**Testimony of the**

**National Newspaper Association**

**(NNA)**

**Before the President's Commission**

**on the**

**United States Postal Service**

**By**

**Max Heath**

**Vice President**

**Landmark Community Newspapers, Inc.**

And

**Chairman**

**of the**

**NNA Postal Committee**

***Executive Summary***

Newspapers, as a key component of the postal system since colonial
times, have served American democracy by contributing to an informed
public. But the history of the United States Postal Service (and its
predecessor department) and newspapers is only an interesting prologue
to the 21^st^ Century collaboration of the partners to keep mailing
systems up to date.

Today, newspapers in the mail are an anchor in the USPS mall. They can
be delivered efficiently and cost-effectively and meet readers'
expectations of a timely delivery if the Postal Service manages this
mailstream properly.

In fact, the within county subclass of the Periodicals mail class is one
of USPS's gleaming successes. Its good record will be enhanced if USPS
recognizes the value in keeping workshared preparation at the local
level and carrying the product to customers in a carrier's "third
bundle," prepared in delivery sequence by the mailer.

In the nationwide mailstream, more progress toward bar coding, automated
handling and USPS productivity will help newspapers to support the
periodicals mailstream and contribute to an enduring commitment to
universal service. Continued recognition of the educational, scientific
and cultural information provided by periodicals is essential to
America\'s future as well.

NNA joins its colleagues in the mailing community through its work with
the Mailers Council. We support the Mailers Council's emphasis upon
worksharing, productivity incentives and appropriate investment in
technology.

NNA has members in every state and in most Congressional districts. We
would be delighted to assist the Commission in securing testimony from
newspapers outside the Beltway, as the Commission proceeds with its
field hearings.

Our comments touch upon most of the key elements in Executive Order
13278. We believe newspapers are a profitable and important part of the
mailstream, but we urge the Commission to recommend new measures of
costs, better processes for handling and new incentives for
work-sharing. We believe a postal monopoly and volume-based Negotiated
Service Agreements are incompatible and we urge the Commission to
recommend against them. We believe universal service is critical. Our
sense is that productivity is the primary issue upon which the
Commission should focus.

I.  **Background of the National Newspaper Association**

NNA has represented the community press since 1885. It was founded by
weekly newspaper publishers to create a national network from a
burgeoning group of state press associations. Unlike the dailies
beginning a national group around the nation's industrial cities, the
weeklies' primary reasons for organizing were not about labor relations
or dealing with advertising agencies.

Rather, these small papers were concerned about gathering the news,
getting their products delivered within a sprawling frontier and
training young printers and journalists. Postal concerns arose quickly,
as they focused on ways to compete effectively with the massive outreach
of the newspapers from New York, Chicago and other major cities after
Rural Free Delivery was established. [^1]

NNA today represents nearly 3,000 community newspapers. Members include
weeklies with circulations under 1,000 and larger dailies, with a wide
sprinkling of growing suburban newspapers. Its median sized newspaper,
however, is a weekly with circulation in the 3,000-5,000 range and a
daily with a circulation under 10,000. These newspapers depend heavily
upon mail distribution. NNA's 1999 mail volume survey indicated that
weekly newspapers with 1,000 to 20,000 readers account for 70 percent of
the newspaper within county mail and about 65 percent of all within
county volume.

NNA has appeared on behalf of its members in every omnibus rate
proceeding since Postal Reorganization. It was an active participant in
the 1996 reclassification case and in recent classification proceedings.
NNA generally supports rational and cost-justified work-sharing. It
supports the Postal Service's innovations on behalf of customers. It
opposes volume-based mail rates as unfair and unjustified in a postal
monopoly, but agrees with many other USPS attempts to refine subclasses
and send appropriate pricing signals to mailers.

We are a nonpartisan trade group. We make no PAC contributions. Our
representation in Washington is carried out with a small government
relations force and a Congressional Action Team of publishers/editors
who know their Congressional delegations. Newspapers keep readers
briefed on national priorities---and many carry the Congressional weekly
columns. We usually find senators and representatives receptive to our
concerns. We worked with Congressman John McHugh on postal reform bills
in the 106^th^ and 107^th^ Congresses, and are assisting the Postal
Service's efforts to revise of the postal portion of the Civil Service
Retirement System (CSRS).

