The Postal Service, unsurprisingly, sees the instant proceeding from the polar opposite viewpoint of its customers. From the USPS point of view, if Order 5763 were flawed, then it was so by providing too little rate authority.1 And if a change is necessary, it should be to release the Postal Service virtually fully from any prior rate constraint or to raise rates dramatically through a “baseline reset.”2

The Postal Service’s View that More Rate Authority is Necessary is Short-sighted.

This is not a constructive position for USPS to take at this time, despite its serious financial straits. Militating against it include the major loss of business, extensive failure to meet service performance targets, let alone standards, a major decline in productivity while costs have increased substantially, $120 billion from Congress, and the choice to not exercise judiciousness or restraint in applying pricing authority. Nonetheless, the Postal Service suggests that the current pricing regime has failed because this Commission did not provide even more pricing authority. Perhaps most important, the Postal Service has not reined in its costs 3 which, if accomplished, would in part or in whole obviate the need for additional rate authority. In the face of all of the foregoing, it has proposed for this proceeding either a “regulatory monitoring” system, essentially removing limits on pricing, or a pricing “baseline reset,” which would raise rates dramatically, as potential remedies.4

As we discussed in our initial comments, at 8, the current system is not the old cost-of-service regime that USPS appears to be leaning back toward. That system, which was neither predictable nor stable, nor required cost containment, was deliberately replaced by Congress with a price cap5that did effectively impose the necessity of cutting costs, and has not been statutorily changed since. USPS is not entitled to whatever money is necessary to make it whole, regardless of the type of planning it has done and the cost. That would eliminate all incentive to cut costs, and provide stability, predictability and affordability to mailers.

It would also raise uncomfortable echoes of exercising too much market power. Raising prices in light of the foregoing problems and seeking even greater authority, display some of the hallmarks of a monopolist, which the Postal Service is for Market Dominant categories (“mail”). It is in a position to extract more funds from a customer base which, by definition and by law, has no alternative to the monopolist.6 These are not the hallmarks of a public service trying to continue its mission by raising funds without driving the customers and the public it serves off; they are of one seeking more funds to solve the problem, even if the impact would be as adverse and counterproductive as it would promise to be here. Which is one fundamental reason why the Commission exists: to ensure that, as with any other de facto or de jure monopoly, the Postal Service functions with a check on its market power.7

Yet, notwithstanding the words in Title 18 of the US Code8 barring private express, USPS often insists that it is not a monopoly because digital messaging is a choice for those wishing to use mail; the “secular shift” the Postal Service frequently points to for the loss of mail.9 Even setting aside the statutory mandate creating the monopoly for the sake of discussion, that is reading the relevant market too broadly. For anyone who wishes to or must, through legal requirement or otherwise, communicate on paper, there is no choice other than USPS, except where the Postal Service has suspended the application of the monopoly to several, mostly narrow, categories.10 

To read more on this, download the full letter below, and review the references.