86

6.1 Customer segments

SOHOs and SMEs are the most attractive segments.

LME. Large-to-Medium sized Enterprise	Already have existing mail rooms and infrastructures built
SME Small-to-Medium-sized Enterprise
SOHO Small Office Home Office
Residential.	Take years to educate on…

In US SOHOs earn twice average national income. 26 million SOHOs growing at 10%+ pa.6.2 Product service bundles, pricing and revenue, and costs

Controlled take-up required but price is not the best mechanism for doing this (c/f. Relay One @ US$3.80)

INSERT Table from previous workshop on revenue options

Certificate Authority. An additional bundling opportunity is to link Certificate Authority with secure electronic messaging, e-commerce and hybrid mail. All Australians provided access to a Certificate Authority certificate for a small say $10 service activation fee providing:

Subscriber user details, credit or debit account details, and user preferences either via a web-form or by filling a paper form at the post office.
E-mail address@post.au
Certificate Authority certificate after 100-point identification at a post-office (users can fill in via the web all the details before visiting the post office for identification).
E-commerce enabled account with the Certificate Authority certificate.

The above set-up enables Postal Service to:

Build a subscriber base with credit/debit details for billing and e-commerce enabling
Build a subscriber base for 1-1 marketing knowing user preferences, market segment etc. and not just their postal address.
Build a superior directory service, preferable linked to Telco electronic white pages.
All the back-end processes such as email address and certificate generation can be automated.
PS hybrid mail customers can get itemised billing by web and email.
Postal Service may provide a service guarantee and/or e-commerce money guarantee when Certificate Authority certificates and Postal Service certified parcel delivery are used.
Hybrid mail delivery can be tracked by web with certified hybrid mail return receipts delivered by email.
Help desk trouble tickets can be web and/or email enabled.
E-Commerce and secure messaging is non-repudiable with the digital signature of the Certificate Authority certificate, can be encrypted, and digitally check-summed for tamper-proof transmission.

6.3 Critical Success Factors CSFs

Three key processes: activation, assurance and billing

Seamless service activation of a bundled service (hybrid mail, Certificate Authority and e-commerce capability) by a well co-ordinate service activation process (web-enabled form – provide details including billing, 100 point check, collect smartcard & receive address)
Assurance: Web-tracking, e-mail enabled help desk
Billing – web and e-mail enabled payments

Customer acceptance of "pay for use" of hybrid mail (no real alternative; bundles to capital budgets for SMEs, SOHOs?)
Hybrid mail must be able to support all common desktop types with guaranteed outcomes on pdf, html, postscript (and perhaps MS Office)
Ability to support multimedia (voice, video) and advanced print formats (colours, sizes and media, eg. cards) – Medium term
Overseas compatibility; international standards compliance (partner with global network provider – eg. print on demand in OS locations; leading ultimately to reciprocal arrangements with overseas postal services) Without this (a) value of hybrid mail service limited; (b) lowers barriers to entry for competitors such as RelayOne (enhanced value proposition: can send hybrid mail to UK). NOTE: % of PS letters international (check JC)
Multiple sites nationally for printing on demand of hybrid mail, re: EDI Post.
Fault tolerance within sites and across sites: disaster recovery planning to back service guarantee
Architecture that can be scaled, with resulting changes in performance, which will drive service agreements and standards with users
Levels of service that are well researched and match customer needs and achievable

customer care
billing - itemised
guarantee of delivery
delivery and performance tracking
delivery receipts if required
integration with secure messaging (eg. Certificate Authority)
non-repudiation
other value added services (??? escrow (eg. legal documents) PS holds onto the message; IMAP message stores help on PS servers)

6.4 Risks and Responses

Alliances. PS and Telco. Nature/functional split of alliance:

Postal service & hybrid mail (physical delivery of email fax etc) – PS
Universal in-box electronic services (Email, PSTN value-added)
Facilities management – (i) PS (IDP) & outsourced; (ii) Network, and e-mail backbone

Risk that regulatory authorities likely to demand that other parties have access to PS and Telco’s established infrastructure on the grounds of natural monopoly. Forcing access by other ISPs to PS’s hybrid mail (increases PS’s revenue on the assumption that Big Pond only accesses PS part of the market). At the same time, this will act to keep Telco honest: thereby helping to re-balance what could otherwise be an asymmetrically orientated relationship (Telco holds more of the key assets).

7. Management and Organisation

The proposed management and organisation will be:

Board with the largest venture group holding the chair. Dr. Ben Livson will be deputy chair with powers of veto regardless of the extent his share holding is diluted.
Research & Development Corp. located in Sydney with Dr. Livson being the Chief Executive. Dr. Livson will have exclusive rights to all Intellectual Property.
Commerce Corp. located in the US West Coast with representation in the US East Coast and Europe. Commerce Corp. shall be responsible for sales and marketing, and for out-sourcing operations. Commerce Corp. Chief Executive will report both to the Board and Dr. Livson.

The projected staff is 20: 14 with Commerce Corp and 6 with Research and Development Corp.