II. **The Commission should recognize newspaper mail as unique mail that
    is an essential part of the future mailstream**

Former Postmaster General Bill Henderson coined the "anchor in the mall"
term for periodicals. His comments in the late 1990s took the concept of
periodicals beyond the educational, scientific and cultural
informational values (ESCI) found in the Postal Reorganization Act and
affirmed that periodicals are important for another reason. They create
interest in the mailbox. NNA embraced the term as a particularly apt
description of newspaper mail.

Newspapers are users of all mail classes. Although periodicals mail is
the primary vehicle for weekly newspaper distribution, newspapers are
also heavy users of Standard mail for distributing advertising shoppers
to everyone in their markets or Total Market Coverage (TMC) vehicles to
non-subscribers. They use first-class mail for invoicing and general
business correspondence.

NNA works with many USPS and mailers groups on issues involving these
mail classes, including our work with the industry-oriented Mailers
Council and the Postal Service's Mailers Technical Advisory Committee. I
have been NNA's MTAC representative since 1989. Because NNA is the
primary representative of within county mailers, our work often is
focused primarily upon this subclass.

A.  ***The Origins and Purposes of Within County Mail***

The Postal Rate Commission in 1986 reviewed the background of Within
County mail, as Congress struggled with funding for this
formerly-subsidized mail class. A comprehensive history is found in the
PRC's report, "Report to the Congress: Preferred Rate Study," June 18,
1996. The study by Professor Richard Kielbowicz, assistant professor of
communications at the University of Washington School of Communications,
drew heavily upon NNA's historical documents. My summary of the history
here is necessarily brief, but I commend the report for its valuable
history.

Newspapers, of course, were part of the mailstream from colonial days,
as newspaper publishers and postmasters were often one and the same. The
postmasters enjoyed not only the benefits of free service for their
publications, but they had first crack at the English newspapers coming
in from the ships at Atlantic ports, so they could easily summarize the
news from abroad.

Congress kept postage rates low for newspapers, concerned with educating
a growing and sprawling republic. In 1845, Congress took steps to
encourage a local press by introducing postage-free delivery within 30
miles of an office of publication. [^2] That law was revised
occasionally until it was settled in 1885 as a privilege for newspapers
circulated within their counties of publication. The delivery remained
free for residents without carrier service until 1962; for those with
carrier delivery, weeklies' subscribers could receive the paper for one
cent per pound and dailies' subscribers for one cent per copy. Periodic
debates in Congress resulted in affirming the importance of the local
press, as Congress depended upon it to communicate with a wide
constituency.

Small increases in postage rates began in the 1960s, a time of national
growth. The problems with sustaining service that plagued the old Post
Office Department affected newspapers as well. The turmoil led to the
Postal Reorganization Act, and USPS. The law required each class of mail
to sustain its own costs and make a contribution to institutional costs.
39 USC 3622(b)(3). Local newspaper publishers faced a major economic
shock---one that threatened their existence.

B.  ***Congress phased out the low rates, but continued support for the
    community press***

Navigating the economic swells of rising postal costs took the
cooperative work of both publishers and the Postal Service, with strong
mandates from\` Congress.

When Postal Reorganization took effect, the rate for a within county
newspaper was 1.5 cents per pound and .2 cents per piece. The Postal
Service maintained that these rates failed to cover costs, let alone
contribute to the overhead. Yet ratcheting into full cost coverage would
have laid waste to the carefully-built landscape of local papers that
Congress had so long nurtured. Congress cushioned the shock by
instituting a phased-in rate of 8 steps---later lengthened to 16 as
increasing costs hit harder than expected. At the end of phasing,
Congress decreed, within county mailers would pay their own direct and
indirect costs, but their contribution to institutional costs would be
paid by the taxpayer.

Even that cushion came to an end in 1993, as budget-cutting on Capitol
Hill decreed the end of "revenue forgone" for preferred mailers, the
system whereby Congress contributed those mailers' share of overhead
contribution. With the Revenue Forgone Reform Act (RFRA), 39 USC 3626,
Congress required within county newspapers to make a contribution to
institutional costs. That contribution was anchored at 50% of the
contribution assigned by the Postal Rate Commission to the nearest
corresponding commercial class. In the case of within county mail, that
class was the periodicals class.

