DMA Politically Direct (Summer 2008): Implementation of Postal Reform Law Advances

August 27, 2008 — As 2008 has progressed, the United States Postal Service (USPS) and the Postal Regulatory Commission (PRC) have continued to put into place the reforms outlined in the Postal Accountability and Enhancement Act of 2006 (PAEA).

As a part of PAEA, the PRC must report on universal service and the postal monopoly to the President and Congress by December 19, 2008. In preparation for this report, the PRC must consult with the USPS, relevant Federal agencies, commercial mailers, postal service competitors, and the general public.

Leading up to this report, the PRC held field hearings in Portsmouth, NH, Flagstaff, AZ, and St. Paul, MN, concluding the summer with a hearing at its headquarters in Washington, DC.

Throughout the series of PRC hearings, similar themes emerged, primarily focused around the necessity for a broad range of industries and nonprofits to ensure a “healthy and thriving USPS for many decades to come,” as DMA Nonprofit Federation member Matt Spanos testified in Flagstaff.

Witnesses at all hearings reached a consensus that both the Postal Service’s Universal Service Obligation, and the postal monopoly restricting the use of mailboxes exclusively to the USPS are necessary to support a healthy and thriving USPS.

Universal service has emerged as a particularly important USPS obligation in rural areas, where communities maintain strong ties to their local post office. In the absence of universal service, such communities maintain that they would receive limited access to a local post office as well as reduced services.

As the US economy has weakened and the price of gasoline has continued to climb, the idea of delivery fewer than six days a week has gained momentum. On this subject, some witnesses pointed out to the PRC that, although such a proposal could result in fewer mail carriers delivering mail every day, the same volume of mail would need to be sorted, transported, and stored.

Witnesses also emphasized that many consumers depend on receiving the mail six days a week. For example, Medco Health provided testimony regarding the delivery of prescription drugs to patients. Without improvement in current delivery service times, Medco said their patients need delivery six days a week — particularly on Saturday — to avoid two consecutive days of non-delivery of mail.

DMA, joined by the Association of Postal Commerce and the Mailing and Fulfillment Services Association, has filed comments with the PRC on universal service and the postal monopoly, and awaits the PRC’s report.

USPS Organizational Changes

In further reforms at the USPS, Postmaster General John E. Potter announced key USPS Headquarters organizational changes designed to “strengthen our position in an extremely competitive marketplace.” Potter said that, with growth as a top priority, the USPS is bringing together product management, product development, and commercial sales in a new Shipping and Mailing Services division.

Potter also announced that he is consolidating all Intelligent Mail Barcode (IMB) activities under the direction of Deputy PMG and Chief Operating Officer Patrick Donahoe. Potter went on to state that the IMB will become the foundation of mail operations, including verification, acceptance, payment, processing, diagnostics, routing, transportation, and delivery.

Additionally, in accordance with PAEA, the USPS has submitted to Congress a Network Plan, which, among other issues, addresses the establishment of performance goals and the future of various aspects of the USPS.

In a July 24 hearing of the House Committee on Oversight and Government Reform Subcommittee on Federal Workforce, Postal Service and the District of Columbia, entitled “The Three R’s of the Postal Network Plan: Realignment, Right-Sizing, Responsiveness,” DMA Senior Vice President of Government Affairs Jerry Cerasale testified that the USPS should be allowed to operate as a business with increased flexibility over its equipment and offices.

Cerasale maintained that, as part of the compromise of PAEA, in addition to increased flexibility, it is imperative that the PRC, the Government Accountability Office (GAO), the USPS’s Inspector General, and Congress increase oversight to hold the Postal Service accountable to ensure that network adjustments are working as planned.

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