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USPS proposal plays favorites with mail customers

Post by TNT Editorial Board / The News Tribune on June 21, 2012 at 5:12 pm with No Comments »
June 21, 2012 5:12 pm

This editorial will appear in Friday’s print edition.

Lawmakers from both sides of the aisle agree on at least one issue: They’re concerned about a U.S. Postal Service plan to offer special, monopolistic postage rates that seem designed to favor one customer – the giant Valassis Direct Mail company.

Those lawmakers – as diverse as Democratic Sen. Sherrod Brown of Ohio and Republican Rep. Darrell Issa of California – have demanded to know why the USPS proposes to play favorites with its postal customers and give a huge competitive advantage to Valassis. The deal would give the company rebates ranging from 20 percent to 36 percent for new mailings containing ads by national retailers.

That could have serious consequences for the already struggling newspaper industry, which stands to lose more than $1 billion in revenue if direct-mail rates are reduced so drastically for a major competitor.

According to Newspaper Association of America President and CEO Caroline Little, “Newspaper publishers are shocked by the specifics of this special deal for the country’s largest direct-mail company. The proposal to provide steep discounts to a major newspaper competitor is a dagger aimed at the financial health of newspapers.”

The deal might have some small merit if it could be shown that it would help the USPS’s troubled financial state. But in fact, the opposite is more likely. Newspapers, including The News Tribune, are big USPS customers. They spend about $500 million a year mailing ads to nonsubscribers. If Valassis is given favored-mailing status, newspapers might be forced to find another, more competitive way to distribute those products – cutting USPS revenue.

Because the USPS holds a virtual monopoly on home mail service, it should not parlay that power into picking commercial winners and losers in the private sector. That’s exactly what it would be doing by giving one company a huge competitive rate advantage over other postal customers, including newspapers.

The deal would have to be approved by the independent U.S. Postal Regulatory Commission, which will make its decision soon. It should reject the proposal and remind the USPS that its role doesn’t include playing favorites and creating unfair disparities in the marketplace.

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