In theory, this contribution would be a static percentage. If the PRC
required periodicals to pay a "markup" over incremental costs of 10
percent, within county mail would inherit a markup of 5 percent. By this
formula, Congress sought to guarantee a continued advantage---albeit
small---for the local press which, by that time, included not only
weekly newspapers but church newsletters, city magazines and other niche
publications published and delivered within a county.

Meanwhile, local publishers had begun such work-sharing contributions as
sequencing mail in delivery order, delivering bundles of already-sorted
newspapers to local post offices and helping postmasters to understand
the increasingly complex forms that had to be filed with every mailing.
But even so, stability was not to be.

C.  ***Today, within county newspapers have exceeded expectations***

The protection of RFRA has not steeled local newspapers from dramatic
rate increases. Rates have risen 5-8 percent in every rate case, and in
some cases, gone up at a double digit pace. For a variety of reasons,
newspapers have exceeded the expectation of contribution to
institutional costs.

Following is a table of relative cost coverages for within county and
outside county periodicals. With the exception of 1999, within county
mail has contributed to overhead in excess of the legal requirement in
recent years.( In 1999, cost coverage fell to 92.4%, a phenomenon
probably tied more to statistical variances than actual cost coverage.
Outside county coverage was 92.6%.)

  ----------- -------------- --------------- ----------------- ------------
  **1996**    **1997**       **1998**        **2000**          **2001**

  103.3       100            115.6           101.1             109.54

  106.7       104.9          92.7            94.41             95.46
  ----------- -------------- --------------- ----------------- ------------

Hard data on the dynamics of within county mail are difficult to find,
as NNA has discovered repeatedly in postal rate proceedings.

But there are probably two forces behind the excess payments. One is the
salutary efforts of local papers to avoid persistent delivery problems
by putting ever-more effort into work-sharing: better preparation,
better address lists and more drop shipping.

A second is the instability of postal data. NNA learned in R2000-1 that
USPS gathers its volume data on within county from a sample of only
about 25 post offices from more than 26,000 total post offices that do
not have computerized volume-capturing systems. If volume data are
inaccurately low, there are fewer mail pieces to share costs. This
statistical instability of these small samples has caused the PRC to
require use of three-year running averages of volume data, to cushion
newspapers against the impact of apparent shrinkage in volumes when, in
fact, real world volumes may not have declined at all. NNA also learned
in rate cases that USPS uses other classes' or subclasses' cost data as
proxies for within county, because it believes measuring within county
alone is too costly. [^3]

The net effect in the past half decade for USPS has been in harvesting
greater revenue from one of its smallest mail-classes than
required---and proof that whatever the problems in the flats mailstream,
local newspapers need not be a part of them. It is apparent that within
county mail can be economically handled, and even contribute to the
overall good health of the Postal Service. In fact, NNA members are the
largest customers in volume and dollars at most of the local post
offices where their mail is entered, making them critical to the
operation of those offices.

D.  **Local newspapers bring people to the mailbox**

Popular perception often has newspapers lodged somewhere between the
rocking chair and the museum. The late 20^th^ century disappearance of
the afternoon daily has created much of that perception, but it is a
misleading one. Newspapers are not disappearing. They are changing, yes.
But they are adapting to a new age as they did when the Pony Express
rider dismounted, the radio took over the farmland living rooms and
Edward R. Murrow began to appear on the television tube with the evening
news in the suburbs.

Weekly newspapers particularly are stable. There may be as many as
4,000-5,000 weekly newspapers, depending upon who's counting. NNA
represents the majority of the weeklies (the rest of its members being
small dailies). New titles pop up every year, as the entry barriers to
composition and printing have declined. The aspiring editor who retires
to a small town to launch a new paper is still a part of the American
small business landscape.

What *is* at risk is the American consumer's reason to go to the
mailbox.