8. Financial Plan - Pricing, Revenue and Cost

Pricing should be attractive for rapid build-up of a customer. Thus, free service activation and free messaging but conditional on a minimum of $50 per month per user spent on hybrid mail. Hybrid mail delivered anywhere in the world as a premium service superior to express mail is priced at a very attractive $1 per item – 2 pages printed duplex – with 20c for each additional A4 page printed. Certified non-repudiable with return receipt hybrid mail is charged at $5. Hybrid mail forwarding is charged at $5 per month and so on for all the value added.
The total annual revenue for the 5^th year is estimated at $US14b = 10 million users x 700 hybrid mails per user x 2 where 2 is the multiplier for value added services used by the Sweden Post model.
Costs are much harder to estimate at this stage. As a guesstimate the base cost for delivering hybrid mail is 25c x 700 x 10 million = $1.75b, add to this $1b for capital expense, $250m for staffing the nodes and $500m for global advertising and perhaps $500m to run billing and customer care totalling $4b leaving $US10b.

Capital outlay can be minimised by arrangements such as Fuji Xerox Finance guaranteeing a 2c/page cost for black & white, 6-7c cost per page for the whole process of mailing and 20c per true colour page. The costs are likely to be lower with global quantities.

Initial deployment may start by working together with National Postal Services. This is in any case necessary in countries such as Australia that still enforce a regulatory regime for postal surfaces.: According to the Morgan Stanley Internet Report, over 80 million people worldwide will be using e-mail by the end of 1997, compared to 46 million who will be using the World Wide Web.

Internet is projected to exceed a billion users by year 6. Using the 20:80 the Internet users will control 80% of world's wealth.

The current global email user base of 200 million is projected to exceed 1 billion in six years.

Assume a modest 200 hybrid mails per user growing to 400 with pricing dropping from $5 to $2.50 per hybrid mail, the revenue per user will be $1,000 per year. Assume 30% of all email users taking up the service and us having 20% per cent market share in the hybrid mail market. Such a projection would lead to 12 million customers by year 2 growing to 60 million customers by year 6. Now divide by three as a worst case scenario yielding 4 millions customers by year 2 and 20 million customers by year 6. Revenue in the worst case scenario would taking into account most of the build up towards the end of the first year being $1b, $5b, $9b, $12b and $15b for year 2 to year 6 respectively. All the dollars quotes are $USD.

Profit & Loss P/L 1-year setup 2-year 3-year 4-year 5-year 6-year
Revenue
Cost
Profit
Nil
-$3m
-$3m
$1b
$900m
$100m
$5b
$4b
$1b
$9b
$7b
$2b
$12b
$9b
$3b
$15b
$11b
$4b

The assumptions are:

The objectives for the first year are:

Patent the core technology. The patent succeeds, the core technology could be sold for several billing dollars without further R&D and commercialisation. The patents are non-obvious - none of the competition including Microsoft implements the core technology. Due to secrecy we cannot expand on this except to say we are to make breakthroughs in two areas of messaging that in Dr. Livson's are not known to industry,
The revenue streams are based being able to outsource all operations.
The model used here is to tap into the IDP/Data Streams run by sixteen postal authorities including the US Postal Service, Australia, France, Germany, Italy, The Netherlands, all Nordic countries, Switzerland, Singapore, Malaysia, and accounting for nearly two thirds of the global mail. The United States alone accounts for 40% of global postal services.
Develop an intelligent node solution that can be deployed independently of IDP/DS to extend services to countries not services by IDP and to have a complete competitive offering that can be sold to the likes of UPS, FedEx or DHL. It will take 18-to-24 months from the start of R&D to the deployment of the first intelligent node. The technology involved requires major sophistication.

9. Industry Literature

Status and structures of postal administrations, http://ibis.ib.upu.org/AN/Statuts
Post 2005 by Universal Postal Union (UPU) http://ibis.ib.upu.org/AN/Poste2005.html
Comprehensive Universal Postal Service statistics of each country are available under http://ibis.ib.upu.org/AN/statistique/Admin/

NB. All other references are given locally in the body of the to make reading easier.

10. Profile on Potential Business Partners

10.1 When and how to involve Global Business Partners?

The candidate global business partners have a natural synergy with our objectives of winning the business of postal services – in particular now that there is a global push to extend the deregulation of telecommunications into postal services.
Obviously approaching these multi-nationals requires credibility. Ideally, we should at least have the venture capital for development and initial deployment. As a minimum being able to demonstrate a fully functional messaging-post gateway node or preferably a small network of such nodes would enable us to approach such companies in a credible way. A fully functioning proof of concept ready to deploy would enable accurate estimation of all costs involved and would minimise any technology risk. Also, having a proven technology and business plans would make us equal partners in an otherwise size wise unequal relationship.
We would target the partnership to last five years and sell our share to the multi-national. The sale price would be a function of the number of customers. A subscriber is normally valued at $40 by Internet Service Providers although in take over bids such as the one with Microsoft purchasing Hotmail, subscribers have been valued at $120 each. For example, Microsoft purchased Hotmail for some $400m and had perhaps 3 million real subscribers when deducting stale accounts and multiple accounts per person. Hotmail’s only revenue was from web-based advertising the messaging service itself being free. We believe that the value of a hybrid mail service subscriber is at least $120 per subscriber.

