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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 , 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

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  1. Postal Reform in the United States Chairman Dan G. Blair Postal Regulatory Commission June 9, 2009Tokyo, Japan

  2. U.S. Postal Eras • Post Office Department (1775) • Postal Service (1970)Postal Reorganization Act • Postal Service (2006) Postal Accountability and Enhancement Act

  3. 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

  4. 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

  5. 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.

  6. How we are organized

  7. Role of the PRC under the PAEA • Postal transparency and accountability • Modern system of rate regulation • Postal financial performance • Service standards and measurement • Complaints

  8. 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

  9. Role of the PRC under the PAEA • International Responsibilities - Coordination with State Department - Federal Advisory Committee - Universal Postal Union engagement - Postal Regulatory Dialogue

  10. The “New” Postal Service • Flexibility balanced by oversight - Reporting rules- Service improvement and measurement - Postal and non-postal services- Complaint resolution

  11. The “New” Postal Service • Growth- Customized solutions- Innovative products • Modern operating model - Efficient pricing and fair competition - Market-dominant and Competitive categories - Future reform?

  12. “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

  13. “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

  14. “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

  15. 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

  16. Universal Service Obligation(USO) • Seven Aspects - Geographic scope - Range of products - Access to postal facilities - Prices/affordability - Quality of service - Users’ rights - Delivery frequency

  17. 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

  18. www.prc.gov

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