Other Voices Heard About Proposed Service Standard Changes

 By late June, the Postal Regulatory Commission likely had received more comments than it had expected about the Postal Service’s proposal to change the service standards for First-Class Mail and some Periodicals.

Aside from the briefs and statements of position from the eleven intervenors in the case, plus the commission’s “public representative,” the PRC also got comments from other groups and interested parties, including from 478 individuals from all over the country.  (Whether there was a coordinated campaign behind those isn’t clear; many of the comments didn’t follow a pattern.)


 Mailers Hub will be hosting a webinar on July 21, 2021, at 1 pm ET addressing the PRC's advisory opinion and the impact it will have. 
REGISTER HERE.


Degrees of opinion

Formal briefs and statements of position ranged from lukewarm to completely opposed to the USPS proposal.

  • The PRC’s Public Representative was generally sympathetic to the Postal Service’s premise that declining volume required service changes that enable cost reductions.  The PR also accepted the Postal Service’s rather self-contradictory claim that “while the proposed changes will increase our service standards for a portion of FCM and end-to-end Periodicals, these changes are unlikely to materially impact the third top driver of customer satisfaction: faster delivery.”
    At the same time, the PR was “concerned that the Postal Service’s modeling may not prove accurate, that the Postal Service may not have done enough to project mailer behavior going forward,” that a “major contributing factor to the Postal Service’s service performance history has been a lack of investment,” and that its analytical data “is not necessarily predictive of future behaviors.
    Nonetheless, the PR concluded that the agency “presents a compelling business case, centered on its financial analysis, for the proposed changes to services standards’ and that “these proposed changes are in the interests of the general public because the status quo is untenable and the proposed changes appear to be supported by Postal Service’s business case.”
  • The Greeting Card Association was more ambivalent, stating it “does not express either explicit support for or explicit opposition to the proposed changes.”
    It did, however, point out that “The issue for the Commission, then, is whether it can advise favorably on the Postal Service plan to degrade First-Class service standards largely because volume – considered very generally – has fallen, when the plan did not consider the internal structure of the decline and what could be done (particularly as regards improvements in First-Class products) to retard it. ... Insofar as volume decline may be driving the recent failures to achieve intended service levels, this issue ties back to ... what could be done, by improving or reconfiguring First-Class products, to retard the decline?”

  • Similarly, the MPA – The Association of Magazine Media took a narrower view of the case, stating that it “... takes no position on the proposed changes to First-Class Mail service standards.  Rather, we focus on the proposal’s impact on Periodicals service.”  Its statement also noted that the proposal

“... would be highly problematic if the relaxed service standards are not accompanied by the promised improvements in on-time performance or network optimization.  The Commission must therefore hold the Postal Service accountable for meeting or exceeding the 95 percent on-time performance target for Periodicals and enhancing transportation efficiencies. ... Thus, we urge the Commission to hold the Postal Service accountable for meeting its new service standards, including a reduction in CPI cap pricing authority for performance shortfalls."

“The Postal Service’s proposal to diminish the importance and service provided to First-Class Mail is inconsistent with the Postal Accountability and Enhancement Act (‘PAEA’), which places a higher priority for treatment of First-Class Mail and Periodicals than does the proposal under consideration here.  The combination of service degradation and shocking rate increases (in Docket No. R2021-2) will surely accelerate First-Class Mailers leaving the system, all for what are surprisingly modest cost savings for an organization the size of the Postal Service. ...

“Had the Postal Service surveyed NPPC members, it would have found a strong preference for reliable rapid delivery at lower rates.  Instead, the Postal Service did not even consider, much less propose, any rate design proposal to address the concerns of the First-Class Mailers whose service it is degrading. ...

“The proposed service degradations that are the focus of this case are not consistent with Congress’s policy.  Certainly, this proposal is not driven by a desire to increase First-Class Mail service speed.  Instead, the reduction in service standards was initiated by a desire to transport more mail by surface rather than by air. ...

“First-Class mailers have seen this story before.  The Postal Service has reduced First-Class Mail service standards before, most recently in Docket No. N2012-1.  It has modified business rules.  ... Yet the Postal Service has consistently failed to meet even those slower service standards. ...

Despite their clear concerns, NPPC stopped short of urging rejection of the changes, instead urging the commission “to consider these views in preparing its Advisory Opinion.”

  • As the only postal union intervening in the case, the American Postal Workers Union was nonetheless clear in its opposition to the proposed changes:

The Postal Service is putting the cart before the horse.  The Commission should urge the Postal Service to reconsider its priorities, and put service ahead of experimental transportation models.  Instead of changing its service standards in anticipation of launching untested transportation models, the Postal Service should maintain its current service standards while it tests changes to its transportation model to meet those standards. ... Lowering service standards first and then chasing transportation models that have never been used widely in the Postal Service is risky, imprudent, and unnecessary.  The Commission should rebuke the Postal Service for degrading First-Class Mail service to chase speculative operational improvements.  Given the immense importance of service standards for First-Class Mail, the Postal Service should not implement its service standard changes and should focus on improving performance instead.”

