Newspapers Address Postal Concerns p. 18

By: Debra Gersh Hernandez Newspaper Association of America, National Newspaper
Association execs present views to House subcommittee sp.

MAILERS MAY AGREE that the U.S. Postal Service is in need of an overhaul, but they differ on how free it should be to set rates and compete with private delivery systems.
The House Committee on Government Reform and Oversight's Subcommittee on the Postal Service recently heard some of these viewpoints from leaders of newspaper and other associations concerned with the mail.
The National Newspaper Association has three general concerns about the Postal Service, said Tonda Rush, NNA president and CEO.
The NNA believes the Postal Service "wants to favor mailers on the basis of their size," it is worried that the "Postal Service wants out of government [oversight] but wants to keep most of the advantages that go with it," and, in light of yet another second-class rate increase, NNA is concerned that its members "are getting less for more."
Rush told subcommittee chairman Rep. John McHugh (R-N.Y.) that NNA favors keeping the Postal Rate Commission and is against a proposal that would give substantial second-class discounts only to the largest mailers.
"The current system of laws and regulatory procedures governing the Postal Service is working well now," Rush noted in her prepared testimony. "The Postal Service has been freed of many constraints generally imposed on government agencies, while retaining significant advantages unavailable to private sector businesses.
"The combination of congressional oversight coupled with postal rate and mail classification review by the Postal Rate Commission has maintained a fairly balanced postal system," Rush said.
For example, oversight by the Congress and the Postal Rate Commission gave NNA and others the opportunity to challenge a 34% rate increase for second-class in-county. The Postal Service recalculated its math, and the result was a slight decline in the rate, Rush noted.
"If the committee is interested in legislative initiatives, we would recommend that the concept of a strong Postal Rate Commission be paramount in any statutory changes you might make," she added.
Cathleen Black, president and CEO of the Newspaper Association of America, pointed out that while newspapers often are "one of the largest customers of the Postal Service in their local area . . . in the overall scheme of things, newspapers are not considered large customers."
The newspaper industry has developed a "profound distrust" of the Postal Service, Black noted.
"This stems in large part from the attitude that the Postal Service has taken towards newspapers as advertising vehicles since the mid-1970s," she explained.
"Since that time, the Postal Service has treated newspapers more as competitors than as significant customers, and many newspapers believe that the Postal Service consciously has sought to drive advertising dollars out of the pages of newspapers and into direct mail," Black continued.
Further, Black said, NAA senses "a crisis of direction and purpose at the Postal Service.
"The institution is at a significant turning point, and we are concerned that it may be in danger of losing sight of what has been ? and remains ? its fundamental mission.
"More and more," Black testified, "we see the Postal Service moving away from an institution that should be run in a businesslike fashion, as the Postal Reorganization Act envisioned, to one that wants to be an independent business."
Black pointed out that while the Postal Service wants to be freed from regulatory constraints, it does not want to give up various benefits, such as being exempt from antitrust laws.
While all calls for regulatory relief may not be unreasonable, Black suggested the subcommittee not "confuse these instances with the Postal Service's rate, pricing and classification situation, for the rate making scheme that the Postal Service is under today is not only appropriate, but we believe absolutely necessary."
The subcommittee also should scrutinize the current reclassification case, which Black said the newspaper industry expects the Postal Rate Commission to reject.
Increasing postal costs also are "an urgent concern" to Magazine Publishers of America members, who generally support the reclassification proposals, according to MPA executive vice president George Gross.
"It is clear that unless the Postal Service gets control of costs in a meaningful way, more second-class mailers will divert an increasing portion of their mail to private delivery," Gross said.
"What that means is that, absent effective cost control, postal volume will gradually decline, or grow even more slowly; unit costs will rise; jobs will be lost; and service will decline," he explained.
"The need to find more effective ways to reduce costs explains our general endorsement of the Postal Service's reclassification efforts for second-class," Gross added. "The reclassification proposal would promote more efficient mailing practices throughout second-class, and base rates more closely on costs, as required by the Postal Reorganization Act of 1970."
MPA believes that small- and large-volume magazine publishers "will increasingly adopt more efficient mailing practices . . . in order to qualify for the new publications service subclass . . . . Over time, second-class will become a more and more efficient class of mail," Gross predicted.
The Association of American Publishers believes the Postal Service "should be afforded greater flexibility . . . to test and price new products and services . . . that mailers need greater stability in postal rates . . . [and] that the goal of universal service continues to have vitality," according to AAP postal committee chairman Stephen L. Bair, senior vice president/law and business affairs for Time Life Inc.
While applauding proposals to allow the Postal Service to enter into service agreements with large-volume mailers, Bair cautioned that it is necessary "to establish appropriate safeguards to protect the interests of smaller mailers, who may not be able to take advantage of these agreements."
The Mailers Council shares the postmaster general's "concerns about the constraints imposed on the postal rate-setting process, in the implementation of labor-management policies, in the exposure to financial jeopardy from Capitol Hill, and more," but it also is concerned about the implied rate increases in his statements about seeing that the Postal Service not run a deficit, council managing director Arthur B. Sackler noted.
The Advertising Mail Marketing Association called upon Congress to "promptly begin and quickly conclude a complete and thorough overhaul of the now 25-year-old statute that governs the Postal Service," said AMMA general counsel Ian D. Volner.
Volner charged that "the Postal Service of today is not market-driven, it is not flexible, it is not cost-effective, and it is, all too often, not timely."
Legislative and regulatory reform, according to AMMA, should include: enabling the Postal Service to set rates that reflect the competitive marketplace; allowing the Postal Service to customize service offerings; making sure it actually can compete; changing the legal structure and making it "less accountable to Congress and more accountable to those who pay for its services;" and providing incentives for success at all levels.
For direct marketers, "the mail is still, and will likely remain for a long time to come, [the] principal means for contacting the public," explained Direct Marketing Association senior vice president/congressional relations Richard Barton.
The DMA is working "to flesh out proposals for significant postal reform," Barton noted, adding, "there is a unique window of opportunity to revise the Postal Reorganization Act of 1970."
Barton said the DMA had not worked out specific reform proposals, which he expected to be ready in time for the hearings this fall, but, he said, "The underlying principle of reform must be that the Postal Service be given the authority and flexibility to meet effectively the new competitive forces it faces in the communications market."
Among the changes necessary is the rate-making process, he added. "The process is cumbersome, time-consuming and lacks the flexibility needed to allow the Postal Service to price its products to meet the often fast-breaking developments in a competitive market."
Also testifying were representatives from the Mail Order Association of America, the Parcel Shippers Association, the Alliance of Nonprofit Mailers, and the National Federation of Nonprofits.
?( [The] Postal Service has treated newspapers more as competitors than as significant customers, and many newspapers believe that the Postal Service conscously has sought to drive advertising dollars out of the pages of newspapers and into direct mail.") [Caption]
?(Cathleen Black, Newspaper Association of America president and CEO) [Photo & Caption]