Postal Fight Projected For 1996 p.28

By: Debra Gersh Hernandez

Newspaper associations gear up for intense activity sp.

NEITHER SNOW, NOR rain, nor heat, nor gloom of night will stay postal issues from becoming a leading policy issue in 1996.
Both the Newspaper Association of America and the National Newspaper Association are gearing up for intense postal activity both on the U.S. Postal Service/Postal Rate Commission front and in Congress.
“Clearly, postal’s going to be our number-one issue. There’s just no way around it,” said NNA president and CEO Tonda Rush.
NAA president and CEO John Sturm noted that the Postal Service had not been subject to substantial legislative changes since it was formed in the early 1970s.
“There seems to be a desire to look at the postal system and see if substantial changes need to be made legislatively,” he said.
The groundwork for legislative action was laid during oversight hearings last fall, and more are likely when Congress reconvenes, Sturm said. Although legislation is expected to be introduced at some point in 1996, Sturm was not sure it would “go the full route,” given other items on the agenda and the presidential election.
“I expect there will be fixes, Band-Aids, with possibly a bigger package in the following Congress,” he said.
Sturm had reservations about some of the legislation.
“We are concerned about any legislative proposal that would give the Postal Service, in effect, the ability to continue to shift overhead away from third-class mailers and onto first-class mailers,” he said.
“At present, we believe that first-class pays a disproportionately high share of overhead costs. If you look at volume, it seems out of whack. Third class has high volume and low overhead. First class has low volume and high overhead.
“We’re concerned about anything that would shift costs onto first class and away from third class,” Sturm said, adding that the stage has been set for this in current rate case proposals.
“I worry about two things,” Sturm said. “That the Postal Rate Commission will allow them to do that, or that they [the PRC] will do the right thing and deny the Postal Service many things they seek, and then the Postal Service will run up to Capitol Hill and ask for it.”
Sturm, noting that the USPS would like to abolish the PRC, defended the PRC, calling it “an intelligent filter on what the [Postal] Service can and cannot do.
“The Postal Service wants to act more like a business,” he said. “There is a serious question if the intent of Congress was to create a business or a public service.”
Postal is “the big ticket issue that’s coming in the next one, two, three years,” Sturm commented. “From a resource standpoint, we will be very happy if telecom comes to a successful conclusion as soon as possible and helps clear the deck for postal stuff.”
The pending rate case is fully briefed and argued, with a PRC decision expected in mid- to late January, Sturm said.
Depending on what happens then, the case will go back to the USPS board of governors, go back to the PRC, or maybe go to court.
“It will produce a reaction on the Hill sooner rather than later,” Sturm said. “The actual conclusion of the case may take a while longer.”
Postal issues have been a tremendous drain on the resources of the NNA, as well, according to Rush, who noted that her group had spent $110,000 on this case, more than ever before.
“We scraped for every penny,” she said, pointing out that a lot of the financing came from member contributions in the $30 to $50 range.
“It’s a tough thing to finance. It is a challenge,” Rush said. “But it’s not going make us to say the Postal Rate Commission ought to be abolished. It is essential right now for us to have the Rate Commission be effective. There is no other check and balance on the Postal Service.”
The big scare for NNA members came this year from the proposed neighborhood mail project for local business advertising, which was postponed and then canceled by the USPS in mid-December.
“For years, NNA had chairmen on the lecture circuit talking about postal [issues] until people began to think we were Chicken Little,” Rush said. “It had gotten to be like death and taxes; no matter what happens, postal rates will go up.”
This year, however, when NNA chairman R. Jack Fishman, editor of the Morristown, Tenn., Citizen Review, told members the Postal Service was going after their advertising dollars, Rush said “people would come out of their chairs.”
While larger newspapers primarily watch the preprint revenue, Rush said the neighborhood mail proposal reached farther into the community newspaper industry.
But lest NNA lower its guard too quickly, the Postal Service may begin inducing catalog advertisers to purchase advertising on computer kiosks in post offices.
“We jumped out of the fire and right back into the frying pan,” Rush said.
“It’s a persistent problem with the way the Postal Service is set up,” she continued. “It has a huge labor force with a lot of overhead costs. It has to drive the system with ever-increasing volume. But first class is not increasing. Second class is not increasing . . . . They won’t get parcel back; UPS is too successful.”
Where do they look? Advertising.
“We think for a government operation to be in the direct sale of advertising is not good,” she added.
The game to watch now is Congress, according to Rush.
“No matter how the classification case comes out, somebody will go to the Hill,” she said. But, she added, “Congress has got a lot bigger issues going on than the Postal Service.”
As this article was being prepared, House and Senate conferees were negotiating a final version of a telecommunications bill. Although many of the newspaper industry issues ? such as electronic publishing and the access, rates and competition amendment ? seemed to be on solid ground, numerous major issues, including media ownership and online regulations, remained unresolved.
And, of course, there was no guarantee that the bill would be voted out of Congress in a form that would be agreeable to the president.
The Senate and House managed to get their bills passed relatively quickly, but conference committee activity appeared stalled for quite a while. In mid-December, however, activity picked up. Sturm had predicted that a bill could get to the floor before Christmas.
“They’re real serious about getting this thing done,” he said. “It looks promising. It would put to bed a major issue for us.”
While Rush said she did not think the bill would be completed in calendar year 1995, she hoped it would be finished by the end of this Congress.
“I would be fearful that if this does not get enacted this [congressional] year, it will be like S.1, [a bill that Congress] gave up on after years and years.”

