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SMC files response to NNA filing protesting saturation discounts
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On March 2, 2009, the Newspaper Association of America (NAA) filed Comments with the Postal Regulatory Commission (PRC) objecting to the rates proposed by the USPS as they relate to saturation and high density mail. NAA asks the PRC to rule that the proposed rates are "unlawful" and "unfairly discriminatory as favoring saturation mailers over high density/TMC newspaper programs." NAA also asks the PRC to disallow the Postal Service's proposed saturation mail Volume Incentive Program.
In its Comments, the NAA alleged that the proposed rates for saturation mail were achieved as a result of SMC's "lobbying" of Postal Service executives. (NAA's Comments did not disclose how many times newspaper publishers or NAA might have met with USPS officials in 2008 or preceding years).
NAA also wrote, inaccurately, that SMC's postal advocacy agenda was designed to "encourage third party advertising inserts to shift from one mailer to another, with the latter [saturation mailers] paying lower rates [then TMC mailers]."
NAA also asserted, inaccurately, that "the average saturation mailer piece pays the piece rate, not the pound rate."
As your association leader, I took great exception to NAA's Comments. In an effort to set the record straight, I submitted to the PostCom Bulletin, a postal publication read widely by mailers, postal stakeholders, and Washington leaders, a comment on the NAA piece and submitted a reprint of the Ink column I wrote last year that described in detail the meeting and business case that saturation mailers have been bringing to the Postal Service and the PRC for a postal rate and an operations environment that will help saturation mail programs grow and bring needed volume and contribution to the USPS. I was pleased that PostCom's executive leader and President, Gene Del Polito, a well known and respected expert and commentator on mailing and postal matters, took the NAA to task and described its lament as "at best disingenuous."
Anyone wanting to read the entire text of the NAA Comments, or the Comments filed by SMC and other mailers about the Postal Service's postal rate adjustments, can go to the PRC website, prc.gov, and check the daily listing of filings for March 2, 2009.
For the record, SMC's rate platform and advocacy was in 2008, and will continue to be as follows:
SMC REQUESTS FOR 2009 USPS RATES - AND FUTURE RATE AND OPERATIONS ENVIRONMENT
1. Keep single piece rate adjustment below CPI.
● The current saturation mail rate is too high when compared to competitive products. The USPS should reduce the piece rate from today's rates by 5% to 10%.
2. Lower the pound rate.
● The high pound rate discourages saturation mailers from staying with the USPS as their piece size grows. Heavier weight papers and mail programs are more likely to convert home carrier or set-up their own private delivery networks.
● Saturation mailers cannot compete to distribute heavier weight pieces against cheaper, non-postal delivery options, or blended TMC rates.
3. Increase the saturation - high density rate differential.
● Saturation mailers have not been able to compete with newspaper TMCs on cost and price. SMC members report that newspapers often use their blended TMC rate as a loss leader or offer rates that are clearly below the absolute cost a saturation mailer needs to charge for full saturation mail coverage.
4. Adopt simplified but certified as an alternative addressing option for program mailers with a frequency of at least 12 times a year and an established circulation.
5. Preserve the detached address label (DAL) as an addressing option.
6. Preserve existing drop ship discounts with 100% pass through of cost savings.
7. Create an incentive/new market rate for saturation, program mailers.
8. Appoint a USPS product manager to work with the saturation mail industry.
SMC's efforts to achieve a greater differential between TMC rates and saturation rates, and to achieve a lower pound rate, is not designed to simply transfer advertising materials from TMC products to saturation mail. The rate environment that has existed through 2008 has given TMC mailers an unfair competitive advantage in pricing. TMC programs have had the ability to leverage their private delivery networks and ROP pricing to offer distribution rates that are lower than the rates saturation mailers can offer.
SMC has maintained, and will continue to maintain, that the Postal Service pound rate is too high. We believe there is a substantial market to grow local print advertising programs that bring desirable shopping information from local retailers, grocers, and service providers into American homes. The Postal Service and saturation mailers are uniquely positioned to partner together for the growth of this business. As the communications and media environment changes, advertisers are looking for cost effective advertising solutions. SMC's members believe we can work with the Postal Service and local advertisers to grow this business. Our efforts will help businesses, consumers and the Postal Service. Much of this growth will come from completely new business, and advertisers large and small, that have not used the Postal Service, whether TMCs or saturation mail, in the past.
As for this last rate case. We did not achieve all of our objectives. We will continue to fight for a lower pound rate and for a simplified addressing option. But given the constraints of the law and the Postal Service's pressing need for more money, we achieved the most favorable rates possible. I will continue to look to all of our members for support, and participation, to keep fighting for a rates and operations environment that helps saturation mailers, the Postal Service, and your advertising customers.
Donna E. Hanbery
Saturation Mailers Coalition
33 South Sixth Street, Suite 4040
Minneapolis, MN 55402
(612) 340-9350/direct dial
(612) 340-9446/fax
ana
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Cheers,
Craig McMullin
AFCP
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