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PRC Choosing Between Protecting USPS Customers or Competitors

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Currently the Postal Rate Commission is considering two three cases that illustrate the conundrum of United States postal policy. Should postal law and regulatory policy based on that law protect competitors or expand competition to benefit consumers? In both cases, opponents of proposals presented by the Postal Service represent competitors of the Postal Service who object to the Postal Service making improvements in service or offering lower prices. Both cases force the Postal Regulatory Commission to decide between competitors who have a focused interest in maintaining the status quo and a history of participation in postal policy and regulatory proceedings and consumers of mailbox and saturation advertising delivery services that [...] Read more »

What would an optimized Postal Service infrastructure look like in the 21st century and beyond?

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In trying to define an optimized Postal Service infrastructure, I was stuck at trying to define what “an optimized Postal Service infrastructure” meant.  The problem that I had was not with the mathematics of optimization which is focused on either cost minimization or profit maximization but with four sets of constraints that affect the formulation of an optimization model.   These constraints are: Customer service needs which determine product characteristics; Labor management constraints that impact operating costs; Capital spending constraints that limit options for infrastructure optimization; and Regulatory constraints which modifies a market-driven optimal network to reflect political considerations. While in the future, the Postal Service’s customers are going to need [...] Read more »

Relevance of PRC Decision In Network Optimization Review

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Right now the Postal Service has committed to Congress to hold off closing postal facilities and implementing Network Optimization Initiative (NOI) until mid-May. This date is two months before the Postal Regulatory Commission (PRC) will close the record on the Postal Service’s NOI proposal and between three to five months before the Commission publishes its opinion. The difference in time between when the Postal Service promised Congress that it would implement Network Optimization Imitative and when the Commission will issue raises an interesting question. Does the Postal Service have to wait for the Commission’s decision to act? Some believe that the Postal Service does not have the legal obligation to [...] Read more »

Legislative and Regulatory Delays Will Affect Introduction of Incentives for Early Retirement

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Early retirement incentives at the Postal Service requires both the funds to offer those incentives and an urgent need to reduce the workforce quickly.    In the past week, actions of two different government bodies had the effect of delaying any possible introduction of early retirement incentives. S. 1789, the 21st Century Act, had a provision that would provide the funds to allow the Postal Servcie to offer early retirement incentives.   However, after the publication of the Congressional Budget Office’s cost estimate on S. 1789, the 21st Century Act, appears likely to, at best, delay and, at worst, scuttle any chances for passing a postal reform bill in the Senate.   This [...] Read more »

Measuring the Impact of Network Optimization

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The Connecticut Record-Journal has reported the concerns of businesses affected by the closure of the Wallingford, CT processing facility. The article focuses on the impact on Connecticut Color, a company that generates about 6 million advertising pieces of mail a month for national clients, including Home Depot and BJ’s Wholesale Club. Rick Herr, the company’s president, focused on how the plant closure and service standard changes will affect the viability of mail as an advertising mode, due to difficulties of meeting advertiser’s ability of the print and delivery cycle to continue to meet advertiser need for specific in-home delivery dates. What he missed was that printers seeing local processing plants [...] Read more »

PRC Conducting Study to Allow More Flexible Costing And Pricing

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On August 2, the Postal Regulatory Commission issued a Request for Proposal to produce a “Report on Peak Load Costs.” Peak load costs are traditionally thought of as additional costs that are born to cover higher demand than normal. For electric utilities that have multiple options for producing or purchasing power, the most profitable operating model involves using the lowest cost electricity first and as demand rises going to more and more expense options for producing power. For that reason, many utilities have developed models that show that costs of handling peaks in power demand are higher than the cost of handling base demand and often set tariffs that encourage [...] Read more »

Turnover at the Postal Regulatory Commission.

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Today’s announcement that Dan Blair has accepted the position of President and Chief Executive Officer of the National Academy of Public Administration assures that within the next six months the Postal Regulatory Commission will have two new members. Commission Blair will resign from the Postal Regulatory Commission on June 30, 2011.  This could leave the Commission with four members until President Obama appoints and the Senate confirms a replacement. Those that have carefully read some recent Postal Regulatory Commission decisions will recognize that who President Obama appoints to replace Commissioner Blair could have a major impact on how the Postal Regulatory Commission opinions and the Postal Regulatory Commission’s recommendations to Congress on changes [...] Read more »

Who Represents the Administration on Postal Policy?

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The Office of Management and Budget media office has provided the following response to my question regarding why OMB Director Jacob Lew is not testifying at the Postal Hearing this Wednesday. “As a matter of policy, the OMB Director doesn’t testify before subcommittees on issues not directly related to OMB’s appropriations.”  If this is standard policy for OMB then the Subcommittee may have posted the hearing schedule prior to knowing the protocol.   The problem that the Committee faced in trying to pick a witness to present the Obama administration proposal for the Postal Service that is included in the 2012 budget is who represents the administration’s position.  For most departments it is clear.   The [...] Read more »

Social Value of Mail

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Last week the Postal Regulatory Commission announced on its website that it has funded six studies examining the social value of mail.     The Commission’s studies provide a couple of snapshots as to the impact of the Postal Service on the markets and communities that it serves.   The summary of the studies are as follows: SJ Consulting will quantify the benefit of the Postal Service’s rural services by measuring the percent of population affected by Delivery Area Surcharges and determine if there is a cost basis for the Delivery Area Surcharges by the two major parcel carriers and the benefits from the Postal Service having a more frequent delivery network in [...] Read more »

Netflix: What is Driving It Out of the Mail?

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Postalnews.com reported that Netflix stated in a filing with the Postal Regulatory Commission that a decision in GameFly’s favor could “result in reduced DVD shipment growth from Netflix as well as accelerate the ultimate decline of DVD shipments as Netflix would shift more resource to the digital delivery of content”.   In addition, Netflix is concerned about the Postal Regulatory Commission requiring the Postal Service to release confidential research conducted by Netflix that the Postal Service has that “certain changes in DVD design, manufacturing, packing and handling would enable GameFly to avoid DVD breakage from automated letter processing.” Netflix’s assertion raises a couple of interesting question that are independent of whether [...] Read more »