Newspapers concerned about postal changes p. 12

By: Debra Gersh Hernandez THE U.S. POSTAL Service has proposed what it calls "the most sweeping changes in mail rules ever," but not everyone is pleased with the suggested reclassification, especially the second-class mailers looking at a 17% rate increase.
Among the changes the Postal Service planned to submit to the Postal Rate Commission on March 24 was the creation of a new rate of second-class mail known as a publications subclass.
As the Postal Service explained, "The second-class regular rate will be split into a low-cost subclass called Publications Service and another for regular periodicals mail. In-county rates are not addressed by this case. The regular periodical subclass rates would be increased by about 17%. Rates for the new Publications Service would decrease by a comparable amount ? about 14% on average from present rates."
The Postal Service proposal, which also includes changes in some first- and third-class rates, is designed to reward mailers who use automated processing, those large-volume mailers whom the Postal Service believes it is less costly to serve.
Loren Smith, Postal Service senior vice president for marketing, explained that "one of the overriding goals of reclassification [is] to bring market-based pricing to the rate process as a first reform in postal pricing."
The Postal Service said its proposal was supported by, among others, the Magazine Publishers Association, the Direct Marketing Association, the Advertising Mail Marketing Association and the Mail Order Association of America.
The National Newspaper Association immediately said it would "vigorously oppose" the second-class proposal.
The proposal may be a watershed change for the Postal Service, but as NNA president and CEO Tonda Rush commented, "We're the water they're shedding."
Rush said, "For NNA, the issue is:
Save Second Class. They are rearranging the entire Postal Service to serve the needs of large mailers . . . . All they are doing is taking from the poor to give to the rich."
Rush said NNA was not surprised by the reclassification proposal itself, but it was taken aback by the severity of the increase.
"They're trying to take the mail that has the lowest cost to handle and group it in one set of rates. Everything else is going to be a leftover, and their rates will go up," she said.
"We've been completely opposed to it," she said, adding that the NNA planned to file comments against the action with the Postal Rate Commission and has hired King & Ballow to represent its interests.
"We hope the rate commission rejects the entire thing on principal," she said.
"No one could fault the Postal Service for encouraging efficiency, particularly when it has had such difficulty finding efficiency within its own ranks," commented NNA chairman Michael Parta, publisher of the New York Mills (Minn.) Herald.
"But that is not what this proposal is about. This proposal is not to favor efficient so much as to favor large," he added.
"It skews the entire mail system toward large volume mailers, in order to feed the Postal Service's ravenous appetite for volume.
"No community newspaper and very few other mailers of publications can qualify for the new Publications Service," Parta noted.
Rush said she believes this eventually will "wind up in the lap of Congress."
As she commented, "The public and small businesses will not tolerate this behavior for long. If USPS is going to cater primarily to large volume, big business mailers and leave the rest of us to pick up the bill for its high overhead costs, why should we fight to preserve the mail monopoly?"
"NNA fears," Rush added, that the Postal Service "has been seduced by its internal illusion that it is already a private business.
"It increasingly seeks the freedom of private business without the obligations, and still argues for hanging on to a protected monopoly. USPS can't have it both ways."
Newsapepr Association of America senior vice president/public policy and general counsel John Sturm added, "We're very skeptical about this whole exercise. We are very concerned when the Postal Service makes a proposal that seemingly will result in saturation mailers getting a discount. That's of great concern to us in any context."
The reclassification proposal "is another example of putting rates ahead of service, volume ahead of people," he added.
Sturm also expressed concern "about how these kinds of changes in classification, subclasses, etc., that may look benign in the present context, may be paving the way for further mischief in future rate cases. The structural changes might have ramifications for a rate case at a future date."
In the third-class category, as proposed, "newspaper TMCs would be in the same rate class as the enhanced carrier route subclass along with the saturation mailers and others," he explained.
"We have always pursued a better system so that newspaper TMCs would get closer to the lowest rates in that category," Sturm said. "We'd like to see [with] newspaper TMC products, there shouldn't be such a difference between the saturation rate and newspaper TMCs."
Sturm said the reclassification proposal "is going to be a long, hard, tough process. There's no question the Postal Service has thrown in with the big volume mailers. What that means for universal service, which is of concern to everybody, in the long haul is up in the air."
As it has in the past, NAA will employ the Washington firm of Wiley Rein & Fielding and independent economists for the case.