THE FIRST A IN PAEA WAS SUPPOSED TO STAND FOR ACCOUNTABILITY Given that eight months had passed since comments on the review were filed, it was not a surprise when the PRC concluded that the current system is not meeting all of the objectives of the Postal Accountability and Enhancement Act (PAEA). Nor was it a surprise when shortly thereafter the Postal Service issued a statement agreeing that “that the current CPI price cap does not work and needs to be changed” while continuing to beat the drum that the price cap should be eliminated altogether. This reflects the notion that regulations aren’t necessary because USPS is subject to sufficient competition even on its market dominant products. This notion is patently untrue. That is not to say that USPS does not face existential threats - they do. Electronic diversion and changing media consumption habits will continue to eat away at USPS’ core business. But competition is more than just market pressure, it also implies the availability of alternatives. If I tire of Verizon’s mobile service I can switch to AT&T. If the line at McDonald’s drive thru is too long, there is probably a Taco Bell down the street. But if a business or nonprofit enterprise wants to mail promotional or informational materials to its customers, they are constrained by statute to relying on the USPS. Yes, they could email, or use a bullhorn, or visit in person, but for mail there is no direct competition. One might expect USPS to try to blur this distinction but it was disappointing to see the PRC reach the same conclusion and leave users of the mail vulnerable to a monopoly provider who may soon have no apparent incentive to seek meaningful cost reductions, efficiency gains, or service improvements.
If the proposed regulatory structure is installed, some Postal Service customers will almost certainly face five years of annual price increases exceeding seven percent. At the end of that period, the PRC proposes to again consider whether the proposed regulatory system is working. The good news – for lack of a better term – is that there will be much less of an industry to worry about.
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