10.2 What does it take to make it?

Hybrid mail requires the following:

A global name trusted by every individual and company to deliver – a name with a reputation no less than with the national postal services. This is the first failing with E-Snailâ. Business is all about perception.Global distribution mechanism to more than 200 countries and several thousand offices for distribution. This is crucial to realise business benefits and true distribution is the only way the volumes can be supported. A fully distributed network is crucial not just for performance but for high availability, fault tolerance and ability to minimise and quickly recover from any local disturbance. Business has to be able to rely on this service the way we can rely on postal services. Distribution is also the very key to save cost. An email sent from Sydney to a postal address in Helsinki, Finland should be converted to surface only in Helsinki. Superb knowledge in sorting, labelling, packaging, distribution and tracking and above all facilities management of operations on a global scale. Customer care and billing of a global service provider able to support potentially tens of million of customers. Global data communications network is important to save cost and to expedite deployment. Bring in an existing base of at least a million customers – the time to market is imperative and a head start with a significant customer base is vital. The following corporations are examples of potential business partners that could fill all of the above criteria with very strong synergies with their existing business:

10.3 United Parcel Service - UPS

Embracing Technology

By 1993, UPS was delivering 11.5 million packages and documents a day for more than one million regular customers. With such a huge volume, UPS relies on technology to maintain efficiency, to keep prices competitive, and to provide new customer services. Technology at UPS spans an incredible range, from specially designed package delivery vehicles, to global computer and communications systems. For example, UPSnet is a global electronic data communications network that provides an information processing pipeline for international package processing and delivery. UPSnet, which has more than 500,000 miles of communications lines, including a UPS satellite, links more than 1,300 UPS distribution sites in 46 countries. The system tracks 821,000 packages daily. Between 1986 and 1991, UPS spent $1.5 billion on technology improvements, planning an additional $3.2 billion to be spent over the next five years. These improvements are aimed at both efficiency and expanded customer service.

See http://www.exchange.ups.com for UPS OnLine® Dossier and UPS OnLine® Courier powered by Tumbleweed Software servicing premium value added secure messaging services.

10.4 Federal Express Corp.

Federal Express connects areas that generate 90% of the world’s gross domestic product in 24-48 hours with door-to-door, customs-cleared service and a money-back guarantee. The company’s unmatched air route authorities and infrastructure make it the world’s largest express transportation company, providing fast, reliable and time-definite transportation of 3 million items to 211 countries each working day. FedEx employs approximately 140,000 people and has more than 43,000 drop-off locations, 600 aircraft and 39,500 vehicles in its integrated global network. The company maintains electronic connections with more than 850,000 customers via FedEx Powership^®, FedEx Ship^®and FedEx interNetShip^SM. Federal Express reported revenues of $11.5 billion for its fiscal year ended May 31, 1997.

Stake your claim in the growing electronic market.

With more and more businesses going on-line every day, the sooner you get your electronic commerce system up and running, the better. FedEx VirtualOrder can provide everything you need to make the most of what only the Internet can offer.

10.5 DHL Worldwide Express

DHL Worldwide Express is the world's largest and most experienced international air express network with service to more than 675,000 destinations in the world. DHL maintains its position as the world's leading international air express network by continually expanding and upgrading its network of offices, hubs and services, and by offering superior service through a well-trained and dedicated work force. On an average day, more than 260 thousand DHL shipments are sent to destinations throughout the world. In 1994, DHL handled 95 million shipments.

Countries and territories served 227 with 2,381 stations servicing virtually every city around the world.

DHL And AT&T To Offer Industry's Most Comprehensive Electronic Notification Service For International Express Shipment Recipients.

11. Competitor Analysis

Summary

Service feature	Delivery by open Internet	Directory service (eg. look up address)	@post addressing	Universal in-box	Pricing	Service backed by established by postal service	Integration with E-Commerce (eg. bundled offering)
Relay One	Y	N	N (check)	Y (N) (check)	Premium	Y	N
E-Snail	Y	N	N	N (Y) (6-12 months)	Penetration	N	N
Sweden Post	Y	Y	Y	Y(N)	?	Y	Y (Torget)
Postal Service and Telco in partnership	Y/N (Big Pond family only?)	Y (White Pages +e-mail)	Y (achievable)	Y/N	Penetration	Y	SureLink (next generation) + Certificate Authority
IDP ePOST	N	N	N	N	Penetration	Y	N

Most of the above are CSFs.

11.1 Microsoft - Royal Mail

The announcement on the Microsoft-Royal hybrid mail launch is attached below and can be located at: http://www.abcnews.com/sections/tech/DailyNews/email_snailmail0402.html:

L O N D O N,   April 2 — Britain's post office and software giant Microsoft Corp. are launching a mixed Internet and postal service enabling Internet users worldwide to send e-mail to Britain for postal distribution in Britain and in Europe.
     RelayOne customers will be able to transfer e-mail through the Microsoft Network, Microfossil's Internet arm, to Britain, where printed copies will be sent by first-class or airmail delivery. "Serious consideration" is also being given to providing global coverage for the project with printing sites likely in the next 12 months in the Americas, where the United States is "a big market opportunity," Southeast Asia and Australasia, a Royal Mail spokesman told Reuters.
     He declined to say whether it was also planned to extend printing to Continental Europe.
     At present, printing will be in London, Chesterfield and Leicester in Britain and would expand as justified by demand.
     A joint statement described RelayOne as "fast, convenient and simple, providing a real alternative to regular mail, fax or courier services."
     The combination of "traditional postal communication and the Internet will reduce the cost and increase the speed of sending letters and documents, including graphics, to everyone, anywhere in the world."

