Mailers: RPN Fee Should Be Part of Rate Case

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A coalition of mailers told the Postal Rate Commission that a decision on whether added costs should be charged for the use of "yellow stickies" on direct mail ought to be made as part of the upcoming postal rate case.


A U.S. Postal Service proposal for a yearlong market test of a fee on stickies -- also known as repositionable notes or RPNs -- is actually a backdoor "mini-rate case," the coalition said in an Oct. 25 filing with the PRC. The commission has received evidence and testimony on the proposal since July, and the debate over the market test is nearing completion. However, the PRC is under no deadline to decide.


The coalition includes the Direct Marketing Association, the Association for Postal Commerce, the Magazine Publishers of America and the Mailing & Fulfillment Service Association. They contend that the USPS is trying to set a precedent by charging more for mail not because it costs more to process, but because it brings better results for marketers.


In its own filing with the PRC, the USPS said market research has shown that mailers are willing to pay more for RPNs. If the market test is successful, the USPS will be able to increase much-needed revenue and mailers will have a new tool to improve results, the USPS said.


The USPS currently does not charge for RPNs on mail, though they are allowed only on automation-rate letter-size mail. Under the postal service's proposal, RPNs would be allowed on more types of mail. Prices would include 0.5 cents on First-Class mail and 1.5 cents on Standard mail and Periodicals.


The USPS has not provided sufficient evidence that a fee for RPNs is justified, the mailers coalition said in its PRC filing. The postal service should conduct a market test of RPNs on a broad spectrum of mail, but it should make them free for now and leave the question of fees open for the next rate case, expected in spring 2005.


If the USPS wants to raise prices on RPNs because they bring better results, it should be willing to bear part of the risk when such mailings fail, the coalition said. Raising prices on RPNs to increase revenue might have the inverse effect of reducing mailer use of RPNs and thus decrease revenue.


"Even assuming the postal service is correct regarding the prospects for increased response rates, a surcharge of this magnitude will not likely result in mailers readily embracing RPNs," the DMA said in a statement. "And, in the end, the postal service will likely not see the potential increase in volume that the hoped-for higher response rate would have generated in bills, parcels and additional advertising mail."


The USPS has said testing has shown no additional processing costs for mail pieces with RPNs attached. Mailers have seized on this issue, but the USPS contends that postal law does not prohibit rate increases based on factors other than cost.


However, some postal employees are skeptical that RPNs will be as easy to process and deliver as the USPS claims. One postal service technician, who requested anonymity, said in an e-mail to DM News that RPNs tend to reposition themselves or detach when going through processing equipment, causing equipment jams. The equipment is not designed specifically for RPNs, and even one jam in a thousand could cause serious problems, the technician said.


Another postal employee, a postmaster who also requested anonymity, said RPNs are a problem when they are only partially attached to a letter. Partially attached RPNs detach during processing and force carriers to slow down while they are casing mail to ensure that the RPNs don't come off, resulting in productivity setbacks, the postmaster said.


However, USPS experts have submitted testimony to the PRC stating that RPNs are unlikely to become detached during processing. One USPS expert stated that RPNs used in mail have a wider adhesive strip than typical yellow stickies used in offices, and a mechanical process involving air pressure used to attach RPNs to mail ensures that the stickies stay put.


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