Letters from friends and family really have landed somewhere between the
rocking chair and the museum. And the trends are almost certain to
continue, as even Grandma has begun using the Internet. What will remain
in the household mailbox will be mostly mail from businesses that want
our patronage. The fact that this mail comes in a variety of mail
classes is important to the Postal Service's economics. To the mailbox
owner, it is all of one class: stuff we didn't ask to receive. We may
ultimately be interested in this mail or not, depending upon our
shopping mood. But one thing is clear: the daily anticipation of mail
will decline as mail we asked for declines. What can USPS count on to
send people to the mailbox every day?

The answer is "the newspaper."

The local paper runs the soccer pictures, the school lunch menus, the
squabbles of the local politicians and the grocery store coupons. It so
famously brings people to the mailbox that every postmaster in America
is aware that when the paper is late, his telephone is going to start
ringing.

The reasons for a thriving local press are no less viable now than in
1845. Congress has repeatedly reaffirmed them. But to the Postal
Service, one overriding factor will stand out: this mail makes people
want to open the mailbox. This is how newspapers came to be called an
\"anchor store\" in the USPS mall.

Yet the Postal Service too often thinks of newspapers as an "outlier" in
its systems---not fitting the standard size or shape of other mail, and
not handily fitting into its design schemes. As time goes on, USPS and
we who care about the value of the mail will learn how critical the
newspaper is to the mailbox itself, apart from the overall health of the
nation. We hope the Commission will affirm the role of the newspaper in
the mail and urge consideration of its importance in the design of the
USPS of the 21^st^ Century.

III. **Economical and reliable service isn't the most important thing.
     It is the only thing.**

As America has moved into a 24 hour news cycle in the past decade, the
immediacy of news has become ever more important. While citizens may
rely upon CNN for the headline, they continue to rely upon the newspaper
for the explanation. The fact that the news changes so rapidly simply
puts more pressure upon the newspaper---and its delivery partners in
USPS---to deposit the current issue in the mailbox on time.

Newspapers arriving late or in stale clusters at distant addresses have
worried us for decades. The Postal Service has never been able to
deliver the Orange County, CA, paper on time and consistently to Orange
County, FL. Much of my time overseeing circulation for my own company
and advising NNA members on postal problems is spent unraveling knots in
the transportation or delivery network across the nation. Years of the
Postal Service's devotion to improvement have paid off poorly.

The new phenomenon for NNA's members, however, has been in massive
delivery problems within our own newspaper markets. These problems have
been economically damaging, harmful to the Postal Service's credibility
and enormously frustrating to readers. This is not the problem of a
single tabloid paper winding its way across four time zones. This is the
problem of moving the Thursday issue from one small town to another 10
miles away before Friday.

NNA's publisher Patsy Speights testified in Postal Rate Commission
Docket R97-1 about problems with her paper in Prentiss, MS. The copies
she used to deposit in her local office for delivery in the small town
of New Hebron just outside her county no longer travel directly to New
Hebron unless she takes them there herself in her own pickup truck. If
USPS handles the transportation, the papers go to Hattiesburg, MS, more
than an hour away, and sometimes take three or four days to return to
her market. The retail specials have ended, the community events have
passed and the opportunities to sign up for health department screenings
are already over before the unfortunate residents of New Hebron get
their news. Do they complain? You bet. They cancel their subscriptions.

Why the new problems? Because the Postal Service's strategy for handling
newspaper sorting is to truck these pieces far away from home to the
sorting machines. Ironically, the data show that the newspapers too
often are still NOT sorted by automation, even when they are properly
barcoded and the machines are available for sorting them. Rather they
are handled by human beings, just as they would have been at the local
office. Then they are trucked back, at ever swelling costs, to the area
hometowns for delivery. For the privilege of these extra trips,
newspapers get slower, more expensive delivery, and angry, lapsed
subscribers.

NNA has worked with USPS to identify work-sharing opportunities so
publishers can truck their own carrier-sorted newspapers to delivery
points. But the discounts historically were not generous and publishers
found it cost-prohibitive to take on more drop shipment. While the
situation is improving, there is little data measuring what discounts
will prompt more private dispatch and cost-effective work-sharing.

