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Postal rate hike ignores hard facts

The one-cent rate increase for first class mail, effective Sunday, is getting a mostly positive spin. The US Postal Service suggests that, as we consumers fumble around for spare one-cent stamps to add to the 32-centers left in our desk drawers, we should be glad the the overall postage hike is up just 2.9 percent over the last hike in 1995.

America's first-class mail rate is lower than many other nations, and the US Postal Service offers a reliable, improving service. More than 90 percent of first class mail sent locally arrives at its destination the following day.

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While it's asking more money for its mail delivery, the Postal Service is poised to reap immense savings from automation steps taken by consumers and small business mailers, and it balks at sharing any of those savings with the customers who will, in effect, be doing the Postal Service's work. It's not fair, and it's a reason the way America runs its mail service - one of the few federal functions enshrined in the Constitution - needs to change.

The automation, due to roll out this year, involves postage that can be downloaded to personal computers and printed on envelopes and parcel labels. The system - PC Postage - includes printing a bar code on envelopes proving postage has been paid and providing data that can speed sorting and delivery, eliminating much of the manual work of postal employees.

Yet, while big mailers - like phone companies, gas utilities, or credit card companies - get pennies off each bill for doing similar bar coding, you and I won't fare as well if we use the automated system. We'll pay the same 33-cent rate my Mom does when she hand-addresses a letter. No offense, Mom, but if I'm doing more work for the mailman than you, shouldn't I get a break on the price? The Postal Service and its Board of Governors don't think so. In the last two rate hikes, this year and in 1995, it has refused to offer consumers the kind of break given big business.

The governors claim a discount rate would be difficult to administer and enforce, and probably confuse the public.

But effectively there are already three different rates for overnight and two- or three-day delivery. Federal Express, United Parcel Service and the USPS each charge different prices for these services.

More than any time since Ben Franklin - the first postmaster general - the postal service faces heated competition. I don't pay my Visa card bill by mail - instead, I click on my bank's Web site to make a transfer. Every magazine I read online is one less for my letter carrier to deliver. And then there's e-mail and faxes.

In the face of this competition, the Postal Service needs to reform its operations. Rep. John McHugh, (R) of New York, chairman of the House Subcommittee on the Postal Service, has been pushing a reform bill, HR-22, that would give the agency incentives to be flexible in setting rates and cut costs and pass the savings along to all mailers. One example of the change promised by the McHugh bill is the establishment of a price band within which the Postal Service could raise or lower rates for first class mail once year. If it costs less to deliver the mail than the ceiling of the band, the agency makes money on each letter and can pay all its workers bonuses from the profits. If delivery costs more, the USPS eats the loss with an obvious incentive to save money.

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This is the kind of competitive discipline lacking in postal ratemaking.

The McHugh bill, which stalled on the floor of the House last year, would be the first major reform of postal affairs since the 1970 Postal Reform Act, which transformed a Cabinet department into the USPS, a quasi-governmental service. The bill was reintroduced Wednesday.

The Congress needs to weigh this measure, pass it, and make the Postal Service operate in a more entrepreneurial style.

Mark A. Kellner, is the technology columnist for The Washington Times and has written about postal matters since 1972.

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