Backup for E-mail Exchanges
RelayOne's fast printed copies would back up electronic mail exchanges. It is also aimed at the personal market.
     It will cost 1.50 pounds ($2.50) for a one-page letter e-mailed from anywhere in the world. Four pages will cost three pounds ($5), while a 50-page document will cost five pounds ($8.35) for delivery in Europe and 10 pounds ($16.70) elsewhere.
     Each message will bear a unique number for transmission tracking before automatic printing, but "there will be no individual vetting of messages" on privacy grounds, the spokesman added.
     Royal Mail did not disclose projected revenues but said they would be shared between the two partners based on their respective investments.

The author's competitive analysis follows:

Microsoft Network MSN is accessible by only a small number of users perhaps two million world wide and 200,000 in England.
The main motivation for Microsoft seems to have been stalling Netscape's initiative with Sweden Post making sure that Netscape won't get a dominant foothold with national postal services.
The small subscriber base and the minimum cost per letter - $2.50 - reduce the revenue base to a small market. We see the launch as Microsoft establishing a strategic foothold in the postal service market. However, the fundamental weakness is that Microsoft bundles access with Microsoft Network and excludes the overall Internet market. We believe that even with all of Microsoft's resources MSN will never exceed the odd few per cent of the Internet market.

11.2 Netscape-Sweden Post-Sun

Sweden Post in partnership with Netscape and Sun is implementing a Global Hybrid Mail system for some four million Swedes over the next twelve-to-eighteen months. Sweden Post is negotiating with a number of postal services including Canada Post. We believe that Sweden Post does not have the ability to market this globally. Also, we note the financial difficulties of Netscape and Microsoft willing to invest large resources to block every move by Netscape. The likely scenario is a friendly takeover of Netscape by Sun. Some talk has been about IBM or Oracle taking over Netscape but Netscape's attractiveness as a takeover target is rapidly diminishing. The author visited Sweden Post, has access to Sweden Post presentation materials and has tried his best to assist Sweden Post in dealings with Postal Service. In the author's opinion Sweden Post has lost its 18 month market lead and is rapidly becoming an 'also run'.

11.3 E-Snailâ

E-Snailâ has been decommissioned in favour of another US based service provider LetterGramâ - the below is an excellent example of the dangers small private providers face in trying to provide hybrid mail.

The NetGramâ system consists of a database of user-supplied postal recipients, and a specialized email server that allows you to designate those recipients by email. Currently NetGramâ supports only ASCII text messages. The inventor regards NetGramâ evenmore restrictive and less capable than the old E-Snailâ service.

We proceed to describe the previous more capable E-Snailâ service.

E-Snail is an E-Mail / Postal Mail gateway. You send an e-mail to us, and we print it and

send it by United States Postal Service.

Why would I use E-Snailâ? (for more information see http://e-snail.com/index.html)

If you live outside of the United States, use E-Snail to save on the cost of international

postage, to speed delivery, or to improve the reliability of your international mail.

If you travel for business or pleasure, use E-Snail to send mail when you are unfamiliar

with local postal systems or when you don't have the time or facilities to print a

professional letter.

If you wish you would write more but never get around to it, use E-Snail to send off

quick notes in seconds.

If you always need to borrow a stamp, search for an envelope, and then carry the letter

around with you for a week until you remember to ask someone else to put it in a mailbox

for you, use E-Snail to send mail instantly.

If you need to send a résumé or C.V. but don't want to print it out at the office, use

E-Snail to send your mail as an attached file.

If you ever want to send an e-mail to somebody who doesn't have an e-mail address.

Use E-Snail to send your electronic message to any street address on the planet.

How do you charge for E-Snail?

Accounts are settled to a credit card at the end of each month. Members receive an

itemized statement of their monthly activity by e-mail.

Personal checks and money orders may also be used to pre-pay E-Snail accounts.

Pre-paid balances will be drawn down as services are used.

Businesses may set up invoiced accounts. Inquiries regarding special payment

arrangements should be directed to Admin@e-snail.com.

E-Snailâ is a US Colorado based company that specialises in hybrid mail at very reasonable prices using US Postal Service of delivery. E-Snailâ suffers for cumbersome addressing and more importantly lacks credibility. E-Snail tries to address this by displaying the Web Assurance Bureau logo.

Regular E-Snailâ pricing follows:

We forward your e-mail message as a postal mail worldwide for US99¢
We forward your e-mail message as a certified letter to the U.S. for US$4.99
We forward your letter as an overnight letter in the U.S. for US$14.99
Greeting Cards sent worldwide US$1.99

Attached PC format files... (include two pages)

We forward your file as postal mail worldwide. US$1.49
We forward your file as a certified letter to the U.S. US$4.99
We forward your file as an overnight letter in the U.S.
US$14.99

More E-Mail Gateways supported by E-Snailâ:

Airmail Communications. Receive your e-mail on your pager.
Voice E-Mail. Send voice messages by e-mail.
Faxaway. Send Faxes by E-Mail.
Mailpush. E-Mail notification and other services.