If we liked unraveling this problem, we will love the Postal Service's
Delivery Point Processing plan. It calls for eliminating our
work-sharing---possibly even taking away our opportunity to sort mail to
carrier routes---and hauling all of this mail upstream where machines
will put the newspapers into the proper bundles for carriers, and postal
trucks will bring them back to the home town for delivery.

As other witnesses who share our difficulties with the flats mailstream
processing will attest, the Postal Service's success with the automated
sorting techniques has been a mixed bag. Despite billions of dollars
spent on equipment, human beings continue to process too much of the
flat mail.

Where newspapers are concerned, the magnitude of the problem has grown
exponentially. USPS maintains that its new AFSM 100 machines cannot
routinely handle newspapers in sorting.[^4] It intends to continue to
use old FSM 1000 machines to handle newspapers and other large flats,
but it is not clear that these will be adequate to the problem.

Yet the data have shown that when volumes of mail for the FSM 1000 are
small, plant managers resist starting the machines. They move the mail
to the manual forces, and our mail receives the costing tallies for
expensive human labor.

There is no immediate solution for long-distance newspaper mail. These
copies will inevitably have to move through mail processing plants.
Improving bar-coding rates and address hygiene on our side, and better
USPS technology in bar-code readers on the Postal Service side will
help, but we are facing more years of cost and frustration. USPS could
accelerate productivity by insisting that all of its plants employ best
practices in handling our mail. It has periodicals Standard Operating
Procedures, but it does not require its plants to conform to them. It
could require plant managers to start with the assumption that
procedures will be standard and alter them only for compelling reasons.
Instead, USPS begins with the assumption that each plant manager is
relatively autonomous and hopes they will embrace best practices and
adapt them to the local environment. The Commission should examine mail
processing procedures for flats in randomly selected sites, and test
them against the readily-available periodicals SOP. It would find wide
variations in the way the work is managed.

In local markets, a solution is more easily found. The Postal Service
should not automate just because it can. The best replacement for costly
postal labor is not always a machine, but sometimes is the mailer's own
more-controlled labor cost.

The Postal Service, however, is not as aggressive as it might be to
create incentives for private labor forces. Its habit is to measure a
cost, and then "pass through" a certain amount of the cost savings to
mailers, while holding a portion back as a cushion against inaccuracy
and unforeseen circumstance. The passthroughs have become subjective and
unpredictable. And in within county mail, they are based upon a cost
base that is calculated for the wider periodicals stream. The
passthroughs to encourage more publisher-prepared and drop shipped mail
are sometimes miserly, and occasionally erratic from year to year.

Unfortunately, the Postal Service has never attempted to develop costs,
rates or procedures for newspaper mail, even though newspaper
characteristics are quite different from other pieces in that stream. It
does not know what comprises the within county mailstream, or what
portion of newspapers are in outside county periodicals. Therefore, it
has a hard time building a market-based rationale for improving this
mailstream. It begins and ends its analyses on cost-avoidance, rather
than looking from the mailer's view of the telescope and assessing the
mailer's costs and incentives for taking on more work-sharing and drop
shipping. USPS doesn't know, for example, how many cents per piece it
would have to give Ms. Speights to entice her to do even more work with
her pickup truck. If it did, it could then examine its cost systems to
find those necessary pennies, rather than examining its own hoard of
pennies and pondering how many it is willing to give away.

USPS is fond of citing its two mailstreams: letters and flats. But we
think it has three: letters, flats and local newspapers. Our industry
has proven, with a greater than 50% carrier route preparation rate in
within county mail, that we can process newspapers well for local
delivery. USPS carriers take these newspapers in a so-called "third
bundle" out on their routes and deliver them as they are sequenced.

The carriers' operations are not diminished by the use of the third
bundle. Rather, its use, coupled with publisher-prepared drop-shipped
bundles, is an excellent example of the business strategy that USPS
likes to call the "last mile."

NNA is a firm believer in the third bundle. Different ways of measuring
local newspaper delivery costs, and assessing the appropriate volumes of
pieces for them, are needed. While the county-line geographical
measurement is fixed in statute, neither newspapers' nor USPS's business
schemes necessarily fit tidily within the county lines as the frontier
era operations once did. USPS needs to be able to measure\--within
Sectional Center Facilities and within delivery units\--the
newsprint-based, subscriber-demanded products that newspaper businesses
present for delivery. It is perhaps time for a new look at both the
measurement and delivery schemes---one that is tailored to the needs of
a unique, profitable and highly-desirable product for the Postal
Service.

