The Changing Nature and Cost of the USO and the Value of the Monopoly Ruth Y. Goldway Chairman, U.S. Postal Regulatory Commission UPU Conference of Postal Regulation November 13, 2013 Bern, Switzerland

2 Role of the Postal Regulatory Commission  Establish more modern system of rate making  Monitor quality of service  Provide detailed, transparent information on Postal Service’s operations  Provide Open Review of Post Service Proposals for Changes in Nature of Service  Hear appeals from citizens on post office closings  Offer assistance in resolving rate and service inquiries  Hear customer complaints and provide redress if appropriate  Ensure level playing field between mailers (e.g. decide over allegation of rate discrimination)  Assure universal service six days a week

3 U.S. Postal Monopolies The Two Postal Monopolies  Letter Monopoly (Private Express Statutes)  Mailbox Monopoly

4 U.S. Postal Monopolies (cont.) Estimating the Value of the Two U.S. Postal Monopolies  Combined Letter and Mailbox Monopoly (Status Quo)  Mailbox Monopoly

5 USO Components for the U.S. Elements Included in the USO Cost Estimate (FY2012)  Six-Day Delivery instead of Five-Day Delivery ($2.5 Billion)  Nonprofit Mail Discounts ($0.974 Billion)  Unzoned Media/Library Rates ($0.071 Billion)  Losses on Market Dominant Products ($0.708 Billion)  Maintaining Small Post Offices ($0.529 Billion)  Alaska Air Subsidy ($0.122 Billion)  Uniform Rates for First-Class Mail ($0.117 Billion)  Group E Post Office Box Service ($0.03)  Not Included – Services that would otherwise not be provided if there was not a USO

6 Comparison of the Value of U.S. Postal Monopolies and Cost of the USO Cost Value

Legislative Activities PENDING POSTAL REFORM LEGISLATION  S Postal Reform Act of 2013 Awaiting Committee Action  H.R Postal Reform Act of 2013 Approved by the House Oversight & Government Reform Committee Awaiting Floor Action 7

Legislative Activities Key Issues Under Discussion  Potential Service Changes  Temporary moratorium on service standard changes and post office closings  Exploring moving from 6 to 5 day delivery schedules  Increasing cost effectiveness of delivery, including centralized and curbside delivery  Encouraging New Streams of Revenue and Innovation  Potential Changes to the current rate-setting process  Employee Healthcare Benefits & Healthcare Pension Benefits 8

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