GAO – Key Considerations for Potential Changes to USPS’s Monopolies

07/27/2017

The US Government Accountability Office has released it’s report for Key Considerations for Potential Changes to USPS’s Monopolies.

It did not contain any new surprises and seems to be based primarily on public and PRC provided information.

This is a summary of what the GAO found:

The value of the U.S. Postal Service’s (USPS) letter delivery and mailbox monopolies was $5.45 billion in fiscal year 2015, according to the most recent estimate prepared by the Postal Regulatory Commission (PRC), the regulator of USPS. This figure suggests that USPS’s net income would decline by this amount if its monopolies were eliminated. To develop these estimates, PRC identifies the mail covered under USPS’s monopolies for which a potential entrant might compete to provide service if the monopolies were to be eliminated; such mail is referred to as “contestable.” PRC’s estimated value of these monopolies has increased substantially in recent years—it was $3.28 billion in fiscal year 2012—and PRC staff expects that the value will continue to increase in the next few years due to increased volumes of contestable mail.

Narrowing or eliminating USPS’s letter delivery and mailbox monopolies would likely have varied effects, according to views provided by postal stakeholders, experts, USPS, and PRC. For example, all parties agreed that allowing other entities to deliver letters could decrease USPS’s revenues, and that additional strain would be placed on USPS’s ability to continue providing the current level of universal service. Additionally, some stakeholders said that allowing other entities to deliver items to the mailbox could adversely affect the security of mail and increase clutter that would impair USPS’s delivery efficiency. On the other hand, most of the postal experts we interviewed said that allowing entry to this market by private competitors could result in increased competition that would spur USPS to become more efficient. Officials from foreign posts or regulators in all six of the countries GAO contacted reported increases in competition after ending their postal delivery monopolies, and some of these countries also reported losses of revenue and market share for the carriers providing universal service. Stakeholders, experts, foreign officials, and USPS agreed that postal policies are interdependent and therefore need to be considered in tandem with one another; officials from all six countries we contacted told us that concurrent postal policy changes, such as increasing a post’s degree of commercial freedom or decreasing the scope of its universal service obligation, assisted their transitions away from postal monopolies.

Estimating the effects of laws that apply differently to USPS and its private competitors would require steps including defining appropriate study objectives and assessing scope and methodological tradeoffs. For example, objectives would need to clarify the extent of financial effects to be estimated—whether for USPS as a whole, for only specific products, or for USPS relative to competitors. Scoping decisions would need to define the specific areas to be studied, the period of time to be reviewed, and the type of data to be collected. This would involve multiple considerations, including determining which laws to include and how to address differing stakeholder views. Additional judgment would be needed to address any lack of consensus on methodologies and to determine the appropriate degree of time and resources. For example, a comprehensive study estimating the effects of every law would require significant time and resources; if estimates were desired in a shorter time frame—or if financial resources were limited—tradeoffs would be required.