**BEFORE THE**

**POSTAL RATE COMMISSION**

**WASHINGTON, D.C. 20268-0001**

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**EXPERIMENTAL RATE AND SERVICE**

**CHANGES TO IMPLEMENT NEGOTIATED**

**SERVICE AGREEMENT WITH**

**CAPITAL ONE SERVICES, INC. DOCKET No. MC2002-2**

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**SECOND INTERROGATORIES OF CAPITAL ONE SERVICES, INC.**

**TO NATIONAL NEWSPAPER ASSOCIATION**

**WITNESS JEFF M. DAVID (NNA-T1-3-10)**

Capital One Services, Inc (COS) hereby requests National Newspaper
Association to respond fully and completely to the following
interrogatories and requests for production of documents pursuant to
Rules 25 and 26 of the Commission's Rules of Practice and Procedure.

> Respectfully submitted
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> Timothy J. May
>
> Patton Boggs LLP
>
> 2550 M Street, NW
>
> Washington, D.C. 20037-1350
>
> Tel: 202 457 6050
>
> Fax: 202 457 6315
>
> Counsel for Capital One Services, Inc.

Dated: January 3, 2003

**COS/NNA-T1-3** You state on Page 4 of your testimony that, while the
net contribution from Capital One's future mail volumes may increase, it
won't equal the contribution that would be made if those volumes in
excess of 1.225 billion paid the full First-Class per piece rates and
were mailed in the absence of the agreement. If those volumes in excess
of 1.225 billion were not to be mailed in the absence of the agreement,
would additional volume mailed because of the discount incentive
increase the net contribution to the Postal Service?

**COS/NNA-T1-4** On page 8 of your testimony, you state that because the
Postal Service is the sole source provider, "the businesses injured by
these volume discounts do not even have the advantage of shopping around
to find a less costly provider." Is the advertising carried in your
shopper, the [Livingston Parish Dispatch,]{.underline} material that is
covered and protected by the postal monopoly; and is it material that
the advertiser can place either with you to be delivered in your Shopper
to potential customers, or mailed directly to its potential customers?

**COS/NNA-T1-5** Please confirm that you will neither be economically
nor competitively injured by the Capital One NSA, assuming it produces a
net contribution for the Postal Service. Please explain any negative
answer to either parts of the question.

**COS/NNA-T1-6** On page 5 of your testimony, you state that, if the
Capital One NSA is approved, "it will open the door for numerous
petitions for volume based rates, which will create a major competitive
advantage for large, nationally-oriented businesses in our economy." Do
you believe that the Postal Rate Commission should decline to recommend
highly discounted rate categories that are based on work-sharing efforts
that are largely limited to those that are high volume mailers because
such discounts create a "major competitive advantage" for those large
volume national mailers compared to small local business mailers?

**COS/NNA-T1-7** On page 7 of your testimony, you say that, while you
are able to order as much as 25,000 gallons of ink annually, that is
small compared to the amount of ink that Gannett Company is able to
order, and that ink is priced by volume; and that you pay 20 to 40
percent more for ink than do larger purchasers. Do you believe that the
government, either federal or state, should intervene to prevent large
consumers of ink from gaining a competitive advantage against you
because of their size, by prohibiting discounts based solely on volume
and not related to any intrinsic and demonstrable cost savings to the
vendor from the volume of the ink purchased?

**COS/NNA-T1-8** Please explain how the Postal Service's monopoly
position enables it to offer a lower discounted Standard A rate to
advertisers who otherwise might place their advertising in your Shopper,
the [Livingston Parish Dispatch]{.underline}.

**COS/NNA-T1-9** Isn't it true that the reason you really oppose the
Capital One NSA is because you fear that, if it is approved, "it is not
hard to imagine that direct mail businesses will be in line for their
turn at major discounts."? (Page 9).

**COS/NNA-T1-10**

\(a\) Please confirm that, your Shopper, the [Livingston Parish
Dispatch]{.underline}, is not eligible for periodical publication
preferred rates, and the postal rates paid by your Shopper do not
benefit from application of the educational and cultural rate criteria
of the Postal Reorganization Act which is designed to benefit
non-advertising media mail.

\(b\) Please confirm that your Shopper is predominantly an advertising
vehicle that in no material way differs from other Standard Solicitation
Mail sent through the Standard A rate sub-classes. If you cannot
confirm, please present all the distinguishing characteristics for your
Shopper that would differentiate it from the typical Standard A
advertising piece, and submit several specimen copies of the Shopper.

\(c\) Please explain why your Shopper, which is predominantly an
advertising vehicle, should be protected from the more efficient
operations and consequent lower rates that are available to larger
advertisers, merely because the owner of the Shopper also happens to be
the owner of an eligible preferred-rate periodical publication that has
been and remains favored by both the Postal Reorganization Act and by
the decisions of this Commission over the years.