DMA Announces Support for Postal Rate Case Settlement

Washington, DC, November 1, 2005 – Although concerned by several proposed double-digit rate increases, the Direct Marketing Association (DMA) generally supports today's decision by the Postal Rate Commission (PRC) to recommend across-the-board increases in US postal rates. DMA, which represents the interests of most of America's largest mailers, signed onto the rate case settlement between the United States Postal Service (USPS) and stakeholders from the mailing community earlier this year.

"Considering that we will have gone three and a half years since the last rate increase [June 30, 2002], this recommendation represents relatively good news for most mailers," said Jerry Cerasale, DMA's senior vice president for government affairs. "While postal rate increases are never really good news for organizations that rely on the US Postal Service to get their messages and packages out, today's recommendation is significant, considering the double-digit increases that were discussed prior to the filing of this rate case last April."

In its recommendation announced today in Washington, DC, it appears that the PRC tried to accommodate the Postal Service's request for a 5.4 percent across-the-board rate increase, although rate increases for certain types of mail were significantly higher. If, as expected, the USPS Board of Governors approves the PRC's rate recommendations later this month, the new rates would likely go into effect in January 2006, although DMA has repeatedly asked the Postal Service to delay the increases until at least early spring.

In particular, the DMA Nonprofit Federation (DMANF) expressed concern about the proposed double-digit rate hike for enhanced carrier route (ECR) nonprofit mailings. "While we understand that the Commission felt constrained by statutory requirements, that does not alleviate the pain of a 12.3-percent increase for nonprofits that are working so hard to keep overhead costs to a minimum," said DMANF Executive Director Senny Boone.

Although DMA signed onto the rate case settlement agreement, Cerasale emphasized that the association "remain[s] firm in our belief that the viability of the world's largest postal network, and the more than 9 million Americans whose livelihoods depend on it, are in jeopardy unless comprehensive postal reform legislation is enacted."

"While we recognize and appreciate the hard work the PRC and the Postal Service have done to keep rates low for businesses and consumers, stopgap rate increases remain a Band-Aid on a system in need of serious repair," said Cerasale. "This rate increase was precipitated to help the Postal Service meet a congressionally mandated escrow payment. It's unfortunate that postal reform was not enacted in a timely manner, since either the Senate or House reform bill would have reduced this rate increase for all mailers. However, we still have a chance this year for postal reform legislation that will create a viable postal system for the 21st century, and we are hopeful that the Senate will soon act to move forward its reform legislation as the House has already done."

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On April 8, 2005, the Postal Service filed a rate case with the independent PRC seeking an expedited recommended decision to raise rates and fees 5.4 percent for almost all categories. However, the PRC today unveiled its 430-page opinion and recommended decision with rates somewhat different from those initially proposed by the USPS. Among its recommendations are the following increases:

- First-Class Mail - 5.2 percent (overall)

- Standard Mail Regular - 5.4 percent (overall)

- Enhanced Carrier Route - 5.5 percent (overall)

- Nonprofit Regular - 3 percent (overall)

- Nonprofit Enhanced Carrier Route - 12.3 percent (overall)

- Priority Mail - 5.4 percent (overall)

- Express Mail - 5.5 percent (overall)

- Parcel - 7.3 percent (overall)

- Periodicals within County - 2.3 percent (overall)

- Other Periodicals - 5.5 percent (overall)

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The Direct Marketing Association (www.the-dma.org) is the leading global trade association of business and nonprofit organizations using and supporting direct marketing tools and techniques. DMA advocates industry 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 entire direct marketing process. Founded in 1917, DMA today has more than 4,800 corporate, affiliate, and chapter members from the US and 46 other nations, including 55 companies listed on the Fortune 100.

In 2005, companies will spend more than $161 billion dollars on direct marketing in the United States. Measured against total U.S. sales, these advertising expenditures are expected to generate $1.85 trillion in increased sales in 2005, or 7 percent of the $26 trillion in total sales in the US economy (which includes intermediate sales). All together, direct marketing will account for 10.3 percent of total U.S. GDP in 2005.

Since 1982, the DMA Nonprofit Federation and its predecessor organizations have been aggressive and effective advocates for nonprofits in postal, regulatory, legislative, and accountability issues. It has led the way in professional education, networking, and industry advancement. The Federation is the premier agent for improving public awareness and receptivity to direct/interactive marketing-driven philanthropy, and is the 'top brand' among all associations and advocacy groups working on behalf of nonprofits in this area. With more than 400 members, the DMANF is one of the largest member segments of the Direct Marketing Association.