NPES Government Affairs Update — Mailing & Postage

Mail Moves America

Mail Moves America is a recently formed coalition of trade associations and corporations with the mission of educating state and federal government decision-makers on the vital role advertising mail plays in the commerce and economy of the United States. A major component of this mission is monitoring and, when necessary, intervening to block so-called “Do-not-mail” legislation at both the state and federal level. These initiatives are the next extension of efforts spawned by public sentiments that lead to similar efforts to ban or limit unauthorized telephone, fax and e-mail solicitations. NPES is an active participant in the coalition, which currently numbers 48 associations and corporations, many of which participated in the recent postal reform efforts.

Despite the growth of electronic communications, the U.S. Mail remains a critical means by which to exchange information and conduct commerce in the United States. The U.S. Postal Service provides a universal, reliable, and afford-able method of communication and commerce for over 146 million separate American households, businesses and nonprofit organizations. As advertising mail currently provides more than half of the annual revenue that makes this possible, the loss of that revenue would likely cause postal rates to rise, curtail customer service and ultimately damage the larger U.S. economy.

Advertising mail offers a cost-effective entry into the market for small businesses and an opportunity for larger businesses to reach broader audiences. For example, in 2006 advertising mail contributed more than $660 billion in increased sales and played a critical role in the success of our country’s economy. Every dollar spent on catalog marketing generated an average ROI of $7.20, and every dollar spent for non-catalog direct mail generated an average ROI of $15.71.

According to the Direct Marketing Association, the average U.S. household gets just over 14 pieces per week of Standard Mail from businesses and nonprofit organizations, a figure that has held steady over the past five years. And the most recent USPS Household Diary study (2005) indicated that 85 percent of

U.S. households usually read some or all of the advertising mail they receive. They say it makes shopping more convenient, gives additional choices and saves them money. Most consumers don’t want to stop all direct mail, and would regret missing out on special offers, coupons and notices about new local businesses and services.

Getting off mailing lists should never be difficult. It is usually a simple matter for recipients to contact mailers and request to be removed from their lists and to not share their names with other mailers. Most mailers welcome this feedback as well, since it avoids wasting their resources sending mail to those who don’t want it.

After initial interest, most bills have drawn criticism and opposition. Hearings have been held on bills in the states of Connecticut, Montana, Texas and Washington, but none have advanced past that stage. In the last session of the Hawaii legislature, the state’s senate passed a resolution urging Congress to establish a “Do-not-mail” registry, but the state House failed to approve it. To protect against the possibility of any state legislation gaining traction and/or spawning interest at the federal level, NPES and the other members of the Mail Moves America coalition will remain vigilant as the year progresses.

Postal Rate Commission Ruling

The new Postal Regulatory Commission has recommended that the price of a First-Class one-ounce letter stamp be increased from 39 cents to 41 cents, which could be implemented as early as May by the U.S. Postal Service. The USPS had proposed a 42 cent First-Class stamp. Postcards will go from 24 cents to 26 cents, and the First-Class additional ounce rate will decline from 24 cents to 17 cents as the result of refinements in shape-based rate schedules for letters, flats and parcels.

The Commission also approved the Postal Service’s new “Forever Stamp,” which is designed to facilitate the transition to new single-piece First-Class letter rates. Forever Stamps will be sold in limited quantities, and continue to be worth the price of a First-Class one-ounce letter even if that price changes. In a press release, the new chairman of the Postal Regulatory Commission, Dan G. Blair, stated that “[The forever stamp] . . . is a prime example of the Postal Regulatory Commission working together with the Postal Service in the best interest of the citizen mailer.”

The Commission’s recommendations followed an administrative proceeding that began in May of 2006, which involved mailers, employee organizations, consumer representatives and competitors. The rate increase request was designed to generate additional revenue to help offset a projected $5.8 billion revenue deficiency in FY 2008 (the test year). While the rate increases will affect many classes of mail in varying degrees, the average rate increase will be 7.6 percent, lower than the 8.1 percent average rate increase sought by the Postal Service, but still sufficient to meet the Postal Service’s revenue requirement. On average, First-Class rates will increase 6.9 percent, Standard Mail rates will increase 9.3 percent and periodical rates will go up 11.8 percent.

Because the recently enacted postal reform legislation grants the Postal Service wide flexibility in future rate setting for its competitive products, the Commission’s recommendations for rate designs for USPS Express Mail, Priority Mail and Parcel Post largely mirror the Service’s proposals.

Noting that this was the first recommended decision of the new PRC, as well as his first case as a commissioner and as chairman, Blair observed that the central tenet of the case was having rates accurately reflect costs saved through work-sharing, and a rate design that sends the signal that the shape of the mail piece plays an important role in controlling costs.

According to its official opinion, wherever possible, the Commission used “Efficient Component Pricing” to develop rates that accurately reflect cost differences. Citing this guiding principle, the commission stated that “Rates that send proper price signals result in more efficient processing and transportation practices, which in turn reduce costs, thereby allowing smaller rate increases, and less volume losses.”

The Postal Regulatory Commission’s opinion and recommended decision can be found at www.prc.gov.

Postal issues are an important NPES Government Affairs priority, as a high percentage of printed material enters the postal stream. For more information contact NPES Government Affairs Director Mark J. Nuzzaco at phone: 703-264-7235, or e-mail: mnuzzaco@npes.org.