DMA Urges USPS to Withdraw Request for Exigent Postal Increase

December 5, 2011 — Today, the Direct Marketing Association; the Association for Postal Commerce; Alliance of Nonprofit Mailers; and MPA-The Association of Magazine Media, asked the Postmaster General to withdraw the Postal Service (USPS) request for a $2.3 billion exigent (above inflation) postage increase. This increase would be over and above the announced inflation-capped postage increases scheduled for January 22, 2012.

Although USPS has told its customers that it will not raise postage above inflation, it continues to pursue an above inflation postage increase before the Postal Regulatory Commission. This action requires mailers to plan for an exigent postage increase which lowers the amount of mail they will send. At a time when mail volume is falling precipitously and USPS cannot shed excess capacity quickly enough, USPS should send no signal through its actions to customers to mail less. USPS should withdraw the exigent case, thereby showing mailers, through its actions, that it does not want postage increases higher than inflation.

The full text of the letter to Postmaster General Patrick R. Donahoe follows:

December 5, 2011

The Honorable Patrick R. Donahoe

Postmaster General and CEO

United States Postal Service

475 L’Enfant Plaza SW

Washington, D.C. 20260

Re: Docket No. R2010-4 (Phase II), Rate Adjustment Due To Extraordinary or Exceptional Circumstances

Dear Postmaster General Donahoe,

We are perplexed. In your presentations to the mailing community in recent months, we have heard you say repeatedly that you do not want an exigent price increase; an exigent increase will not occur; and mailers should budget for 2012 price increases at the CPI level, because a larger increase would be self-defeating due to its negative effects on mail volume. Simultaneously, however, the Postal Service has continued to file pleadings and signed statements with the Postal Regulatory Commission in Docket No. R2010-4 claiming that the Service still seeks a $2.3 billion exigent increase.

Under the current circumstances, the only prudent course for mailers is to assume that the Postal Service is still seeking Commission approval of an exigent rate increase in this docket, and that an increase approved by the Commission may very well be implemented by the Board of Governors. As long as the Postal Service’s exigent increase request remains in active litigation, the Commission must consider the request and issue a decision on it. Moreover, if the Commission ultimately authorizes any part of the requested increase, any portion of the authorized increase not implemented by the Postal Service could still end up as banked rate authority—rate authority that would force your customers to plan for above-CPI postage increases for the next five years, and adjust their mailing plans accordingly.

For these reasons, the mailing industry must continue to oppose the exigent rate request as long as it remains pending before the Commission. The resulting litigation will force both the Postal Service and the mailing community to divert precious time, energy, and resources to litigating an increase that you profess not to want – time, energy, and resources that would be far better deployed constructively collaborating to solve the Postal Service’s financial problems and pushing for Congressional action in our common interest. Further, the continuing pendency of this litigation—and the mere possibility that mailers may face an above-CPI rate increase in 2012 or 2013—has cast a pall of uncertainty over the industry’s budgeting and mailing plans. This business uncertainty almost certainly will cost the Postal Service mail volume and revenue.

These harmful consequences can be easily avoided. If you do not want an exigent increase and you do not want mailers to plan for one, withdraw the case. Actions speak louder than words.

Unless and until the Postal Service publicly withdraws its formal request for Commission approval of exigent rate increases, mailers must assume that the Postal Service is serious about seeking them. For the good of the Postal Service and the mailing community, we urge you to pull the exigent request.

Sincerely Yours,

Jerry Cerasale Tony Conway

Senior Vice President Executive Director

Direct Marketing Association Alliance of Nonprofit Mailers

Jim Cregan Gene Del Polito

EVP, Government Affairs President

MPA-The Association of Magazine Media Association for Postal Commerce

cc: Governors, United States Postal Service

Commissioners, Postal Regulatory Commission

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About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the world’s largest global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including half of the Fortune 100 companies.

In 2011, marketers — commercial and nonprofit —will spend $163 billion on direct marketing, which accounts for 52.1 percent of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures will generate approximately $1.96 trillion in incremental sales. In 2011, direct marketing accounted for 8.7 percent of total US gross domestic product. Also in 2011, there were 1.3 million direct marketing employees in the US. Their collective sales efforts directly support 7.9 million other jobs, accounting for a total of 9.2 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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