“The Commission should urge the Postal Service to abandon this misguided effort and instead focus its attention on improving its performance in delivering First-Class Mail and other market-dominant products. ... This policy [of reducing standards] has things precisely backwards. ... Under its new policy, the Postal Service seeks to degrade service in its market-dominant products in order to facilitate growth in its competitive products.  But a policy that prioritizes competitive packages above First-Class letter mail cannot be squared with the statutory requirement that the Postal Service ‘give the highest consideration to the requirement for the most expeditious collection, transportation, and delivery of important letter mail.’ ...

“While the Postal Service suggests that this shift in priorities is a necessary response to the long-term decline in the volume of letter mail, it will inevitably serve as a cause of further decline. ... It is true, of course, that the Postal Service has not met its service performance targets for quite some time.  But rather than attempting to remedy its ongoing performance issues, the Postal Service is simply moving the goalposts.

“... the Postal Service appears to have made up its mind already, and is treating the involvement of this Commission as a formality.  The Commission should insist that the Postal Service live up to its statutory obligations and encourage it to abandon this ill-advised effort.”

  • Former NYU professor Steve Hutkins stated he was opposed to the USPS proposal

“... because the proposed service standards will cause undue discrimination of users of the mail who happen to live in places distant from the country’s centers of population. ... These highly impacted areas will see more of their origin-destination pairs and more of their volumes downgraded, as well as larger increases in average delivery time, than other parts of the country will experience.  Consequently, the proposed changes in service standards will result in unreasonable and undue discrimination among users of the mail, in violation of 39 US Code § 403(c).”

In earlier filings, Hutkins had provided analyses and maps illustrating the disparate changes in service the USPS proposals would cause.  In his brief, Hutkins offered an unusual perspective:

Relaxing service standards can thus be seen as form of raising prices.  Imagine, then, if the Postal Service were to propose raising rates on First Class mail by 6 percent nationwide – 3 percent in the East and Midwest, 5 percent in the West, and 8 percent in the Pacific states.  It is difficult to imagine that the Postal Service would ever make such a proposal or that Commission would ever approve it.  But in key respects that is just what the Postal Service is proposing in this case.  It is lowering the quality of service across the country, but not to the same degree in each part of the country.  It isn’t raising rates in a non-uniform way, but it is lowering services in a non-uniform way. ... If the Commission determines that the proposed service standards do in fact cause discrimination, it will be up to the Commission to explain why the discrimination is due or reasonable.”

Hutkins urged the PRC “to advise the Postal Service not to proceed with implementation of its plan to change service standards.”

  • Postal gadfly and frequent litigant Douglas Carlson also included discriminatory changes in service as a premise to urge rejection of the Postal Service’s proposals:

“I oppose the Postal Service’s proposal to change service standards. ... The Commission already found that similar changes in service standards implemented in 2000 and 2001 violated policies in Title 39.  The current proposal is worse than the changes implemented in 2000 and 2001, so the legal flaws in the current proposal are even greater than in 2000 and 2001.

“More generally, slowing mail service is exactly the wrong response to a decline in mail volume and the generally increasing speed at which modern society corresponds.  By ignoring the disproportionate effects of this proposal on certain parts of the country, and the magnitude of the changes in those areas, the Postal Service is likely underestimating the decline in volume and, therefore, revenue that this proposal would cause.  This proposal could send First-Class Mail volume, and the Postal Service, into the proverbial death spiral.

“The Commission should find that the Postal Service’s proposal would violate policies in Title 39 and that the proposal is otherwise ill conceived and would serve the nation and the Postal Service poorly.”

“... the Commission should rebuke the Postal Service’s request in the strongest possible terms. ... The proposed service standards are legally deficient, bad policy, and bad business. ...

“The Postal Service has undoubtedly had difficulty meeting its service performance targets in the past decade, and its service performance since the pandemic has been particularly poor.  These proposed service standards will do nothing to rectify that situation.  At best, they will align service standards with the existing de facto service standards. ...

“The new density rate authority authorized by the Commission in RM2017-3 directly rewards the Postal Service with additional rate authority if it does anything that results in reduced mail volume.  Mere months after the Commission authorized this authority, the Postal Service is planning service changes that the Postal Service acknowledges will reduce mail volume.  Customers of the Postal Service will not only be punished with reduced service performance, that punishment will be compounded by additional rate authority. ...

“In the end, the Postal Service’s proposal appears to be an attempt to avoid making the changes necessary to improve service performance, using the temporary impacts of the pandemic as a justification for radical changes in a post-pandemic world.  Rather than attempt to rectify long-standing problems, the Postal Service instead plans to provide service of demonstrably lower quality.

“The Postal Service admits that ‘[i]t is possible changes could be made to improve capability of achieving current service standards,’ but it claims these changes ‘would likely come with increased investment and operating costs.’  That may be so, but those investments could also provide mail users with the service they deserve and expect and maybe even help stem volume declines in the process. ...

“While the Commission may not have the authority to prevent the Postal Service from intentionally harming its customers, it should advise against the Postal Service’s proposal in this proceeding and immediately reconsider the rate regulations that will reward the Postal Service for inflicting that harm.

The PRC clearly has received input from postal stakeholders, and the majority of that input urges the commission to advise against the USPS proposals in no uncertain terms.  Whether the PRC will do so will be learned when its advisory opinion is issued, no later than July 20.


Mailers Hub will be hosting a webinar on July 21, 2021, at 1 pm ET addressing the PRC's advisory opinion and the impact it will have. REGISTER HERE.

 

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