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Nip in the ZIP: Will public service sink as postal rates rise?

Service and cost. That's how most people judge their post office. By those measures, 1988 has not smiled on the United States Postal Service. In January, responding to a congressional budget-trimming mandate, the USPS announced some highly visible cuts - closing service windows at most post offices half a day a week, ending all Sunday pickups from mailboxes, and cutting Sunday mail processing by one-third. And yesterday, on the recommendation of the Postal Rate Commission, the USPS raised its prices - sending the basic first-class letter rate from 22 to 25 cents.

So it's tempting to agree with President Reagan's Commission of Privatization, which last month argued that the USPS should be forced to compete with private firms in the two areas - first-class and third-class mail - where it still holds a monopoly. Tempting, but ill-advised. The cure is not quite so simple. The reasons:

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Competition does not necessarily mean improvement in service. Cases in point: the airline industry and the telephone company. Some airline companies, and some communications businesses, love their newfound deregulation. But what about the customers? Is service better, or just cheaper? On that, it seems, the jury is still out.

The area where privatization might most immediately make a dent - the rising cost of mailing a letter - isn't the real problem. In its 17 years of operation as a quasi-governmental corporation bent on paying its own way, the USPS has raised the first-class basic rate from 8 cents (in 1971) to 25 cents. Adjusted for inflation, however, today's 25 cents equals 8.7 cents in 1971 dollars - hardly an increase at all.

Privatization would require congressional action. But Congress, according to knowledgeable legislative bean-counters, could hardly muster even a dozen votes for privatization if the bill came up today. Politically, the plan is a nonstarter.

Postal employees handle some precious stuff - and do it pretty honestly. Most of us don't have to wonder whether somebody is reading our mail - or conveniently ``losing'' some of our checks. Nor do we typically worry that letter carriers, on their appointed rounds during the day, are casing the neighborhood for their burglar friends at night. Private companies, too, could offer good security - if, despite severe competition, they were willing to pay enough to attract top-quality employees.

The drive for privatization assumes that the central problem with the USPS is its monopoly status and its tough-minded unions. Those are indeed challenges: The former invites lax management, and the latter may have accounted for the $233 million deficit sustained by the USPS last year. But there's a more immediate problem: the differential in pricing among the various classes of mail. Put simply, the price you pay for a first-class stamp appears to be subsidizing third-class mailers - the ones sending you all those catalogs, fliers, and unsolicited ``junk'' mail.

Who says? The Postal Service's own figures (see chart).

First-class mail, which accounts for 51.2 percent of the volume of mail, produces 61.6 percent of the USPS total revenues. Third-class mail produces only 20.3 percent of revenues - but makes up 38.8 percent of the mail stream. Even when sophisticated accounting is used to allow for the greater ease of handling third-class mail, that's still out of balance.

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Which is why the latest price increases are not all bad. Third-class mail, appropriately, was socked with increases of up to 25 percent. That puts direct-mail advertising well on the way to paying its fair share. It should also cut the clutter in our mailboxes - giving greater visibility to the third-class mailers that remain, which is surely an advantage to the ones willing to pay the price.

The big loser? Second-class mail (for magazines and newspapers), which will endure increases that average 18 percent. Second-class doesn't quite pay its own way, either, producing 6.7 percent of the volume but only 4.2 percent of the revenues. But there's a longstanding and noble reason why: It carries the information on which a democracy subsists and deserves some subsidy.

When the Rate Commission next meets, let's hope it continues the trend of making third-class pay its way. Let's hope it stems the rising second-class tide. Then let's hope that the newly appointed postmaster general, Anthony M. Frank, can hold the line on rising costs. That's a better solution than privatization.

A Monday column

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