Postal Regulatory Commission Increases its Irrelevance in Policy Debate

The Postal Regulatory Commission never seems to miss an opportunity to miss an opportunity. Yesterday in its Section 701 Report: Analysis of the Postal Accountability and Enhancement Act of 2006, the Commission combined a full throated defense of aggressive regulation, with some tepid suggestions for policy change. The report is neither in line with the current economics of the Postal market, nor the current political environment. As such it is likely to be ignored.

The failure of the Commission’s report as an important policy document is gingerly explained by the Postal Service in its response.

Improving the Postal Service’s financial stability in both the short-term and the long-term requires more comprehensive changes than are discussed in the Commission’s draft report.

Part of the cause of its failure as an important policy document is who wrote it, the Postal Regulatory Commission. Rarely does a regulatory commission would ever write a report that does not promote its own self-interest or support less regulation over more regulation. As such, the report’s sections reviewing actions that the Commission has taken leave a self-congratulatory impression, and the sections recommending changes that affect its powers tend to recommend changes that increase the Commission’s powers rather than diminish it.

The Commission’s overall thinking about regulation and in particular its support of a strong regulator is a real problem and deserves to be ignored for three reasons

  • First, the Commission’s assumption that Postal Service customers and competitors need intense protection from unfettered competition is an assumption that has been abandoned in every other mode that delivers physical items from a sender to a recipient in the United States, and has lost significant support in countries that have pursued postal reform more aggressively.
  • Second, the Commission’s regulatory approach favors maintaining the status quo in an environment in which the status quo is clearly untenable
  • Third, the Commission’s regulatory approach continues to maintain regulatory lags and regulatory barriers that prevent the Postal Service and its customers from making business and personal decisions that would allow them to adapt to the changing postal market as rapidly as the market changes.

Now is the time for an independent assessment of postal regulation with a focus on determining:

  • the minimum amount of regulation that the postal market requires to protect individual consumers and universal service; and
  • an approach for regulating competition between the Postal Service and its private sector competitors in regards to non-postal services that favors competition over protection.

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