Postal Service Reform:

Issues Relevant to Changing Restrictions on Private Letter Delivery

GGD-96-129B: Published: Sep 12, 1996. Publicly Released: Sep 23, 1996.

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Pursuant to a congressional request, GAO reviewed the restrictions in federal, civil, and criminal law on private letter delivery, focusing on: (1) the Postal Service's experience in administering and enforcing the private express statutes since 1970; (2) the growth and development of private message and package delivery companies since 1970; (3) the possible effects of changing private letter delivery restrictions on the Service's mail volume, revenues, costs, and postal rates; and (4) other countries' postal reform efforts, particularly regarding 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since 1970, the Service delivers the vast majority of advertising and periodicals; (7) if the statutes are changed or repealed, the Service's loss of volumes and revenues would vary among mail classes, but Priority Mail would be at the greatest risk; (8) postage rates would be affected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.

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