Newspaper mail offers a terrific opportunity for this Commission to
encourage all the stakeholders to examine new ways of operating. It
should urge the Postal Service to take a new measure of newspaper
delivery, its costs, its service levels and its role in the future. It
should recommend a new look at newspaper delivery---particularly within
the local market where the forced transport upstream has unbearably
harmed with efficiency. Finally, it should encourage development of new
ways to optimize work-sharing, regardless of the path USPS takes for
future automation of flats.

IV. **Local newspaper advertising and nationally-marketed direct mail
    are in separate mailstreams, but often in one sensitive market.**

Local newspapers are heavy users of Standard mail: advertising mail.
Because the needs of local retailers often require distribution to every
household, most NNA members publish every-household shoppers, or
non-subscriber products in addition to their subscriber-based papers.
These Standard mail products are often the largest single product in the
Standard mailstream in the post offices where they are entered.

NNA has often participated in developing rates and operations of
Standard mail. We have generally supported efforts to improve this
mailstream.

However, we are also competitors of other users of the Standard
mailstream. We must be concerned when USPS creates special privileges
for large national users that can never be replicated at the local
level. These privileges distort the advertising marketplace
irretrievably and cause advertisers to shift their business in ways that
disable local publications from competing.

NNA, therefore, has opposed Negotiated Service Agreements (NSA's) to
date. While we support work-sharing, most new ideas can be made
available to more than one mailer. Niche classifications are better and
fairer. When volume-based discounts are incorporated into the NSA's, as
USPS has proposed in its current agreement with Capitol One Services,
Inc., we must vigorously oppose. This proposal has made us skeptics of
all NSA's. We do not believe they can be created fairly.

Our testimony before the PRC on the NSA is publicly available. For
purposes of this statement, I will simply summarize NNA's position as
follows.

1.  *Volume-based discounts distort the marketplace in favor of large
    national mailers, and put every local business in that market at an
    inherent disadvantage.*

> This is problem cannot be rectified by extending NSAs to
> similarly-situated mailers, as some have opined, because the smaller
> local mailer is never similarly situated. This phenomenon every small
> business that wishes to use the mail to compete with a national
> competitor. As Professor John Panzar has testified before the PRC, the
> Postal Service cannot be regarded in the same light as other service
> providers. Its legal monopoly and its economies of scale---built upon
> taxpayer-supported infrastructure---make it unique in the panoply of
> distribution businesses.

2.  *Volume based contracts are inherently short-sighted.*

> As Panzar has attested, USPS could generate the intended new volume
> from one mailer, but squeeze enough smaller mailers out of the market
> to diminish or nullify the value. Also, USPS can never read into the
> mind of a potential partner, which may well have provided the same
> volumes at higher prices without the NSA. Therefore, it is always
> susceptible to leaving money on the table that might have benefited
> other users of the system.

3.  *Finally, the regulatory structure for fairly-implemented NSAs is
    almost impossible to regulate fairly.*

> If NSAs require prior approval, the lead time may make them
> impractical. If they are subject only to post-execution review,
> disadvantaged players will have an unbearable burden to stop them.
> And, for small businesses like most NNA members, participating in the
> regulatory process at either stage is prohibitively expensive, and
> will be of little practical value.

Critics of NNA's position may assert that our position is simply about
competition. That is not our only concern, but we would freely confess
that belief in fair competition colors our views. The major partner in
these NSAs is not another private business, but a corporation of the
federal government. That creates an equation that troubles us
considerably.

We need a viable Postal Service that does not play favorites, does not
risk its bottom line in speculation and does not appear to have
foresworn its interest in promoting the democratic values that a local
newspaper can protect. Congress in its wisdom in 1845 affirmed these
values, and has repeatedly recognized them, even as recently as the
enactment of the Revenue Forgone Reform Act in 1993. Allowing large
mailers to cherry-pick the postal system would undermine that policy.

