Tuesday, August 25, 2009

Advertising Delivery: A Governmental Function?

In his thought provoking piece, APWU President William Burris summarized the challenge facing the Postal Service and its employees succinctly. I would like to focus on two quotes from his piece that highlight the challenge that he and his membership as well as all postal stakeholders will have to struggle with as Congress rethinks the business model for the Postal Service. Both of these quotes will like be central to one question that Congress will likely to debate: "Is the Postal Service's business still a governmental function?"

His first quote goes to the heart of what will be the policy debate, the core business of the Postal Service and governmental responsibility for ensuring that a provider exists to serve that market.

"Mail is what we process, transport, and deliver, but as the dominance of business mail demonstrates, the Postal Service is in the advertising business." [emphasis from original]

Mail advertising constitutes the bulk of the volume the Postal Service handles in its non-parcel postal products. Even bills and statements contain advertising.

No other advertising delivery business in the United States is government owned. The one possible exception is the Corporation for Public Broadcasting which allows sponsors of program to craft advertisements that are included at the end and beginning of programs.

No other advertising media is regulated to the extent that the Postal Service is regulated. Newspapers and periodicals that use newsstand, supermarket or home delivery are not subject to any regulation regarding what they can charge advertisers or the reading public, and are not subject to regulation as to how, where, and when those delivered to the household must be delivered. There is limited regulation of the broadcast industry but broadcast networks and local stations are free to set prices that they charge advertisers. Cable operators have some regulation regarding what they can charge customers and the range of their service offerings but do not have to submit to a regulatory process like the Postal Service.

The second quote focuses on the issue of business constraints.

"The Postal Service could do so much more to actively encourage citizens and business owners to use the USPS Web site to create customized messages for delivery by the Postal Service. Invitations to weddings or birthday parties; announcements of new business ventures; promotions of products and services — the possibilities are endless, constrained only by the imagination. Why isn’t the USPS advancing this concept rather than relying so heavily on messages developed by others?

We must use advertising as a tool that generates mail. The USPS has the potential to become a full-fledged advertising giant that, with extensive use of electronic media, creates volume."

The Postal Service is constrained to only provide "postal services" as defined by the Postal Regulatory Commission. This constraint prevents the Postal Service from doing what President Burris suggests. The constraints exist because competitors do not want the Postal Service, a governmental entity to compete with the private sector.

Removing the business constraints on the Postal Service that would allow it to enter businesses that relate to the delivery of advertising would create a more vertically integrated process, and possibly a lower cost process from conception to delivery. However, removing the constraint creates a significant policy quandary. If survival of the Postal Service requires it to enter a broader range of businesses related to advertising delivery that puts it in direct competition with private sector firms, should its existence as a governmental enterprise change?

I d0 not think that President Burris or APWU membership is prepared to accept the privatization option that might be required to fully take advantage of the Postal Service's capabilities as a deliverer of advertising. For too long privatization has been tied to cutbacks in jobs and reductions in compensation for APWU members or leadership to accept. However, the current financial challenges of the Postal Service suggest that those cutbacks and compensation reductions may come even without privatization. President Burris' message to his members suggests that it may be the time for the APWU to seriously invest resources to flesh out how a Postal Service free to pursue all opportunities relating to advertising delivery, and for that matter any business that could use the capabilities of postal employees and network of sortation and retail facilities, could improve the long-term prospects of the Postal Service and the APWU members that it employees.

No comments: