DMA Comments on PRC s Postal Rate Case Recommendations

Washington, DC, February 26, 2007 — The Direct Marketing Association (DMA) expressed its appreciation for the effort made by the Postal Regulatory Commission (PRC) to mitigate the impact of proposed rate increases for individual, nonprofit, and commercial mail. However, DMA remains concerned about both the significantly higher postage rates recommended for some classes of mail, as well as the sufficiency of time allowed for large mailers to modify their systems and processes before the new rates take effect.

The PRC today announced its recommendations to the US Postal Service (USPS) Governors regarding the USPS’s latest request for rate increases across all classes of mail. Citing revisions to some of the underlying financial assumptions used by the USPS, the PRC recommended increases averaging 7.6 percent across the board, as opposed to the 8.1 percent average increase originally requested by the USPS in its May 3, 2006, rate case filing.

“While higher postage costs are never welcome for the individuals and organizations that use the mail to send messages and packages, we are pleased that the PRC did adjust the Postal Service’s revenue requirement and responded to some of our concerns about the particulars of the rate request,” said DMA President & CEO John A. Greco, Jr. “However, we had hoped that more could have been done to offset the extraordinarily high increases for non-flat machinable and parcel mailings. This is not only the second such increase in two years, but it is also far in excess of the rate of inflation.”

According to DMA Senior Vice President for Government Affairs Jerry Cerasale, “DMA supports providing discounts for organizations that use the mail more efficiently, and we understand that a shift from weight- to shape-based rates is needed, given advances in the use of automated systems.”

“Our concern is that the Postal Service may be moving too far and too fast, leaving mailers to struggle with higher rates and lengthy and complex new rules that may be imposed too quickly for mailers to adjust their own systems and plan for new and more efficient mailing pieces,” Cerasale said. “We think it would be better to do things right, rather than to do them fast, to help avoid many operational problems and costly errors for both mailers and the USPS.”

If, as expected, the Governors approve the PRC’s recommendations sometime in March, the new postage rates will likely go into effect in May 2007. DMA continues to request that the USPS allow at least 90 days for business and nonprofit mailers to prepare for the new rates’ implementation.

DMA Nonprofit Federation (DMANF) Executive Director Senny Boone added her concerns about the still-significant increase for non-flat machinable rates. “The dramatically higher rates and minimal timeline for planning would be devastating to the many nonprofit organizations that use ‘front-end premium’ mailings to recruit potential donors.”

In looking to the future, DMA also expressed its hope that all future rate-increase requests will be made in accordance with the new rules and procedures outlined in the postal reform legislation that was signed into law by President Bush in December 2006. Among other things, these new rules keep rate increases at or below the rate of inflation.

“The rates recommended today by the PRC are designed to carry the Postal Service through the fiscal year ending September 30, 2008, and reflect the full $768 million contingency fund requested by the Postal Service,” said Cerasale. “With the new rate-setting procedures required to be in place by June 30, 2008, there should be no need for another postal rate case to be filed under the current, outdated rules.”

Additional information about the PRC recommendations, and their impact on the direct marketing community is available online at www.the-dma.org/postal.

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About Direct Marketing Association

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel 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 end-to-end direct marketing process. Founded in 1917, DMA today represents more than 3,600 companies from dozens of vertical industries in the US and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations.

In 2006, marketers — commercial and nonprofit — spent $166.5 billion on direct marketing in the United States. Measured against total US sales, these advertising expenditures generated $1.93 trillion in incremental sales. Last year, direct marketing accounted for 10.3 percent of total US GDP. Also, there are today 1.7 million direct marketing employees in the US alone. Their collective sales efforts directly support 8.8 million other jobs. That accounts for 10.5 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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