FTC: Regulations Hamper Postal Service; Some Loosening Needed

The U.S. Postal Service’s legal status puts it at a competitive disadvantage to private carriers and Congress may want to consider relaxing the USPS’s monopoly on mailboxes and on mail delivery.

These were some conclusions of “Accounting for Laws that Apply Differently to the United States Postal Service and its Private Competitors,” a Federal Trade Commission report released Wednesday.

This report was mandated by the Postal Accountability and Enhancement Act.

In addition, the report found that:

* Federally imposed restraints on USPS operations increase its costs to provide competitive products by an estimated $330 to $782 million a year.

* The USPS receives an “implicit subsidy” of $39 to $117 million per year thanks to its status as an arm of the Federal government.

The report further argued that the USPS’s legal constraints cause it to use more resources to produce competitive mail products and that its legal advantages partially mask these higher costs. This leads consumers to purchase more competitive mail products from the USPS than they otherwise would.

In light of this, the report concluded that:

* Congress may wish to consider reducing constraints on USPS competitive products and operations.

* The Postal Regulatory Commission may wish to consider requiring the USPS to account for its implicit subsidies when making pricing and production decisions.

* Congress and the PRC may wish to consider whether relaxing the current mailbox monopoly to allow private delivery of competitive products to mailboxes would benefit consumers.

* Congress may wish to consider whether narrowing the scope of postal monopoly would allow greater competition while still maintaining universal service.

The report also argued that spinning off the USPS’s competitive products division into a separate private or government corporation arguably would eliminate many major remaining major legal differences between the USPS and its private competitors.

These findings are based on responses to a Federal Register notice announcing the study, consultations with the USPS and other governmental agencies, private parties and publicly available material.