11.4 AT&T Mail

The US telecommunications giant AT&T Mail - at $A100b+ pa is the size of IBM or the US Postal Services -is offering universal messaging supporting delivery in just about any form including:

1: US Postal Services Delivery (currently restricted to the USA)

2: Overnight delivery via a courier anywhere in the USA

3: Mail Print to any receive-only printer in the USA (The on-demand

Internet Printing Protocol IPP looms very big as a competitor to Postal

Services hybrid mail.

4: The unified messaging includes email, fax and EDI using a patented

messaging architecture built on top of the AT&T X.400 messaging backbone.

11.5 International Data Post Hybrid Mail ePOST

The hybrid mail deliver-and-print postal solution that originated within Finland Post in 1988 is now licensed as ePOST by 18 countries around the globe, including the United States under the management of International Data Post head quartered in Copenhagen, Denmark.

The Hybrid Mail ePOST core systems allow Postal Services to process, manage and offer secure customer access independently from their IT environment via ePOST/DS (data stream) format. Added value to ePOST customers includes:

Electronic sorting
Mail merge
Electronic forwarding
Mail and output management and processing (printing, enveloping and archiving)

IDP partners with industry leaders like IBM, Siemens and Fuji Xerox for the print-on-demand technology.

The focus for most the marketing efforts is heavily business oriented with 50% of ePOST mail from business to home, 35% from business-to-business, only 5% of mail is home-to-business and 10% is home-to-home.

The current PC ePOST is a fourth generation development:

ePOST/VM was the original mainframe based solution developed in 1988 by Finland Post and IBM Finland now frozen to the maintenance level.
ePOST/Open 1 is an open modular system, which was originally adopted by Australia and expanded by IDP. Originally, named EDIPOST in 1992 it continues to run as originally designed in six mail centres within Australia.
ePOST/Open 2 represent 60 man years of development to be deployed in 1998.
PC ePOST with a universal inbox is the only ePOST version that represents true competition.

The latest ePOST statistics of 23 million ePOST letters out of a total 856 million letters delivered by Finland Post in 1996 point put to a mere 3% share of the Post's total volume but more significantly ePOST to a 100% increase for the third straight year. Overall Postal Services grow less 3% annually.

EPOST wants to be a conduit for all kinds of electronic messaging, EDI, fax, email, Internet, etc. in addition to physical mail - otherwise Postal Services have reached their sunset stage.

ePOST pricing in Finland is 30% above normal postal pricing with ePOST letters costing about $1 1^st class for the first page before quantity discounts, 10c for each subsequent page, $5 registered and $7 for proof of receipt.

11.5.1 IDP PC ePOST

In mid-1999 IDP is scheduled to announce a PC ePOST Version 4. It will be integrated with the Internet standard SMTP e-mail. . It will be latest version of the hybrid mail print and deliver postal solution that originated in Finland Post in 1988 - and is now licensed as ePOST by postal services in 18 countries around the globe, including Australia and United States; ePOST is managed by IDP (which is headquartered Denmark).

The utility of this product would be significantly enhanced under the proposed the electronic addressing service, by the supporting infrastructure allowing intelligent addressing and print-on-demand, by the hybrid mail delivery service.

A solution based around PC ePOST is illustrated in an IDP diagram below.

Compliance with International Data Post (IDP) standards is considered critical for the success of the electronic addressing. It will enable an efficient global solution supported by IDP member countries; Australia is a key member of IDP.

For the print on demand technology, IDP partners with industry leaders like IBM, Siemens and Fuji Xerox.

11.5.2 Further development will be needed

Some important questions remain about the functionality of Version 4 of PC ePOST. For example:

whether it will allow all processing to be done on the server; or
if client software will be required on the user’s PC

The former is definitely the preferred solution: penetration of the electronic addressing service will be boosted significantly if users need only use their e-mail or Web browser software to send messages. Conversely, any requirement for the user to install software is likely to inhibit penetration.

So, even though the forthcoming version of PC ePOST represents a promising "off the shelf" product, it is only a partial solution. In any event, even if the full server-side functionality is available (i.e. no requirement for client software other than e-mail and browser), there will still likely to be at least four areas requiring integration :

Customising PC ePOST . For example, the conversion has to produce IDP/DS Optical Mark Recognition "start of document", "sequential" and "end of document" markers. An interim solution to reduce complexity, would be to produce a hybrid mail cover page to manage print runs.

An SMTP handler for extended electronic addressing and authentication and for rating information for billing; this is so the ePOST server can accept general SMTP mail.
Server-based conversion of SMTP messages into PDF format (with additional support for Postscript L2 or higher to support desktop application types for which no PDF conversion is available). Header, body and MIME attachment information need to be converted into PDF with message layout conforming to hybrid mail standards involving postal address rules (positioning of address and last address line including suburb, state and post code for automated postal handling).
Integrating ePOST with the billing engine for recording and processing transactions by subscribers.

