DMA Calls on Members to Protest Exorbitant, Unexpected Postage Rate Recommendations

Washington, DC, March 2, 2007 — When the Postal Regulatory Commission (PRC) issued its recommendations for postage rate increases on February 26, the Direct Marketing Association (DMA) expressed its appreciation for the efforts of the PRC to keep its overall recommendations below the levels originally proposed by the US Postal Service (USPS).

However, after a thorough review of the 700-page document, DMA is today expressing its deep disappointment over specific recommendations that would increase postage costs for catalog mailings by as much as 40 percent in some instances.

“This is a case where the devil really did prove to be in the details,” said DMA President & CEO John A. Greco, Jr. “In our analysis of these recommendations, it has become clear that in addition to the increased burden for many nonprofit mailings, the outrageous rate increases proposed for many types of flat mailings are far in excess of what had been expected by the mailing community, and are certain to ultimately cause a serious decline in mail volumes and a negative ripple effect for consumers, businesses, and the economy.”

“The reduction in mail volume alone might well be enough to send the Postal Service into a death spiral of reduced revenues, halts to infrastructure improvements, and increases in postage rates for all classes of mail,” Greco added.

The PRC recommendations for flat-shaped mail proved to be much higher than those originally requested by the Postal Service when it filed its omnibus rate case on May 3, 2006. According to the USPS, more than 53 billion “flats” were mailed in 2006, accounting for 8 percent of all First-Class mail, 17 percent of Periodicals, and 75 percent of Standard Mail.

“It is unfortunate that this PRC decision represents ‘old think’ rather than ‘new think,’” added Greco. “One of the key principles of postal reform — sought by the mailing community and embraced by Congress — was the need for predictability in future rate increases. Now, just weeks after postal reform was enacted into law, the PRC is undermining the spirit of postal reform and Congressional intent by making recommendations that will generate the very ‘rate shock’ that we have sought to avoid.”

“On Monday, we expressed concern that the Postal Service might be moving too far and too fast, without giving mailers a chance to adequately prepare,” said Jerry Cerasale, DMA’s senior vice president for government affairs. “After digesting the details, we are certain that the PRC is moving much too far and much too fast with rates that will be ruinous for many postal customers. Any responsible policy should allow for a gradual adjustment.”

Cerasale also noted that since the early 1990s, when the USPS originally announced its intention to adapt mailing rates to reflect the cost differential between letter-size and flat-size mailings, the USPS has been making those changes gradually, so as not to place an undue burden on the mailing community. “Now the PRC seems to be abandoning that approach just as the Postal Service is investing more than $874 million to make its flats-sorting system more cost-effective,” he said.

The presidentially-appointed members of the USPS Board of Governors could approve the PRC’s recommendations quickly, and mailers have only until Thursday, March 8 to fax comments to the Governors. Therefore, DMA today is calling on its members to immediately fax letters to the Governors expressing their concerns.

“Every catalog mailer should let the Postal Service and its Governors know that the proposed rates for flats are completely unacceptable to the mailing community, and will have a negative effect — not only on mail volumes, but on the ability of catalog mailers to communicate with their customers and conduct their business,” said Greco. “The long-term results of these ill-advised recommendations could be detrimental to many American businesses and ultimately to our economy as a whole.”

Mailers should send their comments via fax to:

The Honorable James C. Miller III

Chairman, Board of Governors

United States Postal Service

Fax: 202-268-5472

Copies should be faxed to both:

The Honorable Dan G. Blair

Chairman

Postal Regulatory Commission

Fax: 202-789-6886

Stephanie Hendricks

Director, Public Affairs

Direct Marketing Association

202-955-0085

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About Direct Marketing Association (DMA)

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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