Revised bill focuses on private competition

Nation's Business, Feb, 1998 by Steve Bates

Rep. John M. McHugh, R-N.Y., has refined his pending Postal Service reform proposal to provide the government-sponsored corporation with more-explicit ground rules about the products and services it offers in competition with private businesses.

McHugh, chairman of the House Postal Service Subcommittee, made the change in response to increasing friction between the agency and companies such as United Parcel Service, Federal Express, and Mail Boxes Etc. These firms say that the Postal Service's government connections give it unfair advantages in overseas parcel delivery and in boxing and wrapping packages for domestic delivery.

Under the McHugh proposal, the Postal Service could not subsidize its competitive services substantially with revenue from its traditional, virtual-monopoly services such as first-class mail. In addition, competitive services would be subject to antitrust laws.

Also under McHugh's measure, the Postal Rate Commission, which makes recommendations to the Postal Service's Board of Governors on proposed rate and service changes, would be renamed the Postal Regulatory Commission and given stronger powers to monitor the Postal Service's finances.

The revised bill would have no immediate impact on the across-the-board rate case pending before the rate commission. Under the rate proposal, the price of a first-class stamp would rise from 32 cents to 33 cents. A decision on the rate case is expected this spring.

Last year, McHugh's subcommittee held five public hearings on his original bill, but no consensus emerged on its central issues. One issue was whether to give the Postal Service more autonomy in setting rates, subject to price caps. The revised bill would tie the proposed price caps more closely to the inflation rate.

A previous proposal to allow private delivery firms to place mail in homeowners' letter boxes on a trial basis has been scrapped, according to McHugh's staff.

Postal Service spokesmen have had no comment on the revised bill.