From the U.S. Government Accountability Office, www.gao.gov Transcript for: U.S. Postal Service's Monopolies Description: The U.S. Postal Service has monopolies on delivering letters and accessing mailboxes, which were designed to protect its revenues and help it provide universal service. However, its net losses reached $5.6 billion in fiscal year 2016--and have topped $62 billion over the past decade. We looked at potential changes that could help the Postal Service fulfill its mission. Related GAO Work: GAO-17-543: U.S. Postal Service: Key Considerations for Potential Changes to USPS'S Monopolies Released: July 2017 [ Background Music ] [ Sarah Kaczmarek: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Sarah Kaczmarek. [ Sarah Kaczmarek: ] Federal laws protect the Postal Service from its competitors like Amazon, FedEx, and UPS. Congress passed those laws for a reason. The Postal Service has a long history of delivering mail to Americans' doorsteps on an almost daily basis. Those laws gave the Postal Service monopolies to deliver some types of mail and gain exclusive access to our mailboxes. Why? Well, to help protect its revenues. As we communicate less by sending mail and more just online, the Postal Service's revenue drops. Its net losses were over $60 billion in the last decade. Its poor financial condition may jeopardize its ability to fulfill its mission of universal service, so that everyone, no matter where they live, can receive mail. [ Lori Rectanus: ] You know, the Postal Service has been around for 200 years. It's an institution that we all know. These post offices are on our street, in our neighborhood. The postal carrier is on our block, but what a lot of people don't know is the Postal Service has to pay its own way. It's not a typical government agency in that it doesn't get any federal funds, and so any money that it needs to operate, it has to get through what it charges its customers. [ Sarah Kaczmarek: ] So that was Lori Rectanus, a director on our Physical Infrastructure team. Lori and I met out in front of the post office on Pennsylvania Avenue in Washington DC to talk about GAO's new report on Postal Service monopolies. [ Lori Rectanus: ] So in setting up the structure, Congress thought, if we're going to expect the Postal Service to do certain things, we have to give it some revenue protection. So it established two monopolies. The first one says that only the Postal Service can carry letters, and those are things like birthday cards and bills and things like that. The second monopoly says only the Postal Service can put something in your mailbox. [ Sarah Kaczmarek: ] So, does having these monopolies still make sense? [ Lori Rectanus: ] There's no doubt that these monopolies provide some revenue protection for the Postal Service. The real question is, are they still achieving the goals that they were designed to do decades ago? Think about the delivery landscape today. The Postal Service might have a monopoly over first-class mail, like the letters and the cards that you send, but that mail is dropping drastically, because who's mailing anymore? Right? We send birthday greetings through Facebook, or we pay our bills online. [ Sarah Kaczmarek: ] What happens if we take these monopolies away? [ Lori Rectanus: ] From a consumer perspective, we would see a couple of things. One, you'd have a greater choice, potentially, in the people that would be delivering your mail, and the second thing is, you'd have more people coming in and out of your mailbox. So those people who think this is a good idea talk about it in a way that says, as a consumer, if you had greater choice about what you get and how you get it and where you get it, and maybe at a better price, this is a good thing, right? And in general, people think that greater competition leads to innovation and efficiency. [ Sarah Kaczmarek: ] What about the flipside? What are some possible downsides here? [ Lori Rectanus: ] What about if you live at the bottom of the Grand Canyon, or you live in the middle of the rural area, and no one wants to deliver the mail to you? You might actually have less choices, or you might actually have to pay more than you pay now, and most people do recognize that if we eliminated these monopolies, there could be a revenue hit for the Postal Service, which could affect their ability to operate, and finally, if people are coming in and out of your mailbox, some people raise questions about security and privacy, and who's going to have access to the mail that you put in there. [ Sarah Kaczmarek: ] I want to go back to your point on revenue. Are you able to put a price tag on the value of the Postal Service's monopolies? [ Lori Rectanus: ] Well, there's an organization called the Postal Regulatory Commission, or the PRC, and they have valued the monopolies at about five and half billion dollars. The way they calculate this, it's not what the Postal Service is making from the monopolies, but it's the amount of money they would lose if those monopolies were eliminated. So what they're saying is there's $5 billion worth of mail that potentially could be delivered by someone else. [ Sarah Kaczmarek: ] So I know your report also looked at how other countries have dealt with these challenges. What has happened in other countries when they have taken away their postal service monopolies? [ Lori Rectanus: ] We looked at six countries that had either reduced or eliminated their monopolies, and not surprisingly, their experiences are a little bit of a combination of what folks say could happen here. The postal operators, like our Postal Service, did experience some revenue loss initially, but once they lost the monopolies, they also realized that they had some more flexibility about what they could charge and the types of products they could offer. So in the end, the delivery system in those countries did become more efficient, and innovative, and competitive. [ Background Music ] [ Sarah Kaczmarek: ] Okay, so there's a lot to consider here when it comes to possibly changing Postal Service's monopolies. Some people may have more options for who delivers their mail, and maybe even at a better price, but others could have to pay more. Will we see changes like this happening anytime soon, and what's the bottom line here? [ Lori Rectanus: ] You know, GAO has said for years that action needs to be taken to address the Postal Service's financial challenges and help it get ready for the future. That action has not been taken, precisely because we really don't have a consensus about what we, as a country, want from our delivery system. What types of mail do we want? How often do we want that mail? And really, what do we want to pay for it, and how do we want to pay for it? The consensus that came out of our report is this is a really difficult question, and that the monopolies exist in a much broader cultural ecosystem and you can't really look at one without the other-- and therein lies the rub. [ Background Music ] [ Narrator: ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on iTunes. For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at GAO.gov.