Reference: Mail: The Journal of Communication Distribution, November 1997 and

IDP's web-site.

11.6 Partial Net Postage Metering Solutions - E-Stamp and StampMaster

The U.S. Postal Service has given it permission to test its technology for delivering postage over the Internet to half a dozen companies including E-Stamp and StampMaster (renamed Stamps.com), Pitney-Bowes and Neopost.
StampMaster's Internet Postage metering system allows users to print electronic postage delivered over the Internet directly onto envelopes or labels using ordinary laser or ink jet printers. E-Stamp also allows postage to be downloaded from the Net and printed directly onto envelopes using software, a small piece of hardware, and a standard printer.

Both solutions are mainly aimed at the SOHO and small enterprise market that have traditionally been too small for the Pitney Bowes Inc. digital franking systems. However, lately Pitney Bowes has started licensing its PC Postage inventions.

PC-generated postage is only applicable to envelopes that are addressed by computer, and Pitney

Bowes’ research indicates that only about 30% of small office mail falls into that category.

Internet franking is only a small part of the automation achievable by hybrid messaging. The whole cycle requires electronic delivery to the print-on demand centre nearest to the addressee with printing, folding, insertion, addressing the envelope and franking with postal or courier delivery of the last leg in the most efficient manner.

The above Net Postal solutions typically add a new function to the MS Word Mail Merge, Envelopes and Labels functionality but the process is still largely manually and requires activity on-site.

Compaq, Microsoft and AT&T being shareholders of E-Stamp demonstrates that these blue chips value the business potential of the postal services market.

11.7 Internet Print Protocol

Another type of solution for print on demand is the Internet Printing Protocol IPP where a printer is assigned a URL. Clearly, this solution addresses mainly the high end intranet-extranet market where the receiver carries the cost of printing. IPP substitutes some facsimile traffic.

It is difficult to see any advantage of IPP over email with pdf or print file attachment. The author thinks IPP will have minimal impact on hybrid messaging.

11.8 Hybrid Mail Advertising Revenues

Advertising is a major additional source of revenue for a hybrid mail provider. Think of the potential for advertising revenue via the web-logon for hybrid messaging. The portal could easily be the number one revenue generator of all portals. Similarly, think of the advertising value of global hybrid mail sent to a service provider such as IBM or Xerox. For example, if Xerox were the service provider then potentially hundreds of millions of subscribers would typing postal-address@xeroxpost.com every time they send a hybrid mail. Each time both the sender and receiver(s) see Xerox as the provider, thus Xerox becoming part of the sub-conscience of mankind! If a blue chip such as IBM or Xerox would place 10c advertising value for each hybrid message and were to deliver via standard email clients a billion hybrid messages a year, then the advertising value would be $100m a year. Similarly, if another billion messages a year were delivered via web-logon, the web portal advertising revenue could be worth several hundred million dollars a year.

11.9 Tumbleweed POSTA and UPS OnLine® Dossier and UPS OnLine® Courier

http://www.tumbleweed.com/Posta 3.0 www.posta.com web-based S/MIME solution for universal, secure communication applications used to power UPS secure messaging offerings:

http://www.exchange.ups.com UPS OnLine® Dossier and UPS OnLine® Courier.

Tumbleweed Posta integrates with e-mail, back-office systems, and front-office online applications to add the universal, reliable delivery and tracking required for confidential correspondence, document collaboration, automated transactions, customer management, and e-commerce. Tumbleweed Posta enables secure delivery of electronic documents to anyone with e-mail and Web access, without adding additional hardware or client software:

Web-based S/MIME technology- with no special recipient client software necessary
Digital signatures and encryption
Server authentication prior to transmission
Secure Sockets Layer (SSL) during transmission
RSA encryption of the document while on the server
Document expiration for permanent removal from the server
Password protection for controlled access to documents

Posta is an example of premium value added messaging services that will take away business from postal services and further highlight the urgency to integrate email with postal services.

11.10 ELetter http://www.eletter.com

"Taking Internet postal service one step further, San Jose-based ELetter Inc. produces, mails and tracks small businesses' correspondence. "Give us your address list and the content, and we'll take care of everything else," says ELetter CEO and President Manish Mehta. Users start by sending their mailing lists to ELetter's Web site. ELetter verifies the addresses against a USPS database and flags addresses that are potentially undeliverable. After arranging how the addresses will look on the correspondence, users upload the document for mailing and select production options, such as paper type, size and color. Finally, a user can mail himself or herself a proof, or sample, before paying with a credit card.
Although Mehta says the cost of a mailing varies depending on the number of pieces processed and the mailing and production options chosen, the average price is usually between 15 cents and $1 per item. The service has been available exclusively on ELetter.com since January. Because ELetter has digitally automated the production, folding, envelope stuffing, addressing and postage application, it can handle small jobs that traditional mail houses would normally turn down." Source: David Coursey's Showcase April 07, 1999, http://www.upside.com

"The company targets the more than 10 million small-to-medium size businesses and departments within large corporations that can't afford the services of traditional mail houses.

