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BREAKING NEWS & VIEWS
PRC Chair: Magazines Have Been Under-Paying PostageMonday, July 12, 2010 Despite organized resistance to the U.S. Postal Service’s proposed 8% rate increase for periodical postage, the magazine industry may need to adjust to the new reality of pricing, suggests Postal Regulatory Commission Chairman Ruth Goldway. While periodicals face the stiffest rate hikes among the classes of mail addressed by the USPS plan, “On the face of it now, this 8% increase that they are presenting is something that is justified,” Goldway says in an exclusive interview in next week’s issue of min. As the PRC is about to start its 90-day evaluation of the USPS proposal, Goldway says periodicals have fallen behind in covering the actual costs the USPS incurs in handling the class of mail. “The law does require that each class of mail in aggregate cover its attributable costs,” says Goldway. “It does have to pay for what it costs to actually process the mail on the machines and deliver the mail to people’s homes. And periodicals have been a class of mail that throughout the 90s has just barely covered its institutional costs and in the last several years has gone below water as we say.” It is the industry’s case to prove that rates shouldn’t rise considerably now to make up for this shortfall, she says. A more thorough evaluation of the costs of handling magazines is underway, “and we may get different information,” she says. “But the bottom line is that the requirements for now of the law mean that the Postal Service and the Postal Regulatory Commission are supposed to make sure that periodicals cover their cost.” Last week a large group of magazine and catalog publishers, non-profit charities and direct mail companies organized the Affordable Mail Alliance to challenge the USPS rate increase proposal, which Goldway’s PRC must consider over the next three months. Fact-finding has already begun and public hearings will occur in August. The publishers’ Alliance has been very pointed in its criticism of USPS business practices and cost cutting. At the Alliance’s Web site, the group points to inflated labor costs at the USPS. While Goldway is also critical of the USPS in a number of areas, she does not seem sympathetic to some of the Alliance’s arguments about the USPS failing to address labor costs. “I think that it is hard to justify that out of the box when they have cut 25% of the workforce over the last eight years, and 40,000 jobs last year,” she says. In a far-ranging interview in the next issue of min, Chairman Goldway comments on where the vocal Affordable Mail Alliance may and may not be effective in the coming debates over rate hikes and how the USPS itself needs to bring to the table more innovative business models and plans for its own future. If you have breaking news to share please contact Steve Smith at ssmith@accessintel.com
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