DMA opposes cataloger coalition's stance on Standard flats rates

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The differences between the Direct Marketing Association and the Coalition of Catalog Mailers became public Friday, just 48 hours from the inauguration of the new postal rate regime in place today.

Members of the DMA were told by president/CEO John A. Greco Jr. that it doesn't support a Coalition of Catalog Mailers request to the Postal Regulatory Commission that gives catalogers time to adjust to the high rates rather than lowering them.

"DMA immediately issued a call to action to all members to contact the Governors of the USPS, urging them to reject the PRC recommendations for Standard Mail flats," Mr. Greco said in a Postal Rate Case Update e-mail sent to members May 11.

Mr. Greco explained that in its May 2006 rate case filing, the USPS requested rate increases in the 9 percent to 12 percent range for Standard Mail flats. However, the PRC sought increases in the 20 percent to 40 percent range

The PRC's recommendation would effectively have overturned a 17-year program to gradually increase the rate differential between letter-shaped and flat-shaped Standard Mail, and resulted in an additional $678 million in costs for Standard flats marketers.

In addition, the DMA sent a separate letter to the USPS Governors, asking that they reject the PRC's Standard Mail flats recommendations. The association specifically pointed out that the mail volume the PRC had assumed would now be unrealistic, based on the doubling of the USPS' requested increase.

The Governors on March 19 returned the Standard Mail flats increases to the PRC for reconsideration but asked the PRC to rebalance the rates in Standard Mail, including raising letter-shaped mail rates and lowering flat-shaped mail rates.

However, the Governors allowed the PRC-recommended rates to take effect "under protest," which meant that the rates would go live today.

At this point, Mr. Greco explained that the DMA strategy was to push for quick PRC reconsideration so that any rate reduction stemming from its reconsideration could be put in place by today.

"Sadly, in the midst of this strategy, an ad hoc Coalition of Catalog Mailers filed a motion with the PRC to reopen the rate case record," Mr. Greco said. "This action immediately stopped all reconsideration for Standard Mail flats rates, though the PRC reconsideration of the other two rates continued unabated."

The Coalition of Catalog Mailers motion was filed without any discussion with or in consideration of other mailer associations such as the DMA, Mr. Greco said in the e-mail to members.

"In support of its motion, [the Coalition of Catalog Mailers] asked the PRC to give catalogers time to adjust to the high rates rather than the more desirable action of lowering the high rates," Mr. Greco said. "As a result, the message received from the catalogers to the PRC is not opposition to higher rates, but simply the implementation date.

"I would like to be very clear that DMA does not support this strategy," he said. "Rather, we believe strongly and very vocally that Standard flats rates should be lowered."

The PRC denied the Coalition of Catalog Mailers' motion on April 27, the day it issued its reconsidered decision on the non-machinable surcharge and the Priority Box rate. The USPS Governors accepted those lowered rates, which take effect today.

"If the [Coalition of Catalog Mailers] had not undermined DMA strategy, it is very likely that the PRC would have reconsidered its decision for Standard Mail flats in time to stop this Monday's postal rate increase for flats mailers," Mr. Greco said.

Mr. Greco said that regardless of these events, the DMA has continued its focus on the PRC, sending another call to action that asked members to contact the PRC. Also, on May 4, it filed comments with the PRC in which it outlined how it could lower the rates for Standard flats without increasing rates for any other mailer class.

The DMA also has asked the USPS board to delay the implementation of Standard Mail Regular rates pending the PRC's reconsideration.

Mr. Greco said the DMA's longer-term strategy is to stop another postal rate case filing and that the DMA board of directors and staff are in constant communication with the USPS.

He also stressed the necessity of working together.

"As a business community, we must work together to avoid destructive policies," Mr. Greco said. "And if we speak in one voice, we will be significantly more effective."

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