Postal Service Reform

For more than 200 years, the U.S. Postal Service and its predecessors have enjoyed a statutorily imposed monopoly restricting the private delivery of letters. The monopoly was intended to enable the postal system to fulfill its mandate of providing uniform rates for at least one class of letter mail and delivery of letter mail to patrons in all areas, however remote. Some large mailers and private carriers want Congress and the Postal Service to allow greater competition for letter mail delivery. Others have raised concerns about how increased private delivery might affect the Postal Service's ability to sustain mail services traditionally provided by the government, especially since the Postal Service now receives virtually no federal money. The first volume of this report (GAO/GGD-96-129A): (1) determines the historical and current basis for restricting private delivery of letters, including the Postal Service's efforts to enforce those restrictions; (2) documents changes in private sector letter delivery capacity since 1970; (3) analyzes the possible financial effects on the Postal Service's revenues, costs, and postal rates if restrictions on private letter delivery were to be changed; and (4) provides information on how recently reformed postal administrations abroad provide universal service and restrict private letter delivery. The second volume presents a detailed analysis of the restrictions in federal, civil, and criminal law on private letter delivery.

GAO found that: (1) supporters believe that the private express statutes are necessary to protect the Postal Service's revenue base and to ensure that the Service provides universal service and meets other public service obligations; (2) private carriers have challenged the assumption that a monopoly results in lower postage rates and less service disruption; (3) because of outside pressure, the Service has suspended the statutes for extremely urgent letters and has stopped direct enforcement of the statutes due to the difficulty in enforcing the statutes; (4) in 1971, the Service faced little competition, but by 1994, the Service had only a 16 percent share of the expedited mail and package delivery market; (5) the Service's volume and revenues for protected mail classes has increased since 1970, but volumes and revenues for classes subject to competition have shown little growth; (6) despite the rapid increase in alternative mail delivery systems since 1970, the Service delivers the vast majority of advertising and periodicals; (7) if the statutes are changed or repealed, the Service's loss of volumes and revenues would vary among mail classes, but Priority Mail would be at the greatest risk; (8) postage rates would be affected by the loss of first-class mail, but the effects of statutory changes on the Postal Service's mail volumes are difficult to estimate; (9) the Service has taken actions to become more competitive, but various laws and regulations limits its competitiveness; and (10) some other countries have narrowed their letter mail monopolies as part of their overall postal reform efforts and have given their postal administrations greater flexibility in providing universal mail service.