The FTC and the "M" Word

The Federal Trade Commission has issued its much-awaited, Congressionally mandated study on the USPS's mail monopoly, identifying the federal and state laws that apply differently to the Postal Service compared to its competitors, and what measures should be adopted to end such differences, including regulatory action by the PRC.

While there is certain to be further commentary here and elsewhere in the coming days, a quick read of the study report shows that its conclusions are provocative, with morsels of support for everyone -- USPS and its competitors -- to satisfy each side's policy biases.

The study concludes that:

* Because of its status as a governmental institution and its universal service obligation, the Postal Service is burdened with a unique "net competitive disadvantage versus private carriers."

* From a market-wide perspective, the federally-imposed restrictions that impose economic burdens on the USPS and the implicit subsidies that provide the USPS an economic advantage should be viewed as "two distortions that compound each other and negatively affect the provision of competitive mail products."

* Congress should consider whether to reduce the constraints on the USPS's competitive products operations, to assist USPS in its management of labor costs and configuration of its network. At the same time, the PRC should consider requiring USPS to account for its implicit subsidies when making pricing and production decisions.

* Worksharing and recent PRC regulations requiring contribution to institutional costs may reduce any advantage the USPS' postal monopoly provides in its delivery of competitive products.

* In the longer term, Congress should consider action that further eliminates the legal differences between the USPS and its competitors, including:

-- Relaxing the current mailbox monopoly to allow consumers to choose to have private carriers deliver competitive products to their mailboxes would create net benefits for consumers;

-- Narrowing the postal monopoly to allow greater competition while still maintaining universal service; and

-- Establishing the USPS' competitive products division as a separate corporate entity -- with either private or governmental ownership.

The two Democrat members of the five-member FTC -- Pamela Jones Harbour and Jon Liebowitz -- in a concurring statement, criticized the report for its review of alternative business models that exceeded, they say, the mandate of the study and relied on inconclusive information.