Further quotes from http://www.eletter.com :
"Market Opportunity

        According to the U.S. Postal Service, mailings by small-to-medium size
        businesses in the U.S. make up a $1.1 billion market. Today, 92 percent of
        small-to-medium size businesses prepare their mail manually, dealing with the
        painful and time-consuming processes of printing, cleaning address lists, stuffing,
        stamping, licking, etc. Traditional lettershops require large volumes to be
        cost-effective and service bureaus that charge on an individual piece-by-piece basis
        are too expensive (up to $2.00 per piece). Companies mailing any less than 5,000
        pieces at one time find their needs overlooked today.

ELetter Communication Service eliminates the headache associated with manual
mailings, plus it costs up to 50 percent less than existing outsourcing options.

The ELetter Advantage: Splitstream Automation

        ELetter utilizes proprietary state-of-the-art production equipment and advanced
        rule-driven, workflow modeling technology to eliminate all manual labor involved in
        the production process. This technology, called ELetter Splitstream Automation,
        allows error-free high-speed mail production. The operational efficiency is passed on
        to businesses in the form of significantly reduced costs (up to 50 percent lower than
        competitive offerings) and higher quality. Its super-scalable design eliminates the
        need for manual job-by-job setup operations and can easily adjust to increased
        capacities on-the-fly."

The ELetter Partnerships

PitneyBowes www.pb.com for digital franking
Hewlett Packard www.hp.com for servers - data centre
United States Postal Services www.usps.gov as the postal stream
TNT www.tnt.com for logistics
CyberCash www.cybercash.com for credit card payment
Mailboxes ETC. www.mbe.com
http://www.podi.org/index.asp PODi Print On Demand Initiative

Current ELetter Limitations

At the time of this writeup ELetter was in test marketing. The service is all printed from the one Californian location, thus requiring up to two days for domestic US delivery and probably up to 5 days for international delivery. The pricing is yet to be decided but heavily based towards penetration pricing as the offering competes with established mailhouses.

It is likely that current technical limitation in letter size, stationary, print styles, lack of online account, ability to delete accounts etc. will be resolved by the time the service goes live.

12 Outsourced Corporate LAN Printing Services

Outsourced corporate LAN printing services could be a significant additional revenue stream for global hybrid mail. Early hybrid mail providers such as IDP have grown their business as outsourced billing and statement printers and mailers. Extending this to service outsourced corporate LAN printing services is the next logical step.

Printing is a major corporate cost. A significant cost of LAN file and print services and desktop support relate to printing. Valuable staff time is wasted in printing not being available and in staff using incorrectly configured templates, changing stationary and to unblock printer jams. Printers are noisy, create heat, occupy floor space, require supplies of paper, toner and maintenance. In short, printing is a constant headache that most corporations and staff would gladly see outsourced and out of site (and out of sight).

The infrastructure for global hybrid mail would be ideally suited for outsourced corporate LAN printing services. A combination of global on-demand print services provider such as Fuji Xerox that develops, manufactures and services printers expanding into services and a logistics company such postal services or UPS, DHL or AMEX could offer first class outsourcing for corporate printing.

13 Where to from here?

The strategy is for the father of the idea, Ben Livson, to find a business partner(s) for business case development to acquire venture capital for a proof of concept and in parallel the business partners will approach the multi-nationals capable of deploying and operating the infrastructure. We expect business case development and obtaining venture capital to take six months, developing a fully functional proof of concept up to two years with parallel negotiations with the international business partners. Time-to-market is obviously an imperative in the Internet services market by the nature of this initiative and anything to do with streamlining or replacing postal services is such that things cannot be rushed. We have to have a five-year outlook.
Patenting the unique core hybrid mail technology, if successful, alone is worth several billion dollars and should be an initial driver. Processing and defending such major patents will require significant VC backing.

14Links to Hybrid Messaging Sites

Last update: 26 March 1999. For updates see http://www.bal.com.au/hybrid.htm

BAL Consulting P/L has a major research interest in hybrid messaging systems including email to postal services conversion. Some of the research will be declassified by 2Q 1999. In the meantime here are some of the more interesting public domain links to hybrid messaging:

Post 2005 Study by the Universal Postal Union under: http://www.upu.int/

International Data Post A/S http://www.idp.dk

RelayOne http://relayone.msn.com/prd.i/pgen/rm/0L/welcome.html

http://www.abcnews.com/sections/tech/DailyNews/email_snailmail0402.html

ELetter: http://www.eletter.com/

Print On Demand Initiative (PODi): http://www.podi.org

Sweden Post @post site http://www5.torget.se/TorgetPost/

E-Snailâ successor called NetGramâhttp://www.netgram.com/default.asp

Estamp the Internet Postage Company http://www.estamp.com/

Digital Franking http://www.pitneybowes.com/ and http://www.neopost.com/

Virtual Post Office http://www.stamps.com formerly StampMarker Inc.