Other issues

Also pending prior to the holiday recess was a provision in the budget reconciliation bill for some relief on the independent contractor issue, although that, too, was up in the air as this article was being prepared.
“There is a potential for a breakthrough there,” said Sturm.
That relief ? classifying carriers as direct sellers ? may be more of a benefit for NAA members than NNA members, Rush pointed out, adding that NNA nevertheless supports the measure.
“We’re looking for a broader bill,” she explained, adding that she expected “some pretty serious attention paid to that” in 1996, with several bills addressing the issue expected.
Sturm also noted that changes in the income tax system ? including moving away from the current system to a flat tax, consumption tax, value-added tax or some combination ? might have an effect on newspapers.
“The debate would take a number of years, a Congress or two, to finish, but it’s out there,” he said.
Also looming on the horizon in 1996 is the Food and Drug Administration’s proposal for severe restrictions on tobacco advertising and promotion. Comments are due in January, and both NNA and NAA were expected to file.
“No one expects the FDA to change its mind,” Sturm said. “We want to be on the record. At some point, these restrictions will be subject to examination by a court . . . . We will be involved in it when it moves to the appellate level.”
Noting that newspapers receive 0.06% of all tobacco advertising expenditures, Sturm said, “We’re in there largely for First Amendment reasons. You can’t challenge our bonafides.”
Rush believes the Electronic Freedom of Information Act “will turn out to be pretty important,” but the problem has been, and remains, “to get it up to a higher profile.”
She noted, “It will be tough for the courts, without specific guidance from Congress, to figure out how these [FoIA] provisions work in cyberspace.”
Sturm pointed out that in the last Congress, the Electronic FoIA was passed on a voice vote, and in this session, the issue may be an appealing one to the House leadership.
“It would be a good, strong signal that government records are going to be more open,” he said.
The electronic frontier also has opened up the issue of copyright law on the National Information Infrastructure, or Information Superhighway.
“We have to make sure that newspapers and other electronic publishers get a fair shake,” Sturm said. “Right now, I don’t see a reason for huge changes in copyright law. For the most part, the [pending] act is pretty good.
“Overall, the big thing is, we have to protect the incentives for people to create works of various kinds, otherwise, we’re not going to get the works,” he added. “That’s the same. It’s just the method of distribution that’s different.”
One of the biggest wins for the newspaper industry last year was in the final rules on telemarketing from the Federal Trade Commission.
The FTC’s original proposal would have had a severe impact on newspaper telemarketing activities, and many newspaper companies joined the associations in letting the FTC know that.
“A lot of people weighed in at the right time,” Sturm said.
“What happened in the end was a lot of the stuff we said and the newspaper companies said were the same as other people in other industries said. It had an effect. There was this chorus that said, ‘You’ve got to be kidding.’ “
?(“The Postal Service wants to act more like a business. There is a serious question if the intent of Congress was to create a business or a public service.”) [ Caption]
?( ? John Sturm, president and CEO, Newspaper Association of America) [ Photo & Caption]

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