New Postal Rates p. 36

By: DEBRA GERSH HERNANDEZ THE U.S. POSTAL Service Board of Governors has approved most of the second- and third-class rate reclassification proposals sent to it by the Postal Rate Commission.
The board rejected two PRC proposals, one regarding courtesy envelope mail and the other regarding bulk parcel post, but the issues affecting newspapers were accepted as presented by the PRC.
Postmaster General Marvin Runyon called the results "a good start," and said that the USPS will "press forward for postal reform that will simplify and streamline the rate-setting process."
Runyon commented that the existing rates and classification process takes too long and, in this case, "the outcome has fallen short of the vision we developed with ourcustomers . . . . [T]here's much more that needs to be done to update the rules governing the way people use the mail."
While generally pleased by the second-class action, which halted a USPS proposal that would have led to a substantial increase for the majority of users, the newspaper industry was less happy with the outcome for third class.
The U.S. Postal Service originally proposed splitting second class into two subclasses, with larger, nationally distributed publications to be called Publications Service, and the rest of the class would be known as Regular (E&P, Feb. 3, p. 17).
The USPS proposal would have led to a 14% cut in rates for about 800 of the larger publications, but at the same time, it could have meant a 17% increase for the more than 11,000 publications falling under the Regular subclass.
The PRC nixed that idea, calling the split "not justified on the record," and proposing that second class be renamed Publications, but without any subclass change.
The PRC idea was supported by the Postal Service Board of Governors.
"We were glad they accepted the Postal Rate Commission decision," said National Newspaper Association president and CEO Tonda Rush. "We would've been very surprised if they had rejected it, but you never know."
In third class, however, the Board of Governors approved a PRC recommendation to create three new subclasses that will be offering substantial discounts to volume mailers, particularly those who use automation.
Newspaper Association of America president and CEO John F. Sturm called the move "disturbing" and, using a term that advertising mailers loathe, noted that it will lead to more "junk mail" in people's mailboxes.
"It is astounding that a branch of the federal government took action . . . to actually increase the amount of local 'junk mail' that flows into the homes of the American public," Sturm stated, adding that most of that mail "generally ends up in the wastebasket."
"Even more disturbing," he continued, "is that this action makes it easier to the Postal Service to eventually shift overhead costs from 'junk mail' to businesses' and consumers' First-Class rates, thus leading to even lower 'junk mail' rates than in the future."
Sturm explained that if the Postal Service is successful in gaining pricing flexibility and volume discounts, all classes will suffer.
"When [the Postal Service] cuts a deal with a big mailer, it has to be made up somewhere else," he noted.
"The Postal Service has to cut costs before it can cut deals."
The next battle ground on postal issues will be in Congress, where hearings were scheduled in both the House of Representatives and the Senate for the week of March 11.
Executives from both the NNA and the NAA were slated to testify.
Rush said she thinks there will be "several months of pretty intensive exploration by the committees of how the Postal Service is functioning, how its customers perceive it, how it works in the marketplace; how will the Postal Service survive?"
Pointing out that these oversight hearings are an annul requirement, Rush noted that "in this case, it's being billed as the introduction of postal reform."
But, "Given that it's so late in the Congressional season, having legislation move to enactment would be a surprise," she added.
While generally pleased by the second-class
action, which halted a USPS proposal that would have led to a substantial increase for the majority of users, the newspaper industry was less happy with the outcome for third class