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PRC’s decision worries postal software vendors

Postal software vendors expressed dismay last week over a recommended decision by the Postal Regulatory Commission that offered rate relief for Standard mailers and implied that the changes would not be difficult.

The vendors were particularly concerned that the PRC said additional computer hardware or software would not be needed to accommodate the temporary change and recommended mailers simply multiply the number of flats mailed by either 3 cents or 2 cents depending on the mail type. It’s not as simple as it sounds, however.

“[The PRC’s decision] clearly exposes the lack of working knowledge the commissioners have on how mailers actually mail, as well as either ignorance or complete disregard for electronic USPS initiatives and programs,” said Lisa Bowes, postal affairs and industry relations manager at Window Book Inc., a postal software vendor in Cambridge, MA.

“Advising mailers to just hand-adjust their statements is not workable for the vast majority of mailers who, under great pressure from the USPS, are communicating their mailing data electronically to the Postal Service,” she said. “Non-electronic data adjustments are not acceptable, not by the mailers, the mail owners, or by the USPS themselves.”

The PRC’s May 25 decision offered interim rate relief for Standard regular flats and catalog mailers in response to the U.S. Postal Service Governors’ request to reconsider the recommended rates in March. The decision grants a temporary rate reduction of 3 cents for all Standard mail regular flats and 2 cents for Standard regular nonprofit flats.

The temporary transitional rate relief for Standard regular flats mailers will end Sept. 29.

Ms. Bowes took offense to an implication that the PRC equates mailing computer software with being a glorified rate calculator.

“Nothing could be further from the truth,” Ms. Bowes said. “Mailing software also provides output services such as detailed reporting and mail verification support, all of which would be skewed and unusable if the rate adjustments were not electronically reflected. To add this requirement after the last round of fire-drill rate and preparation changes imposed on mailing software providers – and mailers – just adds more insult to injury.

“To be blunt, the PRC needs to get with the program,” she said. “They need to educate themselves on how the [USPS] actually operates. They need to be aware of how customers present their mail and their mail documentation. It is obvious that the lines of communication between agencies and the public need to be reexamined, sooner rather than later.”

Chris Lien, director of commercial mail marketing for Business Objects, San Jose CA, agreed.

“I take particular exception to the PRC claiming to know what is involved in software development and fulfillment,” Mr. Lien said. “We’ve been in the postal software business for over 30 years and there is a lot more here than just calculating by a number of pennies. It came across as demeaning as to the role software plays in this industry.

“The system to process billions of pieces of mail for thousands of mailers is a complicated business, that’s the bottom line,” he said. “We are not talking about balancing your checkbook here – there is nothing trivial about it.”

Mr. Lien also was concerned that the decision puts software companies in “a state of perpetual update. Our customers are already getting multiple revisions to the software and now they will have to get more.”

The PRC didn’t agree with that conclusion.

“It is certainly not our intention to imply that it is not difficult to implement software changes,” said Nanci Langley, a PRC spokeswoman. “Nor are we saying that mailers shouldn’t purchase software.”

In general, mailers were pleased about the rate relief but hope to extend the deadline. But DM lobbies thought more could be done.

The Direct Marketing Association expressed disappointment with the recommendation. It is asking the USPS Governors to approve the rate reduction without the deadline, leaving it in effect until the next postal rate change, which is likely to take place in mid-2008, under the new procedures established by the Postal Reform law that was enacted late last year.

The DMA said that it believes the proposed relief can be made permanent without

causing financial harm to the USPS. The association also asked its members and others in the mailing community to join the association in asking the USPS Governors to keep the rate reductions that the PRC has recommended in effect beyond Sept. 29.

Also, Hamilton Davison, executive director of the American Catalog Mailers Association, last month issued a statement in praise of the PRC’s decision to grant postage rate relief to catalog mailers but asked that it be of longer duration.

“The PRC decision comes on the heels of potentially devastating rate increases of up to 40 percent that would have caused significant economic damages throughout the catalog industry, including significant job losses and reduced mail volumes,” Mr. Davison said.

“The PRC recommended a 3 cent per piece reduction on Standard Mail Regular Flats,” he said. “This proposal will help mitigate the rate increases and economic waste posed by such a rapid increase in postage for catalogers.”

Washington-based American Catalog Mailers Association was formed in response to the postage cost increase originally levied by the most recent rate case and immediately sought relief for catalogers.

“Given the circumstances, we would hope the USPS Board of Governors finds it appropriate to set a very near-term implementation date to provide immediate support to catalogers who are already scaling back their mail plans,” Mr. Davison said.

The USPS Board must now vote on the decision. No date has been set for a vote, but the next board meeting is set for June 19-20, although the board does not have to vote at the meeting.

Mailers have had a 10-day window from May 25 for comments to the Board, and according to Joe Schick, director of postal affairs at Quad/Graphics, Sussex, WI. Basically the message to the USPS is that this should not be temporary.

“The [USPS Board] has the authority to accept the 3-cent reduction and then make it permanent instead of temporary as proposed,” Mr. Schick said. “They could also reject the recommendation and send it back to the PRC once more, which is highly unlikely. Or they could just reject the recommendation and stick with the rates we are currently using, which is also highly unlikely.

“Whatever the decision, it once again could have an impact on the next rate case and how they choose to file – either under the old law or under new law and CPI,” he said.

The other issue is timing if the USPS does accept the change.

“Most of the discussion has been around synching [the timing of the change] up with the implementation of new periodical rates on July 15,” Mr. Schick said. “Despite the fact that everyone would want them changed ASAP, it would give everyone enough time to modify postage statements and software so manual calculations would not have to be done as that would be costly and time-consuming as well.”

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