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Postal Reform in the United States. Chairman Dan G. Blair Postal Regulatory Commission June 9 , 2009 Tokyo, Japan. U.S. Postal Eras. Post Office Department (1775) Postal Service (1970) Postal Reorganization Act Postal Service (2006) Postal Accountability and Enhancement Act.

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postal reform in the united states

Postal Reform in the United States

Chairman Dan G. Blair Postal Regulatory Commission

June 9, 2009Tokyo, Japan

u s postal eras
U.S. Postal Eras
  • Post Office Department (1775)
  • Postal Service (1970)Postal Reorganization Act
  • Postal Service (2006) Postal Accountability and Enhancement Act
postal reorganization act of 1970
Postal Reorganization Act of 1970
  • U.S. Postal Service: Independent agency of executive branch of government
  • Break-even mandate: Funded by postal revenues
  • Merit system: For hiring and promotion
  • Postal Rate Commission: Oversight of rate-setting
  • Work-share discounts introduced in rate-setting process
  • Social compact: To bind the nation together through the personal, educational, literary and business correspondence of the people
postal accountability and enhancement act paea of 2006
Postal Accountability and Enhancement Act (PAEA) of 2006
  • Flexibility to compete, innovate and respond to the market
  • Postal Service may earn and retain profits
  • Postal products defined: Market-dominant or Competitive
  • Greater Postal Service transparency and accountability
  • Postal Regulatory Commission with strengthened regulation and oversight
postal regulatory commission
Postal Regulatory Commission
  • Independent Federal Agency
  • Regulator of the U.S. Postal Service only
  • Five Commissioners appointed by the President and confirmed by the U.S. Senate
  • Our mission: Ensure transparency and accountability of the U. S. Postal Service and foster a vital and efficient universal mail system.
role of the prc under the paea
Role of the PRC under the PAEA
  • Postal transparency and accountability
  • Modern system of rate regulation
  • Postal financial performance
  • Service standards and measurement
  • Complaints
role of the prc under the paea1
Role of the PRC under the PAEA
  • New enforcement tools

- Subpoena power

- Authority to direct Postal Service to adjust rates and take other remedial actions

- Authority to levy fines

  • Annual reports on performance and regulatory process to the President, Congress and the public
role of the prc under the paea2
Role of the PRC under the PAEA
  • International Responsibilities

- Coordination with State Department

- Federal Advisory Committee

- Universal Postal Union engagement

- Postal Regulatory Dialogue

the new postal service
The “New” Postal Service
  • Flexibility balanced by oversight - Reporting rules- Service improvement and measurement - Postal and non-postal services- Complaint resolution
the new postal service1
The “New” Postal Service
  • Growth- Customized solutions- Innovative products
  • Modern operating model

- Efficient pricing and fair competition

- Market-dominant and Competitive categories

- Future reform?

market dominant products monopoly
“Market Dominant” Products(Monopoly)
  • Postal Service: MAILING SERVICES- First-Class Mail (letters, bills, statements, personal)- Standard Mail (Advertising, product offers, non-personal)- Periodicals (publications)- Single-Piece Parcel Post - International Single Piece First-Class Mail
  • Price cap- 45 day review of proposed rate adjustments
competitive products full competition
“Competitive” Products(Full Competition)
  • Postal Service: SHIPPING SERVICES- Express Mail (domestic and international/EMS)- Priority Mail (domestic and international)- Parcel Select- Parcel Return- International Air Parcels
  • Price floor and pricing flexibility- 30 day review of proposed rate adjustments
partition between shipping and mailing services
“Partition” Between Shipping and Mailing Services
  • Separate accounting rules and reports for Mailing Services and Shipping Services
  • Prevent cross-subsidy by “monopoly” Mailing Services
  • Imputed federal income tax on Shipping Services
  • Profit from Shipping Services to pay for modernization and Universal Service Obligation
  • Separate customs treatment for competitive products
universal service obligation uso
Universal Service Obligation(USO)
  • Comprehensive

- Mailing Services and

- Shipping Services

  • Monetary Value

- Estimated value of monopoly: $3.5 Billion

- Estimated cost of USO: $4.4 Billion

  • Everyone, everywhere, everyday
universal service obligation uso1
Universal Service Obligation(USO)
  • Seven Aspects

- Geographic scope

- Range of products

- Access to postal facilities

- Prices/affordability

- Quality of service

- Users’ rights

- Delivery frequency

u s postal service performance
U.S. Postal Service Performance
  • Financial Crisis - FY 2008 Mail loss : 9.5 billion pieces (-4.5%) Net income: - $2.8 Billion

- FY 2009 (mid-year) Mail loss: 12.7 billion pieces (14.9%) Net income: - $2.3 billion

- FY 2009 (full-year*) Mail loss: 20-25 billion pieces Net income: - $6 Billion

  • Regulatory window on performance - Monthly reports, regular consultations, annual reviews* USPS forecast