As one of the few purely small-business oriented groups that will
address this Commission, we wish to comment briefly upon the public
discourse on this subject.

The Commission may notice that few organizations speak out publicly
against NSAs. It should not take this silence at face value. Many trade
groups have at least a few large business mailers that hope to profit
from NSAs. We believe that many smaller members of large organizations
share our concerns but are either unaware of the NSA potential or lack
the resources to speak out. We hope this Commission will look carefully
at the long-range implications of these agreements and affirm that
volume-based deals and a postal monopoly cannot co-exist.

V.  **Finally, a word in support of universal service.**

As Undersecretary of the Treasury Peter Fisher observed in the
Commission's opening hearing, the eye of the beholder often defines
universal service in unique ways.

To NNA, it means delivery of mail to the American public, on a
consistent and cost-effective basis nationwide. We support six-day
service, as we have newspapers that publish every day of the week. We
depend upon the Postal Service's nationwide reach. We believe in its
mandate. And we have entrusted the future of our businesses to its
success.

Periodically, people in our industry question the viability of the
mailbox monopoly. Many publishers are confident that they could deliver
the mail---not only their own newspapers but the townspeople's mail as
well---better than USPS. Our members in small towns have for years
complained that postal salaries are handsomely out of line with the
economy in their areas. Some publishers have their own carrier forces
for newspaper delivery, which carry saturation advertising along with
their papers.

But overall, NNA's policy has been to support the Postal Service,
through thick and thin, in times of high fuel costs, slow service,
yearly rate increases, maddening inefficiency and a sprawling
bureaucracy. If the Postal Service ceased to exist, the entrepreneurs
springing up to claim its business would number many newspaper
executives among them. Of that we have no doubt. Yet we believe
universal service carried out by a government-owned agency is best for
America. And therefore it is best for our businesses.

We are persuaded that the solutions to the Postal Service's woes lie in
greater productivity. The institution must be right-sized to handle the
nation's needs, not necessarily sized around the volumes it can attract
through pricing maneuvers. Adjusting to a changing mailmix and a
changing economic environment will create some pain, as it has for all
of American business, but the Postal Service cannot be immune from the
economic forces that drive the nation. If this Commission takes on no
other task in its recommendation to Congress, address the questions of
productivity that have been raised in the Mailers Council testimony.

**Conclusion**

NNA's message is simple.

1.  Newspapers are a profitable and important part of the mailstream.

2.  The Postal Service needs to take new measures of costs, better
    processes for handling and new incentives for work-sharing.

3.  A postal monopoly and volume-based Negotiated Service Agreements are
    incompatible.

4.  Universal service is critical.

5.  Productivity is the primary issue upon which the Commission should
    focus.

> We believe that newspaper mail will continue to bring citizens to the
> mailbox if the Postal Service continues to deliver the newspaper mail.
> Overall, the record is good. But recent and vexing problems---mostly
> tied to automation-based system changes to avoid high labor
> costs---have dulled the outlook. The Commission's attention to the
> underlying reasons for this dimmer future is welcome. We are available
> to assist the Commission and its staff in understanding the forces
> that affect newspapers in the mail and to work together with the
> Commission and the Postal Service in ensuring that the Postal Service
> has a role in the 21^st^ Century and beyond.

[^1]: Kielbowicz, "The Press, Post Office and Flow of News in the Early
    Republic," Journal of the Early Republic (Fall 1983) pp 255-280.

[^2]: Rural Free Delivery was a later development. Subscribers called at
    post offices for their mail.

[^3]:
    > The anomalous 1999 data probably are infected by the statistical
    > instability, as well as this use of proxies. The rising costs of
    > the overall periodicals class is largely attributed to mail
    > processing plants, while within county mail is predominantly
    > handled in delivery offices.

[^4]: We have witnessed tests of this machine with newspaper mail and
    have found that it does work with much of the newspaper mail, but
    work remains to be done on secondary sorting processes as the
    machine cannot always capture the proper address on a newspaper. We
    continue to work with USPS to refine our mail preparation, but it
    appears that for the foreseeable future, newspapers will not be run
    on the newer machines.