USPS Stamps Online https://www.stampsonline.com:443/ordering/index.htm

USPS Information Based Indicium Program http://www.usps.gov/ibip.

http://www.tumbleweed.com/Posta 3.0 www.posta.com web-based S/MIME solution for
universal, secure communication applications used to power UPS secure messaging offerings:

http://www.exchange.ups.com UPS OnLine® Dossier and UPS OnLine® Courier

Universal Messaging http://www.ipservices.att.com/messaging/

Internet Mail Consortium http://www.imc.org

Major document on comparing S/MIME and PGP/MIME.

http://www.imc.org/smime-pgpmime.html

http://idm.internet.com/features/strom/imsg3_2toc.shtml is a good introduction to basic messaging standards

Group 5 Future of Messaging Forum

http://www.group5forum.org

G5 Messaging - The Future of Messaging Nov/Dec. 98

http://www.group5forum.org/main_news_ema_nov.htm

http://www.group5forum.org/main_news_integ_multi1.htm

Electronic Messaging Association www.ema.org

Some of the Unified Messaging providers:

http://www.unified-msg.com/

http://www.unified-messaging.com/message.htm

http://www.telebot.com/ "free" unified messaging

http://www.octel.com - part of the Lucent Technologies

http://www.amteva.com

http://www.phonesoft.com

http://www.jfax.com

http://www.unitel-inc.com

http://www.irdg.com/ipostoem.htm iPOST

http://www.plpt.com Pulse point Communications

http://www.redrock.com.au Redrock Communications MessageNet

http://www.freeoffice.com/tbd/ ESA from StarTouch International http://www.unifiedmessaging.com/

http://www.comversens.com/ Comverse Network Systems - a supplier of enhanced services for Telcos

http://www.mailmail.com/ Web Office, messaging, fax platform for ISPs

http://www.commtouch.com web-based email which integrates voicemail, fax, pager and telephone services.

E-Service -- Enhanced Email based Customer Care Solutions:

http://www.aditi.com

http://www.ask.com Ask Jeeves

http://www.brightware.com

http://www.delanotech.com

http://www.primus.com

http://www.motive.com

http://www.servicesoft.com

Ferris Research www.ferris.com

Radicati Group http://www.radicati.com/

SAFEmps online pander file processing http://secure.mailorder.com/mps/suppress.html

End of draft 10 by Ben Livson, BAL Consulting P/L

STRENGTHS	WEAKNESSES
Nationally trusted authority: supports confidence that the messages will be delivered reliably Postal Service brand synonymous with mail delivery: supports message delivery in the digital world Retail network: service activation (for those not choosing web activation and for 100pnt check to obtain certificate); credit card details Financial strength: ability to partner with large organisations required to assemble this service Business focused: profitable products	Not a messaging or messaging technology orientated organisation (more focused on physical mail logistics) Little or no experience in subscription-based services (key processes are service activation, assurance and billing) Decision making processes may not support a rapid decision, supported by requisite capital backing Current processes and structure do not support good co-ordination of e-commerce across the organisation Possesses an address-based database, not one on customers (transaction history or preferences)
OPPORTUNITIES	THREATS
Appears PS only viable opportunity to get into the messaging market is via hybrid mail. The other strategic possibilities (PS becoming an ISP or telco) are major departures from its business – and in any event these industries are themselves maturing and current players are looking for value-added services across industry boundaries. Increased profitability or utilisation of existing PS services such as EDIPOST (using joint service provider for print-on demand and mailing services). Move now: technologies for large-scale integrated messaging are mature, thereby technology-risks are diminishing. Synergies with other PS E-commerce initiatives via Bundling: Certificate Authority, hybrid messaging, e-commerce, advertising revenues from web-based mail. Indeed enablers such as Certificate Authority may not be valued unless bundled strategically with a core service like Hybrid Mail. Also, longer–term potential for revenues from web-based advertising, as e-mail becomes more browser integrated, and therefore advertising possibilities. Also PS will have a subscription base (c/f. Current property address base) with customer profiles, to which PS can market 1:1 existing products, such as PS shop products to SOHO market, and future products. Combined full-service messaging with telcos (and perhaps ISPs)	Fragmented or cautious implementation: not rolled out nationally or in a unified form Too slow to react: current opportunity for a first mover is likely to be short-lived; another player moves first (eg. a local telco or an international service such as RelayOne). PS reduced to gaining revenue only from the physical mail delivery of hybrid mail (ie. others take major portion of the value chain) E-mail will rapidly increase with projected Australian users likely to exceed 7 million by 2005 (1 million current) – substitution PS’s current lack of long-horizon products to supplement erosion of markets in traditional mail services from competition; with deregulation of PS’s traditional mail services, PS has only a 2-year buffer to introduce new longer-horizon products Web feeds Rise of other communication options: multi-point communications (eg. video conferencing) Web TV (or network computer may make messaging service easier to use) Band-width expansion is delayed Consumer’s uptake of hybrid mail is slower than expected

Segment	Substitution	Primary driver	Increased usage	Primary driver
Business to Home Correspondence Promotion Invoicing: LMEs, SMEs	70% High	Efficiency	15%-20% Low-medium 1:1 marketing; Targeted promotion and ads	Ease of communication
Household to Business	10% Very low Primarily return mail by business requesting a response or signature; most businesses have e-mail	Ease of use	0% Nil	NA
Household to household	10% to 25%+? Initially low growing to medium	Ease of use	10% - 25%+? Low to medium (eg. connected users sending hybrid mail to unconnected parents/friends) NOTE: Influence of multi-point communications (eg. videophone?)	Ease of use
Business to business	3%? Very low Most business/government agencies have e-mail		Very low to Low